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IRS tests free e-filing system that could compete with tax prep giants

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Re: IRS tests free e-filing system that could compete with tax prep giants

#251

Post by uticus »

dunmalg wrote: post #143
uticus wrote: post #79

Earlier quoted context omitted.

> For example, try designing a tax system that is both fair and efficient with respect to agricultural income and tech income... It won't be simple. I love these armchair opportunities for college-level challenges without the admission fees, I'll bite. Step 1: disallow corporation as a legal taxable entity, private ownership only. Step 2: Subtract expenses from income. Step 3: Divide by 10. Step 4: If more than zero,…

lol, step 1 destroys the entire stock market!

I know! Wait did I fail the class, or pass?

Re: IRS tests free e-filing system that could compete with tax prep giants

#252

Post by pb7 »

aynyc wrote: post #120
dheera wrote: post #17

Earlier quoted context omitted.

Pro tip: If you have a tax bill over a few thousand dollars, sign up for some credit cards with big fat bonuses just to pay the taxes, and you can easily make up the $100. When the system of {government, financial institutions, credit cards, etc.} sucks, shove it back to the system. Obviously, calculate whether it really works out in your favor with the credit card payment fees, but in many cases it will.

This is what we called premature optimization. If you owe big money on taxes, spend your energy and effort to figure out how to reduce that, not on credit card points.

They’re not mutually exclusive. A W-2 employee has very few ways to reduce taxes and no amount of energy or effort will change that.

Re: IRS tests free e-filing system that could compete with tax prep giants

#253

Post by koolba »

jcranmer wrote: post #220
koolba wrote: post #158

Earlier quoted context omitted.

> But I already feel that when I look at my paystub, or pay property taxes. Unless you’re cutting a check in person you’re arguably not feeling it as much as you should. It’s like how replacing cash toll booths with electronic debit hides the true price you’re paying on the highway.

I doubt very many people know how much taxes they actually paid in 2022, even after the pain of filling out taxes. Instead, the number they know and remember is the size of the refund check (or the tax check they have to send out) in April. And the size of that check has relatively little to do with your actual tax rate, instead being driven by the withholding tables instead.

That’s exactly my point. If people were cutting a check for the full about in one go, they’d have a better handle on the size of it. Likely a different opinion as well.

Having to at least see the numbers rather than blindly clicking “Yes” on a government run website is not quite there but it’s better than nothing.

Re: IRS tests free e-filing system that could compete with tax prep giants

#254

Post by alistairSH »

pclmulqdq wrote: post #249
alistairSH wrote: post #216

Earlier quoted context omitted.

Those deductions and credits (mostly) apply to people itemizing their deductions. About 30% of households itemize - the remaining 70% take the standard deduction. [EDIT - since the tax changes in 2018, the numbers are closer to 10% itemize/90% standard deduction] And most of the common items are known to the IRS... mortgage and mortgage interest, property taxes, state taxes, education credits, retirement savings. Com…

That's not really true. Itemized deductions are a small part of this, and so are the individual tax credits. Business accounting and post-tax investment are actually the big items here, and are impossible for the IRS to do for you. I'm afraid that if you get a stock grant from your employer, that puts you beyond where the IRS can send you a pre-filled form that is correct.

I'm afraid that if you get a stock grant from your employer, that puts you beyond where the IRS can send you a pre-filled form that is correct.

Sure, but that's a tiny fraction of the population. Nobody is saying the IRS should send you a fixed return. Only that they should send what they have, and if nothing needs changed, great, society is better off.

Re: IRS tests free e-filing system that could compete with tax prep giants

#255

Post by rsynnott »

linuxftw wrote: post #43

The IRS has no incentive to make sure you get all the deductions you're allowed. They don't have incentives to make sure the software works well under load and at scale. Whatever they put out will likely be half-baked, and the software will degrade rapidly because the tax laws change each year. I suspect, that given the currently complexity of the tax system itself (rather than the filing, which seems to be pretty st…

Not American, but as I understand it the IRS has to pay interest in the case of an overpayment? That's a disincentive for them to screw you over.

Re: IRS tests free e-filing system that could compete with tax prep giants

#256

Post by lazide »

ethbr0 wrote: post #207
ericmay wrote: post #127

Earlier quoted context omitted.

In the case of taxes in the United States this doesn’t really follow because if the government says you owe $x.xx then you have to go through the bureaucracy either way to either pay or dispute the charge. For most people (simple wage earner) TurboTax and other software is just an additional regulatory tax and no different than the government except that it takes money from citizens. A government has a monopoly on ta…

The difference is that if the IRS provided the only filing solution AND adjudicated taxes, there'd be no adversarial tension. Right now, the IRS is forced to establish some sort of data interchange format and adjudicate incoming tax filings equally, because they're required to work with TurboTax et al. (even if only required from a practical standpoint). If they also provided the only filing solution, that pressure w…

Huh? What adversarial tension is needed for filing?

It’s literally data entry.

Tax prep/accounting (what to put where for cases where there is ambiguity) can always be different.

That doesn’t apply to W2 earners though (in 99% of cases)

Re: IRS tests free e-filing system that could compete with tax prep giants

#257

Post by godelski »

TheCondor wrote: post #245
ShadowBanThis01 wrote: post #5

It is WAY past time for this. It's absurd that we have to regurgitate tax information that has already been reported to the government. But it's even more absurd that the government gives us no way to do so electronically. And then there's the disgusting shell game that IS the entire U.S. tax system, which is the root of the whole problem. But... didn't Congress pass some corrupt legislation years ago that made it il…

I'll do you one better, maybe two better... Why can my bank and credit card vendors tell me "up to the second" the status of my account. I use a credit card and get an alert on my Apple Watch. The IRS could have an app that shows it in real time (say up to the day) how much tax you've paid and if they think you'll owe more or get a refund based upon what they know at that point and time and what they know from last y…

Maybe this comment can spur several startup ideas.

Why is it that we can have highly advanced AI, phones, and monitoring systems but so much of what we do is as if we're living before the internet?

Obviously politics (not just a left/right divide, but even at local and budget levels) plays a role. But let's be real, street lights (and cross walk) should be algorithmic and sensor driven, stores should have trivially developed web interfaces (AI can help this just from SAM), SSN being used for identification but also not (and being terrible at it), and so much more. This is literally every industry and ESPECIALLY anything that the government does. I don't want to hear voting online, but please talk to me about DMV online (not literally to me). These things aren't flashy, and maybe that's the problem, but I hate living in both the 22nd century and the 17th at the same time (exaggeration).

Re: IRS tests free e-filing system that could compete with tax prep giants

#258

Post by lazide »

maerF0x0 wrote: post #205
nostromo wrote: post #157

Earlier quoted context omitted.

There is no monopoly on tax preparation in the US. It’s a highly competitive market. Dozens of companies sell online products to file, and thousands of individual providers are available too.

> It’s a highly competitive market. It's a competitive market on a stupid game. The market solutions (maybe mostly just intuit) fight to keep the game near impossible for the lay person to play. They generate "GDP" by making it more grievous than it need be. At least part of this is a symptom of a broken political system (the current process of voting encourages 2 party system which are incentivized to not experiment…

The political system is this way because the cities/urban areas and the rural areas have fundamentally different interests, and the vast majority of the resources and land area isn’t in urban areas.

The federal gov’t has enough power to make either of these groups miserable; and so each is using it to fight out who gets to do so.

Picking one to win isn’t going to stop the conflict, but it could turn it into a shooting war.

Re: IRS tests free e-filing system that could compete with tax prep giants

#259

Post by vkou »

nostromo wrote: post #157
vkou wrote: post #142

Earlier quoted context omitted.

The only thing worse than a public monopoly is where you have to navigate both a public monopoly, and a private monopoly, which is how taxes work in the US.

There is no monopoly on tax preparation in the US. It’s a highly competitive market. Dozens of companies sell online products to file, and thousands of individual providers are available too.

> Dozens of companies sell online products to file

They all suck, and in a better society, that number for normal people would be close to 'zero', because the IRS could just send me a bill to attest to and sign.

Re: IRS tests free e-filing system that could compete with tax prep giants

#260

Post by deathanatos »

whimsicalism wrote: post #103
_yb2s wrote: post #51

Earlier quoted context omitted.

The weird thing is the IRS already knows my taxes better than I do… a few times I’ve made mistakes inputting forms or forgot to put something in, and I will always get a letter from them about it. They’ve already done my taxes so they should just send me a bill and not waste my time, possibly with the option to submit extra details they are missing like deductions… but that should be an option for people that need it…

My partner and I are both W2 earners and filing our taxes takes like under half an hour. Are we doing something wrong? It seriously does not seem hard to file taxes.

You may have a simple tax situation, then.

There's a lot in this thread about standard vs. itemized deduction, but since Trump's tax reforms, the standard deduction has always vastly outweighed itemization for me, and I believe, most Americans.

The part that causes me the most grief nowadays is the 1099-B; there's a few of required tax inputs related to investments that just aren't captured on that form. (Although in recent years, I've started taking better notes, and now I can just refer to past years' resolutions for repeat scenarios.)

But even just punching in the requisite numbers I think takes me longer than 30 minutes…

Then there just seems to be an annual surprise per year. ESPP sales complicated one year; they're a weird mix of income and gains. I had a stock split occur one year, resulting in a fractional share that was liquidated for some really odd capital gains. Moving has complicated state taxes numerous times due to states with poor definition of what constitutes a "resident". I've been plagued by a number of errors on various forms (including twice on the W-2!).

But the upthread remark — that the IRS knows the answers — should apply to my situation. Basically everything tax-related about me, the IRS already knows. They can just send a bill; if I don't trust it, I can look it over for correctness & perhaps trigger some sort of correction process. (Presumably today, they'd just audit me if I was too far off their number.) About the only thing I think that might cause a discrepancy is charitable donations.

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