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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

#231

Post by coffeecat »

randerson wrote: post #128
giantg2 wrote: post #114

Earlier quoted context omitted.

"I would argue that having to file taxes through a 3rd party accountant or service is not only forced commerce but also broken glass economics" Where are people being forced to use a 3rd party? My understanding is that direct file is optional, hiring someone is optional, and using tax software is optional. Isn't it still possible to file with paper on your own?

Anyone with company stock grants, investments, or unusual scenarios is going to find it difficult to file their tax correctly without an accountant or software. The US tax code is too complex for a regular person.

Filing a DIY tax return with investments is intimidating at first, but it's really not hard once you've done it the first time. Assuming you're not doing any esoteric cost basis adjustments, it's just a matter of knowing where to copy the numbers from your consolidated 1099. Interest and dividends go right onto your 1040. Realized capital gains go on Schedule D. If you hold any foreign stock, claim your foreign tax credit on Schedule 3. Investments in IRAs, HSAs, and 401(k) accounts are, of course, not reported at all.

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

#232

Post by iends »

Alupis wrote: post #123
gottorf wrote: post #104

Earlier quoted context omitted.

This is a feature of the US constitutional system, not a bug. It's designed such that things move very, very slowly. If Congress isn't able to pass laws, it probably reflects a division in how the voting populace feels about the subject of such laws. The president may be all we have, but he is constitutionally forbidden from acting like a king. Though, of course, that hasn't stopped presidents from trying.

100% Correct. People all too often look at Congress and say "gee, they aren't passing all the things I want them to do, therefore Congress must be broken!" This fails to realize Congress works entirely the way it was designed. As you said, inaction == lack of consensus. Imaging running a country where significant ways of life (influenced by laws) change willy-nilly depending on the flavor of the day? The legal whipla…

> This fails to realize Congress works entirely the way it was designed.

Don't really think so.

The 1929 Permanent Apportionment Act subverted the intentions of the founders and clearly swayed the power balance back towards rural areas, even though they have equal representation in the senate.

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

#233

Post by brianwawok »

Sohcahtoa82 wrote: post #213
CamperBob2 wrote: post #208

Earlier quoted context omitted.

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…

Yup totally silly. My CPA wouldn’t even take you on as a client, he would say go to HR block if you don’t want to do it,

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

#234

Post by iends »

gnicholas wrote: post #210

Is it going to be open to itemizers? IIRC this year it wasn’t, which means a lot of people weren’t eligible (and basically had to pay an itemization penalty to a tax preparer/company).

Isn't itemization extremely rare post Trump tax cuts?

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

#236

Post by lotsoweiners »

op00to wrote: post #202
jimbob45 wrote: post #182

Earlier quoted context omitted.

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 recently renewed my global entry, and it was a piece of cake. I occasionally interact with the FCC because of my amateur radio license, and the FRS is super easy to use. I recently got passports for my kids, and that was super easy to do as well and the passports came much faster than expected.

> I recently got passports for my kids, and that was super easy to do as well and the passports came much faster than expected.

Interesting. I am currently renewing my and my spouse’s passports while also trying to get first time passports for my children and I couldn’t find the process more outdated and borderline kafkaesque. If you told me the website was built in 2003 and hasn’t been updated since then I would believe you. I can only renew my passport by snail mailing everything including my existing passport. I can only get my kids a passport by physically taking them to an approved location for processing. I could not get an appointment for about a month at any location near me. As a bureaucrat myself, I just find this level of hoop jumping to be ridiculous.

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

#237

Post by MarkSweep »

Sivart13 wrote: post #214
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

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)

8960 (net investment tax) is another form that only applies at 200k or more income.

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

#238

Post by bombcar »

op00to wrote: post #200
bombcar wrote: post #18

Earlier quoted context omitted.

It does work against the government's stated interest, but not in the way you think. Tax policy is the government's strongest tool to change personal behavior, and if the system is simple and automated it doesn't do that at all.

> Tax policy is the government's strongest tool to change personal behavior, and if the system is simple and automated it doesn't do that at all. I'm not sure I agree. For example, I used to pay city wage tax to one municipality, and I decided I did not want to pay that city tax anymore so I took a job in another area that no longer had the city wage tax. I would be due the wage tax no matter what, and I was aware of…

It's all the various deductions you can take, both above and below the line.

It is possible to do the same societal effect in other ways, but the US does a done at the federal level via taxes.

Go look sometimes at the list of things you can claim in various cases.

It's even more explicit when you look at business tax returns and schedules.

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

#239

Post by kevingadd »

dzhiurgis wrote: post #230
yndoendo wrote: post #53

I would argue that having to file taxes through a 3rd party accountant or service is not only forced commerce but also broken glass economics. Looks like it helps the economy by creating jobs but the job is redundant and does not create anything of value. Where are crimes more likely to occur, a city with 10,000 or 1 million? Where are financial crimes more likely to occur, people that make $10,000 a year or people t…

Who steals more? 10,000 people evading 100k or 1million people evading 1k?

Rich tax evaders are evading way more than 100k

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

#240

Post by iends »

kbolino wrote: post #196
gamblor956 wrote: post #163

Earlier quoted context omitted.

UTMA withdrawals by the child are not taxable, however UTMA income is taxable to the child... What exactly are you railing against? It sounds like the IRS is following the rules here.

If the income is taxable for me, but I get no form in the mail and can't even request one (because it's not my account), then how was I supposed to file a correct tax return in the first place?

Isn't that an issue with who provides the UTMA account?
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