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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

#91

Post by pclmulqdq »

ghaff wrote: post #74
Retric wrote: post #28

Earlier quoted context omitted.

Taxes weren’t particularly difficult if like most people you were overpaying before this software showed up. The complexity was originally a way to effectively have different rules for people with accountants than regular citizens thus allowing politicians to shift the tax burden without making the carveouts obvious. Now days we just blatantly tax people living off investments less, etc. Thus defeating the original p…

And the reality today is that, if like a lot of people, you just have a W2 and maybe a 1099 or two, while the 1040 form is probably a bit intimidating, it's pretty straightforward if you're just taking the standard deduction as most people do since Trump era tax changes. Basically, if you're eligible for any of these direct-file arrangements, your taxes are pretty easy to file anyway. I'm all for simplifying tax fili…

I think a lot of people who complain about the complexity of the US tax code and the "need" for TurboTax would benefit from directly filling out the 1040 by hand one year - most of them would have a pretty easy time doing it. For most people, all you need is a 4-function calculator, your W-2s/1099s, and a pencil, and it will take at most an hour or so.

Where the IRS's UX is really bad for the average taxpayer is all the other forms and instructions that Americans feel the need to read and think about despite none of them applying to your situation. However, I think this is mostly psychological, and Americans are wasting their time and money trying to get ahead by finding a "loophole" that applies to them.

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

#92

Post by red-iron-pine »

justin66 wrote: post #67
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…

> Grover Norquist’s Americans for Tax Reform For those who don't know, Grover Norquist is a highly influential, batshit crazy right-wing ideologue who believes the estate tax is morally equivalent to the holocaust. Almost every Republican lawmaker on the national level signs a pledge he has written, swearing they will not raise taxes. https://news.ycombinator.com/item?id=24037730

Grover is the figurehead, but he's got backing from plenty of other billionaires and other large tax-is-bad action group.

also directly sprung from Bush Sr. saying "read my lips: no new taxes" and then immediately going the other way. that ruffled a few feathers and took the "tax bad" lobby into the Tea Party / Norquist insanity we've seen.

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

#93

Post by pclmulqdq »

sakjur wrote: post #11
itake wrote: post #8

Earlier quoted context omitted.

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)?

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…

So does that mean that literally everyone who sends in tax information other than accepting the government's calculations is a huge audit target?

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

#94

Post by throw0101b »

rocmcd wrote: post #59
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…

Otherwise known as the "bootlegger and baptist" problem.

TIL:

> This theory was first put forward by economist Bruce Yandle in a 1983 article published in the American Enterprise Institute's magazine Regulation titled "Bootleggers and Baptists: The Education of a Regulatory Economist."[1] Yandle, at the time serving as executive director of the Federal Trade Commission, used the example of early 20th century Sunday closing laws restricting the sale of alcohol to illustrate his belief that "durable social regulation evolves when it is demanded by both of two distinctly different groups" - Baptists, who support a regulation for moral reasons, and bootleggers, who stand to gain economically from a regulation.[2]

* https://ballotpedia.org/Bootleggers_and_Baptists

* https://www.aei.org/articles/viewpoint-bootleggers-and-bapti...

* https://en.wikipedia.org/wiki/Bootleggers_and_Baptists

* https://www.goodreads.com/book/show/20544240-bootleggers-and...

* https://www.ced.org/blog/entry/bootleggers-and-baptistshow-c...

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

#95

Post by wredue »

gumby wrote: post #69

I love the quote from the Intuit VP, which complained that it would end up “costing billions of dollars in taxpayer money.” The current system costs billions of dollars in taxpayer money, it’s just that today those dollars flow to Intuit. The IRS one should end up costing less overall, even at govt contracting rates.

The IRS taking this on this way has incentive to automate and make taxes as easy as possible. Intuits incentive is to keep taxes complicated and as manual as possible.

Therefore, the most likely outcome is that the IRS taking this on will most assuredly result in saving tax payer money.

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

#96

Post by ryaneager »

kvdveer wrote: post #2

As a citizen of a country where tax is handled entirely by the government, schemes where for-profit corporations are part of the tax collection infrastructure seems absurd. As absurd as for-profit courts or for-profit election polling stations. The article mentions that the tax software maker opposes the government doing this, but doesn't mention public opinion. What does the average American think about this?

Or for-profit hospitals…

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

#97

Post by EVa5I7bHFq9mnYK »

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.…

In the x years I lived in the United States my income taxes in other countries have been almost unbelievably easy. They just didn't exist, as long as I didn't live there.

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

#98

Post by dboreham »

andyjohnson0 wrote: post #13

Non-USian here. How does federal income tax work for people with a normal, regular job? If someone just works full time in a shop or on a factory line, do they get yearly tax demand that they have to check and/or calculate themself?

It's a "push" system rather than "pull" that you're thinking of -- the government (in theory) has no idea what someone earned, although they do know how much tax they've already paid during the year, they pretend that they don't.

So the employee's task is to present a record to the government (known as "Filing Taxes") that says: I earned this much, and I already paid this much tax, so you owe me this much back (while it's possible to have paid too little tax, most people pay too much for fear of ending up in trouble -- you're required to pay some high proportion of taxes owed for the year, during the year -- like pay-as-you-earn).

Employers send each employee a piece of paper at the end of the year showing how much they earned and how much tax was already sent to the government. For the simpler case, generating the tax filing (form 1099EZ) is pretty much a case of copying numbers from the W-2 onto the 1099. Most people would also need to add some numbers that come from other places (e.g. mortgage interest paid, tax credit for buying an EV) but those are also available as pieces of paper sent to you by lenders etc. Since math has to be done to determine the owed tax and subtract the already paid tax, a paper form is not the right way to do it. A spreadsheet is ok for the math, then copy the numbers onto the paper form. But that's some work. Hence "Tax prep software" which is basically a combination of the spreadsheet and a fillable PDF.

Since the government is slow, they never developed that spreadsheet+pdf web site early on, allowing commercial entities (Intuit, mostly) to jump in as an intermediary.

Although the US tax system can be complex, as you suspect for most people it really isn't. The issue here is more about the government pretending they don't have the information necessary to generate a person's tax filing for them. This puts the burden on the user, and so in turn they get help with that from companies like Intuit. Eventually it becomes obvious this situation is ridiculous, but putting the genie back in the bottle is not so easy.

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

#99

Post by ghaff »

hn8305823 wrote: post #84
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?

> Is the system in the US much more complicated to require software purchases? It's intensely more complicated. My 2022 Federal tax filing was over 50 pages. I gave up trying to do it myself with TurboTax about 10 years ago and that was one of the best decisions I have ever made. I can sleep well at night knowing that as long as I provided the necessary information to my accountant, all the right forms will have all…

And I'm guessing you taxes would be fairly complicated in many/most countries in the world and wouldn't be handled by clicking a "Yep, looks about right" button.

I'm in the same boat and I don't even think my situation is especially complex. I can also ask my accountant questions in advance for tax planning purposes.

On the other hand, a lot of people do just have a W2, maybe a 1099, and take the standard deduction.

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

#100

Post by jancsika »

toomuchtodo wrote: post #76
gumby wrote: post #69

I love the quote from the Intuit VP, which complained that it would end up “costing billions of dollars in taxpayer money.” The current system costs billions of dollars in taxpayer money, it’s just that today those dollars flow to Intuit. The IRS one should end up costing less overall, even at govt contracting rates.

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” ― Upton Sinclair

Going further-- if the company depends on it, then the man already understands it.
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