I look forward to the day I can file my taxes directly with the IRS as easily as I can with TurboTax. It seems that Biden's 2022 Inflation Reduction Act included a directive for the IRS to...
I look forward to the day I can file my taxes directly with the IRS as easily as I can with TurboTax.
It seems that Biden's 2022 Inflation Reduction Act included a directive for the IRS to investigate creating a direct filing system for taxpayers, cutting out third parties unless the taxpayer really wants to use them. This could be live at a small scale as early as the 2024 filing season.
I dream of a better world. One where on Feb 1st the IRS sends me a check or a bill based on their math. Then I can appeal it by filing my taxes or just accept their numbers and be done with it.
I dream of a better world. One where on Feb 1st the IRS sends me a check or a bill based on their math. Then I can appeal it by filing my taxes or just accept their numbers and be done with it.
I would be so confused with doing taxes if I moved to the US. Where I am, the tax man sends me a paper that has my tax%, based on previous years earnings. Attached to it is a paper that you can...
I would be so confused with doing taxes if I moved to the US.
Where I am, the tax man sends me a paper that has my tax%, based on previous years earnings. Attached to it is a paper that you can write your returns, if you have any. But other than that, all you need to do is take that paper that has the tax% number, give it to your employer and they will pay the taxman at the same time they pay you, monthly.
Returns or extra payments are calculated by the tax man and they will just send you the money or the bill.
US taxes are essentially the same except you are expected to act as the tax man. You do the math to determine how much of your paycheck should be going to the government, and then you do the math...
US taxes are essentially the same except you are expected to act as the tax man. You do the math to determine how much of your paycheck should be going to the government, and then you do the math at the end of the year to determine the difference and either pay it or wait for the government to reimburse you for overpayment.
Except if you have it wrong the IRS will come after you. They know exactly what you owe, and it's a scummy practice to let people find out on their own when they already know. A decent country...
Except if you have it wrong the IRS will come after you. They know exactly what you owe, and it's a scummy practice to let people find out on their own when they already know.
A decent country would let their residents know what info they have, and if something is wrong or needs to be added give you the opportunity to do so.
They don’t. If the IRS goes after you, it’s because they manually audited you. The IRS knows what you’ve paid in your W2 and voluntary contributions and the information on your tax returns. To do...
They don’t. If the IRS goes after you, it’s because they manually audited you. The IRS knows what you’ve paid in your W2 and voluntary contributions and the information on your tax returns. To do any more requires someone to double check by hand. It’s literally impossible for them to know exactly how much you owe by definition.
Also, I’m not sure why there’s this perception that the IRS will hall you to jail or something on the smallest infraction. What they actually do is give you a polite phone call, an opportunity to appeal, and very generous repayment plans. It’s seriously not a big deal if you’re not actually committing tax evasion.
It's important to know that the IRS will send a letter in the mail first. They don't start with phone calls, which is a good thing to know given all the scam attempts people use to convince you...
It's important to know that the IRS will send a letter in the mail first. They don't start with phone calls, which is a good thing to know given all the scam attempts people use to convince you that they are the IRS and that you need to pay them immediately.
Also, they know quite a bit about your tax situation, and most of it could be precalculated based on the informational forms which they have received. These aren't just your W-2; take a look next time you receive tax documents about e.g. your HSA, 401(k) account, or mortgage interest, for example, and you'll notice that most say that a copy is automatically sent to the IRS when they send it to you. More complicated situations do require input thought, which is why countries where returns are precalculated still allow adjustments at tax time.
Agreed that the IRS is usually pretty chill when communicating about a perceived incorrect or incomplete tax filing. It doesn't require a formal audit though.
That tool exists and is largely unused by taxpayers. It also has several limitations, like not handling state filing and lacking functionality for more complex tax circumstances. TurboTax offers a...
That tool exists and is largely unused by taxpayers. It also has several limitations, like not handling state filing and lacking functionality for more complex tax circumstances. TurboTax offers a level of guidance through the tax process – whether your taxes are simple or complex – that is unrivaled by any government application. The IRS is looking at creating something a little more like what TurboTax offers.
The agreement the tax prep companies have with the IRS is that they will offer their services to low-income taxpayers for free as long as the IRS does not develop a true direct filing system. The agreement is problematic because 1) the companies do everything in their power to hide the existence of these tools, 2) they trick people into paying anyway, and 3) it still requires non-savvy taxpayers to share their private financial information with a third party.
Some people are simply not attuned to things white-collar work has normalized. They cannot necessarily identify which parts of a tax form are relevant to them, or which forms are relevant overall; either because the abstraction in our system is difficult for them to comprehend or because they speak very little English. Many Americans struggle with even simple mathematical calculations, so chaining them together in a form that is confusing in any number of ways is a recipe for disaster. And frankly, even as someone who is both numeric and capable of moderately complex abstract reasoning, doing my taxes by hand is a pain. I would rather use an interface like TurboTax on a system operated by the IRS.
They didn't really allocate a whole lot of money to pilot the IRS' direct-file system. With the tax code being so complicated I can see it easily being "well, we tried it, but there's too many...
They didn't really allocate a whole lot of money to pilot the IRS' direct-file system. With the tax code being so complicated I can see it easily being "well, we tried it, but there's too many scenarios it doesn't work for. Oh well, we tried!"
I followed the general advice of Reddit and used Tax Free USA this past year. It was my first time doing my own taxes instead of paying someone to do them, since my taxes are somewhat complicated...
I followed the general advice of Reddit and used Tax Free USA this past year. It was my first time doing my own taxes instead of paying someone to do them, since my taxes are somewhat complicated (ESPP and RSUs from employer, various investments and a small side business). I ended up comparing the generated forms to what my tax preparer filed the previous year and everything looked great. It was much easier than I expected it to be. So until direct-file becomes a thing, I highly recommend them as a potential solution.
Just a minor correction so people don’t think they have the wrong company, I’m assuming you’re talking about FreeTaxUSA, which I also highly recommend.
Just a minor correction so people don’t think they have the wrong company, I’m assuming you’re talking about FreeTaxUSA, which I also highly recommend.
Ditto. I used them for the past 3 years without problems. My filings don't have anything out of the ordinary, so I can't judge how it handles anything complicated.
Ditto. I used them for the past 3 years without problems.
My filings don't have anything out of the ordinary, so I can't judge how it handles anything complicated.
The IRS already has a system called the Free File Alliance which is basically a list of 3rd-party tax prep software that is guaranteed to be free (at least for Federal Income Tax returns up to a...
The IRS already has a system called the Free File Alliance which is basically a list of 3rd-party tax prep software that is guaranteed to be free (at least for Federal Income Tax returns up to a certain AGI). A direct-file system would certainly be an improvement but I think many people assume they're locked into TurboTax because they just don't know about this option.
Intuit knows about this program and their free file product is a part of it. The problem is that they have advertised their product so heavily that nobody knows about the other ones, and they have...
Intuit knows about this program and their free file product is a part of it. The problem is that they have advertised their product so heavily that nobody knows about the other ones, and they have aggressively closed the gaps (e.g. reducing the max AGI they will accept) and used unethical UX practices (“dark patterns”) to get people over to their paid product to extract wealth from those people.
Intuit yet another shitty finance company who exists to make the world a worse place.
Intuit actually quit the Free File Alliance. Anything you see from them that claims a free version has a lot of asterisks attached which often make it not free under many circumstances....
Intuit actually quit the Free File Alliance. Anything you see from them that claims a free version has a lot of asterisks attached which often make it not free under many circumstances.
My first full-time developer position was for Intuit in their TurboTax division (although I never worked on TurboTax itself). Always was an interesting internal debate amongst employees during tax...
My first full-time developer position was for Intuit in their TurboTax division (although I never worked on TurboTax itself). Always was an interesting internal debate amongst employees during tax season.
I’m keen to hear more about this. • What was the split in your division? • Was there any sort of internal employee push to try and change their stance?
I’m keen to hear more about this.
• What was the split in your division?
• Was there any sort of internal employee push to try and change their stance?
I was there over three years ago so I can only speak for what it was back then. A majority of people, not including upper management, were more concerned about their day-to-day rather than the big...
I was there over three years ago so I can only speak for what it was back then. A majority of people, not including upper management, were more concerned about their day-to-day rather than the big picture and the impact of it. TurboTax is an extremely complicated product (think of all the different rules it has to account for each state) so energy was mostly directed towards solving the problems around that. There were a group of people, including myself, who voiced their opinions and concerns about the product, public perception, and impact. Leadership responded firmly with their position, but did devote a good amount of time answering questions and addressing concerns as much as they could without losing grip of their position. There were also a good amount of non-leadership people who were staunch supports of TurboTax and it's mission (mostly non-technical people in positions of marketing and product management).
I eventually left when I realized nothing was going to change because it was such a core part of Intuit's business. I came away understanding, but not necessarily agreeing with, the declared position of Intuit (believing that the government shouldn't be the only one that decides, assigns, and provides tax returns). I don't use TurboTax anymore, but I also don't waste my time and energy fighting them because it's easy enough to find a free alternative product (or filing manually as my taxes aren't that complicated).
NPR's Planet Money has a good episode on US taxes: https://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero If I remember correctly, one big opponent to automating taxes is...
If I remember correctly, one big opponent to automating taxes is just a group of (paranoid) tax payers who think that if the tax system is too automated, it'd be too easy for the government to add new taxes without anyone noticing. This is why they lobby heavily against any kind of automated system.
You also have the huge tax industry that is heavily against it like Intuit, H&R Block, etc for obvious reasons. I'd wager they have more money and pull then just a group of paranoid tax payers.
You also have the huge tax industry that is heavily against it like Intuit, H&R Block, etc for obvious reasons. I'd wager they have more money and pull then just a group of paranoid tax payers.
If you're not spending hundreds of millions of dollars advertising to consumers that you'll get them the maximum refund, you've lost. It doesn't matter that everyone will end up at the exact same...
If you're not spending hundreds of millions of dollars advertising to consumers that you'll get them the maximum refund, you've lost. It doesn't matter that everyone will end up at the exact same number.
A huge portion of people are not good at finances, and that's extra true of taxes. They don't understand brackets, they think that there's magic cheat codes you can use to get a higher refund (you've seen the shady signs that pop up around tax time), they think if you park some money in an overseas account, the government can't get it.
So it's hard, especially when folks have been trained by this crap their whole lives to think doing taxes is hard. The government doing it at least has some credibility and trust: they designed the tax code, so they must know what they're doing, right?
I look forward to the day I can file my taxes directly with the IRS as easily as I can with TurboTax.
It seems that Biden's 2022 Inflation Reduction Act included a directive for the IRS to investigate creating a direct filing system for taxpayers, cutting out third parties unless the taxpayer really wants to use them. This could be live at a small scale as early as the 2024 filing season.
I dream of a better world. One where on Feb 1st the IRS sends me a check or a bill based on their math. Then I can appeal it by filing my taxes or just accept their numbers and be done with it.
I would be so confused with doing taxes if I moved to the US.
Where I am, the tax man sends me a paper that has my tax%, based on previous years earnings. Attached to it is a paper that you can write your returns, if you have any. But other than that, all you need to do is take that paper that has the tax% number, give it to your employer and they will pay the taxman at the same time they pay you, monthly.
Returns or extra payments are calculated by the tax man and they will just send you the money or the bill.
US taxes are essentially the same except you are expected to act as the tax man. You do the math to determine how much of your paycheck should be going to the government, and then you do the math at the end of the year to determine the difference and either pay it or wait for the government to reimburse you for overpayment.
Except if you have it wrong the IRS will come after you. They know exactly what you owe, and it's a scummy practice to let people find out on their own when they already know.
A decent country would let their residents know what info they have, and if something is wrong or needs to be added give you the opportunity to do so.
They don’t. If the IRS goes after you, it’s because they manually audited you. The IRS knows what you’ve paid in your W2 and voluntary contributions and the information on your tax returns. To do any more requires someone to double check by hand. It’s literally impossible for them to know exactly how much you owe by definition.
Also, I’m not sure why there’s this perception that the IRS will hall you to jail or something on the smallest infraction. What they actually do is give you a polite phone call, an opportunity to appeal, and very generous repayment plans. It’s seriously not a big deal if you’re not actually committing tax evasion.
Yeah, it's a crime to give them incorrect information intentionally.
It's important to know that the IRS will send a letter in the mail first. They don't start with phone calls, which is a good thing to know given all the scam attempts people use to convince you that they are the IRS and that you need to pay them immediately.
Also, they know quite a bit about your tax situation, and most of it could be precalculated based on the informational forms which they have received. These aren't just your W-2; take a look next time you receive tax documents about e.g. your HSA, 401(k) account, or mortgage interest, for example, and you'll notice that most say that a copy is automatically sent to the IRS when they send it to you. More complicated situations do require input thought, which is why countries where returns are precalculated still allow adjustments at tax time.
Agreed that the IRS is usually pretty chill when communicating about a perceived incorrect or incomplete tax filing. It doesn't require a formal audit though.
The IRS is not likely to go after most people unless they do something egregiously wrong.
But yes, it’s a dumb archaic system that should be replaced.
Isn't there already a direct filing system? FreeFillableForms.
I dont know if that's actually direct, but its free and pretty quick.
That tool exists and is largely unused by taxpayers. It also has several limitations, like not handling state filing and lacking functionality for more complex tax circumstances. TurboTax offers a level of guidance through the tax process – whether your taxes are simple or complex – that is unrivaled by any government application. The IRS is looking at creating something a little more like what TurboTax offers.
The agreement the tax prep companies have with the IRS is that they will offer their services to low-income taxpayers for free as long as the IRS does not develop a true direct filing system. The agreement is problematic because 1) the companies do everything in their power to hide the existence of these tools, 2) they trick people into paying anyway, and 3) it still requires non-savvy taxpayers to share their private financial information with a third party.
Some people are simply not attuned to things white-collar work has normalized. They cannot necessarily identify which parts of a tax form are relevant to them, or which forms are relevant overall; either because the abstraction in our system is difficult for them to comprehend or because they speak very little English. Many Americans struggle with even simple mathematical calculations, so chaining them together in a form that is confusing in any number of ways is a recipe for disaster. And frankly, even as someone who is both numeric and capable of moderately complex abstract reasoning, doing my taxes by hand is a pain. I would rather use an interface like TurboTax on a system operated by the IRS.
They didn't really allocate a whole lot of money to pilot the IRS' direct-file system. With the tax code being so complicated I can see it easily being "well, we tried it, but there's too many scenarios it doesn't work for. Oh well, we tried!"
I followed the general advice of Reddit and used Tax Free USA this past year. It was my first time doing my own taxes instead of paying someone to do them, since my taxes are somewhat complicated (ESPP and RSUs from employer, various investments and a small side business). I ended up comparing the generated forms to what my tax preparer filed the previous year and everything looked great. It was much easier than I expected it to be. So until direct-file becomes a thing, I highly recommend them as a potential solution.
Just a minor correction so people don’t think they have the wrong company, I’m assuming you’re talking about FreeTaxUSA, which I also highly recommend.
I used this last year, and can also vet it. The name makes it sound like a scam, but it's not. Before them I used Mint, until Intuit bought them!
Ditto. I used them for the past 3 years without problems.
My filings don't have anything out of the ordinary, so I can't judge how it handles anything complicated.
Yes that's the one, thanks for the correction!
Yup, I use them as well now
The IRS already has a system called the Free File Alliance which is basically a list of 3rd-party tax prep software that is guaranteed to be free (at least for Federal Income Tax returns up to a certain AGI). A direct-file system would certainly be an improvement but I think many people assume they're locked into TurboTax because they just don't know about this option.
Intuit knows about this program and their free file product is a part of it. The problem is that they have advertised their product so heavily that nobody knows about the other ones, and they have aggressively closed the gaps (e.g. reducing the max AGI they will accept) and used unethical UX practices (“dark patterns”) to get people over to their paid product to extract wealth from those people.
Intuit yet another shitty finance company who exists to make the world a worse place.
Intuit actually quit the Free File Alliance. Anything you see from them that claims a free version has a lot of asterisks attached which often make it not free under many circumstances.
https://www.propublica.org/article/turbotax-maker-intuit-will-leave-free-tax-filing-partnership-with-irs
My first full-time developer position was for Intuit in their TurboTax division (although I never worked on TurboTax itself). Always was an interesting internal debate amongst employees during tax season.
I’m keen to hear more about this.
• What was the split in your division?
• Was there any sort of internal employee push to try and change their stance?
I was there over three years ago so I can only speak for what it was back then. A majority of people, not including upper management, were more concerned about their day-to-day rather than the big picture and the impact of it. TurboTax is an extremely complicated product (think of all the different rules it has to account for each state) so energy was mostly directed towards solving the problems around that. There were a group of people, including myself, who voiced their opinions and concerns about the product, public perception, and impact. Leadership responded firmly with their position, but did devote a good amount of time answering questions and addressing concerns as much as they could without losing grip of their position. There were also a good amount of non-leadership people who were staunch supports of TurboTax and it's mission (mostly non-technical people in positions of marketing and product management).
I eventually left when I realized nothing was going to change because it was such a core part of Intuit's business. I came away understanding, but not necessarily agreeing with, the declared position of Intuit (believing that the government shouldn't be the only one that decides, assigns, and provides tax returns). I don't use TurboTax anymore, but I also don't waste my time and energy fighting them because it's easy enough to find a free alternative product (or filing manually as my taxes aren't that complicated).
NPR's Planet Money has a good episode on US taxes: https://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-hero
If I remember correctly, one big opponent to automating taxes is just a group of (paranoid) tax payers who think that if the tax system is too automated, it'd be too easy for the government to add new taxes without anyone noticing. This is why they lobby heavily against any kind of automated system.
You also have the huge tax industry that is heavily against it like Intuit, H&R Block, etc for obvious reasons. I'd wager they have more money and pull then just a group of paranoid tax payers.
If you're not spending hundreds of millions of dollars advertising to consumers that you'll get them the maximum refund, you've lost. It doesn't matter that everyone will end up at the exact same number.
A huge portion of people are not good at finances, and that's extra true of taxes. They don't understand brackets, they think that there's magic cheat codes you can use to get a higher refund (you've seen the shady signs that pop up around tax time), they think if you park some money in an overseas account, the government can't get it.
So it's hard, especially when folks have been trained by this crap their whole lives to think doing taxes is hard. The government doing it at least has some credibility and trust: they designed the tax code, so they must know what they're doing, right?