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13 States join the IRS direct-file test after tax prep firms dropped the ball

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Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#41

Post by flandish »

BrandoElFollito wrote: post #22

We have in France pre-filled taxes, you go to the tax site, click next a few times and you are done. Takes 30 seconds for 90% of the population. Usually people do not even check what they click if they have a standard job. Is the system in the US much more complicated to require software purchases? I get it that it is not prefilled, but is there a lot to actually input in the system?

Yes. We have to wait for forms to be mailed, or emailed, or avail. Download them or enter them in the tax website. Even though the fed already knows.

Forms are things like: main employment, side jobs over 600, bank interest, car/house loan and tax payments, stocks, and other things.

The forms are often not ready until late feb to mid march.

Mid april is the filing deadline.

Mind you - the gov already has copies of ALL the forms. They just want you to f it up.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#42

Post by BrandoElFollito »

flandish wrote: post #41
BrandoElFollito wrote: post #22

We have in France pre-filled taxes, you go to the tax site, click next a few times and you are done. Takes 30 seconds for 90% of the population. Usually people do not even check what they click if they have a standard job. Is the system in the US much more complicated to require software purchases? I get it that it is not prefilled, but is there a lot to actually input in the system?

Yes. We have to wait for forms to be mailed, or emailed, or avail. Download them or enter them in the tax website. Even though the fed already knows. Forms are things like: main employment, side jobs over 600, bank interest, car/house loan and tax payments, stocks, and other things. The forms are often not ready until late feb to mid march. Mid april is the filing deadline. Mind you - the gov already has copies of AL…

Ah OK. In our case the various sources of income have to provide the information to the tax authority, and this is summarized in the prefilled web form (that you approve by clicking submit).

Now, it is your responsibility to make sure that all of the sources are indeed there but for normal people it is the salary only. It happened to me once that one source was missing and I was not happy at all (but said source provided me pronto with what to put where in the form).

Overall I would say that our tax system is complicated (as all trax systems) but made really simple for average people.

Also we do not have any companies such as yours that would provide software to make your taxes. If you want some help you can either contact a specialized finance person (this usually costs 200€ and is useful only if your case is really complicated) or you have free help areas at town halls (mairies). Or clear directions from the providers.

But as I said, it is for a select population, not for the everyday Joe who just clicks three times. There was even national ads on the radio about that.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#43

Post by throwaway84it »

poiop wrote: post #40
sakjur wrote: post #11

Earlier quoted context omitted.

In Sweden, certain things are reported to the government and others are not. Your task is to validate the prefilled tax forms and add missing income (above thresholds in place to allow for hobbyist level incomes) and deduct missing deductibles. The typical process is to just approve it, but when you’re for example selling real estate you’ll have to append it with information about your capital gains minus deductible…

Taxes in Sweden are generally effortless. Deductions, investments and benefits are often generous and easy to file. Unfortunately if you are more modest the story is a bit different. It is great if you are established. You might have a big house, high maintenance costs, use cleaning services, invest a lot in the stock market and other things that comes with all that. Because not only is it easy but you get a lot of p…

You actually benefit indirectly.

By having a transparent semi-automatic system and making it easier to do "the right thing", Sweden (and neighbours) collect more taxes that pay for health care, education and other benefits that you have used.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#44

Post by pjc50 »

itake wrote: post #8
mnky9800n wrote: post #5

In the 8 years since I lived in the United States my income taxes in other countries have been almost unbelievably easy. Typically I look at the calculated amount provided by a government website, compare it to what I think it should be if there is done discrepancy, upload some receipts or whatever for deductions, then click submit. It is beyond me why the experience should be any how different in the United States.…

JW, how do these countries handle non-employement or self-reported income (e.g. capital gains of real estate, equity, or even selling products online)?

UK: no CGT on your home, only investment properties. https://www.gov.uk/tax-sell-home (in some ways this is a pretty big middle class giveaway, but it also hugely simplifies things)

UK equity: smart people use an ISA wrapper https://www.gov.uk/individual-savings-accounts/how-isas-work or a pension, both of which are tax free for people with normal incomes and wealth.

Selling online: after £1000 you're a "trader" and have to pay tax. https://www.gov.uk/government/publications/selling-online-an...

That takes care of almost everything. My employer paid me a bonus in RSUs and doing so was also automatically accounted for in PAYE. However, this discussion has reminded me to sell the vested stock and move it to an ISA rather than leave it in a US ETrade account, to simplify future taxes.

My wife, a UK national resident in the UK, sells ebooks on Amazon as a side gig. She has to file notice to the _US_ tax authorities for exemption, because Amazon assume everyone is American for tax purposes.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#45

Post by runnr_az »

broken-kebab wrote: post #16
sdenton4 wrote: post #7

Earlier quoted context omitted.

"And tax politics make strange bedfellows. Fighting alongside H&R Block and Intuit are anti-tax activist groups like Grover Norquist’s Americans for Tax Reform. H&R Block and Intuit love taxes—that’s how they make their money. Grover Norquist wants to cut taxes wherever possible. But on this issue, their interests are aligned. H&R Block and Intuit want to make it difficult for you to file on your own. The anti-tax ac…

US taxes were pretty cumbersome before Intuit et al. Intuit wouldn't appear if not that. So your quote may partially explain resistance to change, but not causes.

In the 90s, I filed by phone once.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#46

Post by lawn »

poiop wrote: post #40
sakjur wrote: post #11

Earlier quoted context omitted.

In Sweden, certain things are reported to the government and others are not. Your task is to validate the prefilled tax forms and add missing income (above thresholds in place to allow for hobbyist level incomes) and deduct missing deductibles. The typical process is to just approve it, but when you’re for example selling real estate you’ll have to append it with information about your capital gains minus deductible…

Taxes in Sweden are generally effortless. Deductions, investments and benefits are often generous and easy to file. Unfortunately if you are more modest the story is a bit different. It is great if you are established. You might have a big house, high maintenance costs, use cleaning services, invest a lot in the stock market and other things that comes with all that. Because not only is it easy but you get a lot of p…

You're comparing the tax system, but the main topic is simply the act of filing your taxes.

Which is indeed extremely easy here in Sweden comparatively.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#47

Post by glimshe »

tuwtuwtuwtuw wrote: post #25
glimshe wrote: post #17

Earlier quoted context omitted.

It can be pretty easy. When I started my professional life in the US, taxes were relatively simple because I basically had two sources of income (job and interest investments). You enter 2 forms, ignore a lot of prompts in the tax software (do you do X? Do you do Y?) and go for it. You can even file your taxes for free - in theory - if you have a simple life like that. A lot of taxpayers do. The problem that makes th…

And the government is unaware of those or? Where I live the banks reports stuff such as mortage interest payment, capital gains etc, it's time for taxes it's all filled out already and I click OK or text the tax authority to confirm.

It could absolutely be done as you describe for most people. Most will need around 1-2 hours of tedious work per year versus 1-2 minutes as it should be.

All I'm saying is that the current system isn't that difficult for most scenarios, simply annoying busy work and form filling that should be done automatically by the government. When people talk about the US system, it sounds like most people would need a tax professional for doing taxes when that's not really the case.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#48

Post by javagram »

flandish wrote: post #41
BrandoElFollito wrote: post #22

We have in France pre-filled taxes, you go to the tax site, click next a few times and you are done. Takes 30 seconds for 90% of the population. Usually people do not even check what they click if they have a standard job. Is the system in the US much more complicated to require software purchases? I get it that it is not prefilled, but is there a lot to actually input in the system?

Yes. We have to wait for forms to be mailed, or emailed, or avail. Download them or enter them in the tax website. Even though the fed already knows. Forms are things like: main employment, side jobs over 600, bank interest, car/house loan and tax payments, stocks, and other things. The forms are often not ready until late feb to mid march. Mid april is the filing deadline. Mind you - the gov already has copies of AL…

> Mind you - the gov already has copies of ALL the forms. They just want you to f it up.

Not completely accurate - you’re required to pay tax on side jobs under $600 for instance, but neither you nor the IRS get a 1099 tax form for it. Reporting it is on the honor system. Cash tips are supposed to be taxed but rely on self reporting since the IRS has no idea who handed you money, etc.

There are also many deductions and credits that the IRS does not know about unless you self report and claim them.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#49

Post by lotsofpulp »

rayiner wrote: post #37
mnky9800n wrote: post #6

Earlier quoted context omitted.

The tax code is complicated simply because wealthy people do not want to pay their fair share.

Have you ever done your taxes? For individuals, it’s easier if you have a high income because many of the deductions and credits phase out and are capped by AGI. Dependent care FSA versus dependent care credits, student loan interest deductions, etc. Most of the questions the software asks you aren’t “Warren buffet” deductions.

If you have high w-2 cash income. Once you get into equity or business income, it starts getting convoluted again.

Re: 13 States join the IRS direct-file test after tax prep firms dropped the ball

#50

Post by jmclnx »

I think I will pass this trial for now. I knew a high-level programmer who worked at the IRS and he was very good. But the bureaucracy was overwhelming.

Given enough time then sure, but now, no thank you.

But if the IRS wants to use my returns as a test case, I say go for it.

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