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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

#391

Post by refurb »

ethbr0 wrote: post #201
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.

There's a monopoly to a first-order approximation. Apparently TurboTax has ~70% market share for tax preparation software, and TurboTax + H&R Block have ~95% market share. [0] But even that's still a heck of a lot more competitive and responsive than if the IRS shipped the only tax prep solution. [0] https://secondmeasure.com/datapoints/tax-prep-2021-turbotax-...

No, not even by "first order approximation" because plenty of returns are done without any software at all, or done by professionals with different software.

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

#392

Post by refurb »

az226 wrote: post #383
sgerenser wrote: post #291

Earlier quoted context omitted.

Itemized deductions are far from the only thing that the IRS doesn’t know about. Almost everything on Schedule C, and RSU and ESPP cost basis would also probably require manual intervention. Probably a bunch of other credits as well, like the tax credit for buying an EV, solar/energy efficiency, adoption, various student-related deductions/credits, etc.

You took me literally. Basically IRS can file taxes for all your details without adjustments. If you want to make adjustments, there should be an easy way to fill them in and be done with them. Donations, tax credits, etc. Most brokers send all the info to the IRS, but there are some that get wrong cost basis for ESPP (Fidelity looking at you) and so you’ll have to rectify that too. But those things should spit out a…

They'll actually do that today if you want!

I had a friend in college who hated doing taxes so he spent 5 min putting whatever numbers into the forms.

A few months later the IRS sent a "your filed incorrectly, here is the corrected return" and he'd be like "cool".

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

#393

Post by refurb »

pstuart wrote: post #388
refurb wrote: post #379

Earlier quoted context omitted.

Disagree. You don't need Grover to make US taxes overly complex and burdensome. Just look at some of the tax bills Democrats have sponsored - vague tax rules that the IRS is responsible for implementing (and often making their own decisions on how to implement). Basically new tax rules are put into place with little regard on making them simple or including data collection as a part of the tax change.

The last time we were given "tax reform" it was mainly about cutting rates for the wealthy rather than streamline and modernize how taxes are handled (the IRS budget has been constrained and prevents them doing anything other than barely function, which is a not an accident). https://www.policygenius.com/taxes/who-benefited-most-from-t...

"Middle-class Americans saw mixed results as most of the benefits accrued to the highest earners."

I mean, yeah? 42% of Americans pay no federal income tax, how could tax reform benefit them unless it's handing out cash? Which we already do with EITC.

And the complexities and burden of the tax system go way, way back before Trump's tax reform. Think more like anything passed since the 1950's.

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

#394

Post by pfannkuchen »

flagrant_taco wrote: post #376
sgerenser wrote: post #289

Earlier quoted context omitted.

I’d be happy with a system like this, as long as they made it very clear WHEN you should do it the old way. For example: “Our estimate of your income may be too high in certain situations, for example if you are a business owner, independent contractor, or receive income from RSU or ESPP sales where the tax basis reported to the IRS is missing or inaccurate. In those cases, you are encouraged to fill out your tax ret…

Simplifying the tax code would go a long way. We don't need to go all the way towards some flat consumption tax, simply eliminating tax deductions, credits, and write-offs would make calculating a person's tax burden much easier.

Don’t deductions, credits, etc allow the government to incentivize citizens to behave in certain ways? Are you implying that it shouldn’t be in the business of incentivizing behavior?

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

#395

Post by nocsi »

dheera wrote: post #17
lapetitejort wrote: post #11

I paid ~$100 to file my taxes this year. At the end they said because I had one particular form that I couldn't file electronically, and I would have to send it in. So I had to print everything out, write checks, package everything up, visit the post office, and check that the letters arrived. I still had to pay full price of course.

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.

Why don’t you do that for capital gains too? Instead of paying the IRS, turn that into a tax bill then opt into the tax payment plan.

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

#396

Post by dheera »

nocsi wrote: post #395
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.

Why don’t you do that for capital gains too? Instead of paying the IRS, turn that into a tax bill then opt into the tax payment plan.

Tax payment plans don't give you sign-up bonuses, and they also charge interest.

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

#397

Post by bilekas »

I used to work for HRB on their workflow engine basically. And I can say to all the comments about how it's ridiculous that this isn't already free, the IRS delegate the responsibility to the private companies and removes overhead for the IRS. If HRB mess up with the forma they're liable and you're not out of pocket at all.

The US taxes are not trivial each state will change frequently and federal also throughout the year.

Given I've experienced how much is actually involved i don't think i would trust a government body to be the only option for me who is not an accountant.

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

#398

Post by chrismcb »

lr1970 wrote: post #210
shortcake27 wrote: post #184

Earlier quoted context omitted.

Yeah the American system absurd. “We have all the data but you still need to figure it out yourself and if you get it wrong you’ll get in trouble”. The Australian system has improved a lot over the past few years - PAYG (employment), bank interest, and dividends are all pre-filled on your tax return. So all you need to figure out is deductions and other income. I’d still like to see it taken a step further like in th…

> Yeah the American system absurd. “We have all the data but you still need to figure it out yourself and if you get it wrong you’ll get in trouble”. IRS knows all the income data only in simple cases like salaried employees with W-2 forms. If you are business owner or contractor the things can be more complicated and what IRS really knows is a guessing game. IRS is posturing and bluffing that they know everything an…

IRS knows about my taxes because my employer informed them. If you are a business owner, well talk to your boss about getting the taxes done. Self employed, business owners, and petite with some investments will still need to do some work.

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

#399

Post by unmole »

sgerenser wrote: post #366
patrick451 wrote: post #359

Earlier quoted context omitted.

I worry about be one of those. what is it about RSU compensation that is commonly misunderstood?

It’s often the case that you sell a block of RSU stock, and the broker reports the entire sale as a capital gain (e.g. if you sell $50K, then it shows up as a $50K capital gain on your broker’s 1099). But in reality, the gain should only be the difference between the price it was when it showed up in your account and when you sold it (which can actually be a loss), because the basis is already included in your W-2 as…

E-Trade and Fidelity report gains correctly. Which broker doesn't?

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

#400

Post by unmole »

prottog wrote: post #375
dopidopHN wrote: post #371

Earlier quoted context omitted.

Right? Now that you know the answer, apply it to every problem where « but for us It’s different » Gun control, ISP prices & availability, public transportation and in particular long range trains are the top of the list of those subjects. At first it’s fun, then it’s anoying, then it’s sad. Thougt & prayers ! It will get better, or at least you will know intrinsically that you exhausted all of the 1 solutions.

> Gun control Sometimes the US truly is exceptional -- name another country that has more guns than people and, critically, enshrines private ownership of guns in its constitution.

> enshrines private ownership of guns in its constitution.

Czechia, Guatemala, Mexico, Phillipines, Ukraine, Yemen.

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