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IRS Direct File to open to all 50 states and D.C. for 2025 tax season

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Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#211

Post by BeetleB »

whimsicalism wrote: post #50
nly wrote: post #28

As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.

the tax difficulty in the US is overstated, we have plenty of services that will let you do it for 20 minutes for free. the most popular one is obnoxious and tries to upsell you often, but there are alternatives and you don't need to pay

I can't speak for the UK, but in many other countries, the tax forms are already filled out and you simply need to verify the numbers. You don't get that in the US.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#212

Post by BeetleB »

resource_waste wrote: post #58
nly wrote: post #28

As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.

In the US, its basically that simple if you arent a business owner. Might even be simpler. You type in like 14 numbers, each very clearly delineated. But... if you are a business owner, it takes like 2-3 weekends. (I say weekends, because we work all day during the week)

There's a big gap between the two, with many individuals in between.

Do you participate in SPP? Then the form you get will have an incorrect cost basis and you need to manually correct them. I guarantee it.

Do you trade individual stocks (e.g. RSUs)? A bit more work.

Got a K-1 form from an investment? Could be straightforward, or if it's real estate, a major pain to fill out those tax forms.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#213

Post by Sohcahtoa82 »

CamperBob2 wrote: post #208
8note wrote: post #205

Earlier quoted context omitted.

I don't get why there's an income cap though. There's nothing that gets more complicated on income alone, only if you add extra stuff to track

Anybody who makes more than about $200K-$300K/year is likely making a mistake if they don't have a CPA.

What makes you say that? I'm assuming you're adding other assumptions.

My wife and I combined make about $300K/year. We don't run a business, don't make charity contributions, only pay ~$5K in mortgage interest, and don't have kids. We don't even do retail stock investing (EDIT: And I haven't exercised any employer stock options), just a 401k, an IRA, and a 5.25% savings account.

We take the standard deduction. I can't imagine a CPA would be able to find so many possible deductions that it would be worth itemizing.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#214

Post by Sivart13 »

8note wrote: post #205
dmd wrote: post #136

Earlier quoted context omitted.

94% of Americans make less than $200k a year. Not everything is meant for "software engineers in California".

I don't get why there's an income cap though. There's nothing that gets more complicated on income alone, only if you add extra stuff to track

In an effort to keep the scope manageable for the pilot year, the Direct File team chose to have an upper income limit so they would not have to support Form 8959: Additional Medicare Tax (https://www.irs.gov/pub/irs-pdf/i8959.pdf) which only kicks in at that threshold.

Though it's also very likely at these high incomes that you would be disqualified for other reasons (investment income etc)

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#215

Post by ethbr1 »

gamblor956 wrote: post #121
dheera wrote: post #112

Earlier quoted context omitted.

sigh this is a baby step but - Many if not most software engineers in California earn more than the $200K household limitation for using Direct File - From my understanding there is no way auto-generate my state tax return from Direct File so I would have to do all the work twice even if I can use it - Complicating my tax situation (legally) allows me to save more money, I would save far more than the price of TurboT…

DirectFile was created by the IRS, a federal agency, for preparing your federal income tax return, in a manner similar to the streamlined e-file options available in other countries (i.e., for the most common/basic situations). There are 50 states, and every single one of them has their own idea of what an income tax return should look like, so a direct file that handled state returns would take several years and hun…

> so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain.

The way to extend this, if the federal government wanted to push it, would be to define a standard export format from IRS DirectFile, containing all the information in it...

... then make some federal money contingent on states implementing a filing system with an import function (for the shared data).

Nice clean interface, and still states' choices on if they want to support.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#216

Post by mrinterweb »

nly wrote: post #28

As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.

Turbotax and other like companies lobby for more complex tax law and to restrict access to government services that would assist citizens with filing taxes. The more complex the tax code is, the more people need Turbotax. It is not a healthy dynamic. https://abcnews.go.com/Business/turbotax-lobbies-lawmakers-t...

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#217

Post by ilyagr »

dheera wrote: post #112
macrael wrote: post #81

It's SUCH a win that they managed to roll this out to a small set of tax situations and states to start. Every government project I've been on has required creativity in defining an MVP that doesn't include shipping to everyone. This was cited consistently as one of the great successes of this project, they were able to ship something that successfully filed 150k taxes b/c they were able to scope things down to somet…

sigh this is a baby step but - Many if not most software engineers in California earn more than the $200K household limitation for using Direct File - From my understanding there is no way auto-generate my state tax return from Direct File so I would have to do all the work twice even if I can use it - Complicating my tax situation (legally) allows me to save more money, I would save far more than the price of TurboT…

In practice, for software engineers in CA, I'm guessing that https://www.freetaxusa.com/ will be superior to Direct File for a while. It also files federal taxes for free with no limits AFAIK.

In terms of societal and long-term impact of eliminating the middlemen, Direct File has much more potential. Hopefully, in a few years, states will integrate their tax systems with Direct File. Perhaps one day the government will finally send us a completed tax return as opposed to the other way around.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#218

Post by wredcoll »

jimbob45 wrote: post #182
nly wrote: post #28

As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.

US government services are bad almost across the board. Most of us would pay a premium to use a private version over a government version of almost anything. I’m guessing you would find it equally confusing if I told you we’d pay a premium to use a private DMV or private post office. Here in the US, that statement wouldn’t be controversial at all.

I'm in the US and I find your statement confusing. With the exception of the irs which was deliberately made hard to use by the republicans, most government services are fine. I certainly doubt a corporation would do any better.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#219

Post by dzhiurgis »

cududa wrote: post #170
dheera wrote: post #139

Earlier quoted context omitted.

I meat this is Y Combinator Hacker News, so I would expect "software engineers in California" to be a significant fraction of the user base here.

The problem is you're exposing yourself as someone extremely self-centered, and someone that assumes their lived experience is equivalent of everyone else's, and adjudicating the utility of this particular thing as if you are reflective of the larger population. Saying the majority of engineers in California make at least $200k makes you even more out of touch. According to Glassdoor, over $200k for a SE in CA is 90t…

Which is ~$70 per hour - which you can earn from US firms while remoting across many timezones.

Re: IRS Direct File to open to all 50 states and D.C. for 2025 tax season

#220

Post by wredcoll »

swozey wrote: post #84
whimsicalism wrote: post #78

Earlier quoted context omitted.

so you made 25% more than you usually do and are wondering why you have to pay more in tax?

Yep, here we go, the condescension of Hn. The point is they know my exact income and should be able to handle it, not make me figure it out at the end of the year. I have no idea why I got a random $5k bill. It could be something else. And that's the annoyance.

Keep in mind that they could handle it if they weren't deliberately hamstrung by republicans like grover norquist.
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