441–450 of 692 posts
You still have to know "how to do your taxes", but it takes away a lot of the busy work, and will flag certain things you may otherwise miss.
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Even CPAs aren't responsible for leaving you exposed to an audit, unless it was through gross incompetence, or if otherwise specified in a contract. TurboTax gives you some feeling that you have exhausted most of the straightforward avenues for reducing your tax liability, but offers no guarantees. Tax preparers are really only liable if they start telling their clients to do grossly illegal things on a regular basis…
I completely understand what you're saying. Paying someone who is more of an expert than me is still better than me doing it myself. "Hey I did this in good faith and this company messed up, can we work this out without me going to prison?" vs "I didn't know."
Most calculation or categorization errors aren't "prima facie" evidence of tax fraud. In general they need to show intent to deceive. Most of the cases where I have seen someone being fraudulent they are going somewhat out of their way to do it. For example, not reporting cash receipts, just checks and credit cards. Paying their children as contractors even though they do not do any work. Recording only half of the haircuts they do and none of the tips. Claiming to have an unsuccessful business that doesn't exist yet loses money. People have to go out of their way to make their illegitimate books look legitimate and they usually fail to take into account that the IRS has seen it all before. Unfortunately for everyone, the IRS doesn't catch these things for several years if at all, so some get rewarded, some think they're fine when they're not, and some get hit by a huge tax bill.
For the average person, if they make a bona fide attempt at doing their taxes correctly, and they make mistakes because they are not a seasoned tax accountant, the penalty will be back taxes, interest, late fees, and representation costs.
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No, it can work with the complicated path too, they present you with what they already know about you and give you the opportunity to add more information that they don't yet know. They then calculate what you owe and tell you. At some point they are going to calculate what you owe based on what you provide them and what is reported to them, no matter what. Laws that authorize "auto tax" can also come with extra repo…
This is how it is done in Sweden. And after having lived in 2 other countries it is clearly the way to go. The tax authority sends you a summary and you just approve it.
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I didn’t see evidence in the linked article and the cited article therein that Intuit tried to prevent a simplification of the tax code. They just tried to stop the government from trying to build competitor software (partially paid for by Intuit and others in the tax accounting industry). Frankly, it sounds like a PITA to have IRS calculate your taxes with poorly written software, and then have to challenge it. I th…
> Frankly, it sounds like a PITA to have IRS calculate your taxes with poorly written software, and then have to challenge it. That's not how the proposed systems work. The proposed system is: gov sends you a notice "here is your filled out tax return based on everything we know about you" and then you look over the return, make any modifications you believe are correct, and send it to them. You're not "challenging"…
Or more likely, they send you their estimate, based on a tiny fraction of the tax code, you recalculate it from scratch, send it to them, and then they audit you.
Civil disagreements with the IRS start under the assumption that the IRS is correct (e.g., “your cost basis is zero,” or “that wasn’t a valid deduction”), and then you must prove to them that they are wrong.
"Killing TurboTax" is essentially a meme until we meaningfully simplify the tax code. There is no software development team on earth who could catch up with the full capabilities of TurboTax without some sort of fundamental shift in the business. I really hate to say this as someone who makes a living out of it, but dealing with the current amount of complexity in the tax code with a piece of software that a non-expe…
So let's just nationalize TurboTax.
"Killing TurboTax" is essentially a meme until we meaningfully simplify the tax code. There is no software development team on earth who could catch up with the full capabilities of TurboTax without some sort of fundamental shift in the business. I really hate to say this as someone who makes a living out of it, but dealing with the current amount of complexity in the tax code with a piece of software that a non-expe…
Not that I expect it to succeed, but I wonder what would happen if you tried throwing machine translation at the raw tax code.
Imagine a legal document that is written using terminology that is ultimately just a series of higher-order functions. A human could make sense of it with some training, and a computer could directly execute it with determinism.
"Killing TurboTax" is essentially a meme until we meaningfully simplify the tax code. There is no software development team on earth who could catch up with the full capabilities of TurboTax without some sort of fundamental shift in the business. I really hate to say this as someone who makes a living out of it, but dealing with the current amount of complexity in the tax code with a piece of software that a non-expe…
As soon as my tax situation got even the slightest bit complex I started using an accountant. They use TurboTax, I'm pretty sure, but they also know all the questions and what they really mean and can answer my questions on what the tax impact of various situations I encounter might be. They also go to bat for me if I have an audit.
Not only do I consider that far more valuable than the $500/year it costs, but I'm also confident my tax savings more than cancel the expense.
Just my experience, but I recommend a tax accountant to all adults.
This has already been done successfully in Canada. A small team from Vancouver built a pay-what-you-want web-based tax-filing system from scratch. It's called SimpleTax and it's already a major competitor to the Canadian version of TurboTax. In fact, it was so successful that it was recently acquired by Canadian investment group WealthSimple.
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> Frankly, it sounds like a PITA to have IRS calculate your taxes with poorly written software, and then have to challenge it. That's not how the proposed systems work. The proposed system is: gov sends you a notice "here is your filled out tax return based on everything we know about you" and then you look over the return, make any modifications you believe are correct, and send it to them. You're not "challenging"…
> and then you look over the return, make any modifications you believe are correct, and send it to them Or more likely, they send you their estimate, based on a tiny fraction of the tax code, you recalculate it from scratch, send it to them, and then they audit you. Civil disagreements with the IRS start under the assumption that the IRS is correct (e.g., “your cost basis is zero,” or “that wasn’t a valid deduction”…
I've yet to hear any stories where anything like your nightmare scenario has actually happened. Perhaps you would not be part of the group who could rely on a pre-filled return - and you would still have to file manually, but nobody is proposing taking that option away or even making it harder than it already is.
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May I ask examples of things that you are not confident sharing with the IRS, that you do not have the obligation to share with the IRS, and that can affect the taxes you owe? In my (foreign) mind, whatever might affect your obligation final number you are legally required to do so (either preemptively or when asked), so I don't fully understand.
Many things that I tell my preparer are needed later, but not now. (Tax basis for RSUs that vested. Value of capital improvements to my property.) Other things are needed only if we elect to method A of calculation, but not if we use method B of calculation. So I give him all the data; he computes my obligations using method A and method B, chooses the better option, and reports only the data needed to support that m…