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Direct File won't happen in 2026, IRS tells states

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Re: Direct File won't happen in 2026, IRS tells states

#231

Post by quickthrowman »

ryandrake wrote: post #189
ethbr1 wrote: post #156

Earlier quoted context omitted.

Exactly. Tax complexity drives the CPA / tax prep need. That said, there is a huge swath of America that's being preyed on by strip-mall tax prep, who derive zero benefit from it. (And an industry whose profits ultimately trickle up to the tax prep software companies)

I was blown away when I learned one of my wife's friends, who has a single W2 and some bank interest, pays H&R Block every year to file her taxes! No stocks or rental income or IRAs or anything else that could complicate things. But still she, and millions of Americans, pay these companies to fill out what amounts to a single form. Eye opening.

Entering a 1099-B for stocks is dead simple, you enter in a few numbers (cumulative buys, sells, and wash sales) and you’re done. You transmit your trade history to the IRS digitally.

It takes me about 20-30 minutes to enter a W2, 1099-INT, 1099-B, 1099-B (futures) and a 1256 (straddles and index options) into FreeTaxUSA every spring.

Re: Direct File won't happen in 2026, IRS tells states

#232

Post by cyberax »

soared wrote: post #167
cyberax wrote: post #67

Earlier quoted context omitted.

IRS will absolutely go after regular people who just have a W-2 and maybe a couple of 1040 forms. It's easy to verify automatically. But if you're a rich person with dozens of companies and complicated trusts? Yep, nobody is going to be looking.

This is incorrect - the higher your income the higher percent chance you have of being audited. (Also higher for very low income https://www.congress.gov/crs-product/IF12521#:~:text=The%20I...

Because it's technically not "audit". They just send you an automated letter if they find any discrepancies: https://www.irs.gov/individuals/understanding-your-cp2000-se...

And they _will_ find them. For example, one year I forgot to add a line from one of 1040 forms to my return. I got a notification from the IRS about a year later that I have under-reported taxes.

And with the defunding of the IRS, they'll severely limit the complex audits.

Re: Direct File won't happen in 2026, IRS tells states

#233

Post by cyanydeez »

AnotherGoodName wrote: post #44

Meanwhile in pretty much all other nations you go online to the free website, see your employer contributions already filled in and acknowledge they are correct for the year, add any extra income, check boxes for relevant deductions and you’re done.

Hating taxes is an intentional regressive system to ensure its complex and is politically expedient to "cut".

Re: Direct File won't happen in 2026, IRS tells states

#234

Post by goku12 »

com2kid wrote: post #192
goku12 wrote: post #132

Earlier quoted context omitted.

This is a misleading characterization of the issue here. Let me pull up another very relevant analogy here. Let's say that you visit a government office for a driving license. Should you pay a bribe to the official? You are a responsible adult, after all. Bribes are needed for everything from housing permits to your kids' food assistance. How is it bad when it gets good things done? Is this how you reason about corru…

> Let's say that you visit a government office for a driving license. Should you pay a bribe to the official? We formalized it! It is called an application fee, and it is set high enough so they the government employee doesn't need to take bribes outside of their salary. Other countries set application fees so low that government employees barely earn enough money to eat, so they take bribes. NYC solves a huge part o…

> I agree much of lobbying is corrupt, but the concept is that lobbying is how politicians discover the public interest. It is also how they get input on the effects of proposed laws. I want my local small business lobbying group to let my city know if a proposed tax increase will bankrupt my favorite local stores!

I touched this point in my previous reply. But let me reiterate it again. Those politicians are supposed to just talk to their constituents and represent their interests. That's their job description. If the voters who sent them to the legislatures have to lobby them afterwards, what is the purpose of these politicians anyway? Is their job to con the public into choosing them, so that they can leech the same public? Evidently so, and that's the fundamental problem with democracy in US these days.

> The fact is, what the EFF and ACLU do to protect our rights is also a form of lobbying.

While EFF and ACLU do a commendable job, their existence don't justify lobbying. It's the other way around. Lobbying make them a necessity to regain some semblance of balance and fairness. They wouldn't be needed if the politicians were doing their job in the first place.

Re: Direct File won't happen in 2026, IRS tells states

#235

Post by ffffgov »

array_key_first wrote: post #197
Amezarak wrote: post #162

Earlier quoted context omitted.

The number and type of people living in your household is not an edge case. It applies to almost everyone, has huge tax impacts, and the IRS doesn’t know.

The argument is that you don't need a third party like Intuit to get this information. The IRS could get it themselves - they choose not to.

They can’t. Because IRS IT has been starved, beaten and abused for 20 years. If they had the resources and leadership, all of this could be possible via MOUs and better data access/normalization from the mainframes.

Re: Direct File won't happen in 2026, IRS tells states

#236

Post by sharts »

miki123211 wrote: post #72

Why won't a non-profit pick up the open-source code they released and modify it for 2026? Everybody seems to care about this issue so much, so this feels like an extremely high-impact thing to do.

Just because an org is non-profit doesn't mean that it isn't out for itself.

Re: Direct File won't happen in 2026, IRS tells states

#237

Post by nielsbot »

terminalshort wrote: post #213
nielsbot wrote: post #194

Earlier quoted context omitted.

But that's a bad solution. (Otherwise why do TurboTax et al even exist in the first place?) IRS should just have a public free filing solution for everyone. If you have complicated taxes or want to do your own filing, you can still do that.

They do. https://www.irs.gov/e-file-providers/free-file-fillable-form... . And no it isn't a bad solution. I use it every year.

From their description: "You do the work"

That's not what we're talking about. What we're talking about is: "We did your tax return for you based on all the information reported to us. Please click 'OK' to complete your return for the year."

Re: Direct File won't happen in 2026, IRS tells states

#238

Post by archagon »

soared wrote: post #167
cyberax wrote: post #67

Earlier quoted context omitted.

IRS will absolutely go after regular people who just have a W-2 and maybe a couple of 1040 forms. It's easy to verify automatically. But if you're a rich person with dozens of companies and complicated trusts? Yep, nobody is going to be looking.

This is incorrect - the higher your income the higher percent chance you have of being audited. (Also higher for very low income https://www.congress.gov/crs-product/IF12521#:~:text=The%20I...

"The IRS unit that audits billionaires has lost 38% of its employees since January, new data shows" https://www.icij.org/news/2025/03/the-irs-unit-that-audits-b...

"After mass firings, the IRS is poised to close audits of wealthy taxpayers, agents say" https://www.icij.org/inside-icij/2025/03/after-mass-firings-...

Re: Direct File won't happen in 2026, IRS tells states

#239

Post by ghoul2 »

wildzzz wrote: post #121
terminalshort wrote: post #62

Earlier quoted context omitted.

Which is basically how it works here too. If you just have W-2 income from an employer it takes less than 10 minutes to fill out the form. Sure, the system you mention is more convenient, but the difference is minimal.

The IRS already has most of my tax information and knows the tax code. Why must I deal with a third party (and potentially have to pay them) to electronically file my own taxes?

When I lived in the US(5 yrs), early 2000s, from my second year onwards, I used to receive a pre-filled 1040NR-EZ with my W2 info already printed/filled-in on it. Typically, I would just add a deduction, and mailed it back. Does that program not exist? Or was it only for NR?

Re: Direct File won't happen in 2026, IRS tells states

#240

Post by 1718627440 »

Dylan16807 wrote: post #222
drysine wrote: post #212

Earlier quoted context omitted.

That time has passed.

Now you have me really curious. When did "that time" start, and when did it end?

Maybe it started, when the USA became the global power in the half of the 20th century and it stopped when they lost being the free and aspiring country others countries think they should model after, which might be in 2001, or when they openly started extorting their (former) allies, which is under Trump.
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