The private companies have demonstrated pretty clearly that they will do everything they can to avoid people actually having free tax filing, and while ~$50-100 might not seem like a ton of money, keep in mind that at the current United States minimum wage ($7.25 as of this writing), it would take upwards of working 6-14 hours just to pay for tax filing. $100 is a lot of money when you're not a yuppie software engineer.
I suspect I did enough crazy stuff with stocks this year that it probably won't apply to me at first, but hopefully by 2025 or 2026 I can stop giving money to Intuit or Jackson Hewitt.
Still, I kind of feel annoyed that I have to pay any amount of money to do something legally required of me to avoid going to jail. I think the IRS should provide a free option for filing, and TurboTax/FreeTaxUSA/Jackson Hewitt would be forced to provide a better service than "the bare minimum".
Relatively few people in the US earn the Federal minimum wage. It's less than 1/2 of 1% of the labor force. It's a very poor reference for anything in terms of personal finance comparisons.
You can walk into a CVS or Walgreens and earn $15 / hr as the minimum scanning barcodes with zero experience, zero job history, as a teenager. You'll get heavily subsidized health insurance, dental, vision, and PTO.
On top of that, the majority of US states have a higher minimum wage than the Federal.
If you're still earning the Federal minimum wage at this point, it's almost always by choice (if you don't want to work for Costco, Walmart, Target, CVS, Walgreens, et al.).
So it's only millions of people.
I got ~$35 out of it, which was nice.
Why on earth do you need a third party for your tax calc and resolution? It is surely the antithesis of the "land of the free" and all that stuff.
In the boring old UK I login to a govt. run website to do my annual tax self assessment. My P60 is already filled in (that's my PAYE - pay as you earn, my normal salary) I'm a company director too so I have dividends and expenses and offsets etc to worry about. It takes around an hour to complete.
Most UK employees don't do self assessment. PAYE is such a simple and obvious idea - routine taxation should be done by routine.
Just to double down on this, what gerdesj is describing only affects a very small portion of workers. For those who _don't_ do the steps above the process is:
- It's automatically taken out of your pay, and you don't do anything.
That's it.
Because the IRS isn't allowed to tell you what you owe. You're supposed to calculate that yourself... (And it's so damn complicated that it's worth paying someone to do it, unless you were the kid who did the math textbook for fun.)
Eventually, the IRS calculates what they think you owe, and if you underpaid, they send you a bill. You can respond explaining why they are wrong, or pay. The interest is so low that, as long as you don't goof up every year, you're better off risking underpayment than overpayment.
Honestly, the system would work better if the tax prep software could see all the information the IRS has, because then it would be easier to correct their mistakes and harder to make mistakes.
>Eventually, the IRS calculates what they think you owe, and if you underpaid, they send you a bill
It definitely feels like a few steps could be skipped here…
Is there a legitimate reason for this or is this just a joke?
The vast majority of taxes that are filed by US taxpayers are simple. Unless you're extrapolating your own experience to everyone else, that is.
Paper sucks. Tax filing helpers (people/software) have always cost money. “The government sucks” and won’t try to help you.
And, oh yeah, ads and tax prep stores everywhere.
No one questions it. They don’t like it, but they accept it. Just like so many other things in the US because we’ve never seen anything else.
Paying income ta is made into an arduous task so people are likely to vote against taxes or for repeal of taxes instead of being accepted as a fact of life.
You don't; you can download the forms and fill them out yourself. It's annoying but doable.
That said, it really should be better; your description sounds like a good outcome.
The government's preference would probably be to contract with them and license it.
> Our overall success will depend on several special legislative proposals and regulatory authorities that we believe are appropriate for an effort of this scope and importance:
> Engaging the Office of Personnel Management to utilize existing direct hire authority for IT modernization positions and/or broadening government-wide critical pay authority
> Seeking reauthorization of IRS Streamlined Critical Pay Authority that expired in 2013
> Ensuring funding is available for multiple fiscal years at somewhat predictable intervals.
[1] https://www.whitehouse.gov/omb/briefing-room/2023/09/22/fact...
[2] https://www.irs.gov/newsroom/irs-modernization
[3] https://home.treasury.gov/news/press-releases/jy1666 | https://news.ycombinator.com/item?id=36976331
(please consider a tour of duty: https://www.usds.gov/apply | no affiliation, just an engaged citizen)
I reluctantly gave money to TT again.
If your brokerage reports all of your trades to the IRS, which they likely are, then you can just enter a summary. You don't need to grant access to your outside accounts and import anything.
I'll let her know. She cares about UX.
End of the day with TurboTax and co, you, as expected, get a "not our system, not our problem" type response when dealing with the post-filing ramifications.
There seems to generally be a lot of "I'm not sure if I did it right" anxiety in the general population.
In practice, it's not really needed. The thing is (and I realize that it's not the general perception) if you sincerely try to file your taxes and you screw up, the IRS will generally work with you to fix things. Sure, if you go all sovereign-citizen/Wesley Snipes and refuse to acknowledge taxes they'll kick in the door and take all your stuff. But if you accidentally report select head-of-household instead of single, and you can explain why you did, the IRS won't ruin your life.
I personally find it misleading to undersell how high stakes taxes are in the US. Sure for 95% of the people if you make a tiny honest mistake nothing will happen, but it's not like a small error in your taxes can't cause a huge ordeal. I tell my friends, taxes are an extremely high stakes deal and you need to understand what's happening on those papers and IRS website. I'll tell my kids the same once they're of age to understand.
Is there an equivalently-blissful tax-filing software/service? I don't want to go back to TurboTax, and with several single-member LLCs I'm probably beyond the scope of the IRS' free service.
Anyone have any suggestions?
It's literally just filling out the paper forms except in a web interface and it does most of the math for you. And then you can file electronically for free regardless of your income level, and it produces a final PDF with all forms filled out for your files.
It can be tricky to do your taxes the first time around depending on their complexity, but the good thing is that once you figure it out, you just use the previous year's PDF's as a reference for the current year's. The lines move around a little bit year-to-year but it's usually the same idea. And it becomes pretty obvious what has changed (that requires research), and you can figure out if anything has changed in your own financial situation that warrants filling out a new line or new set of forms.
(I don't believe there's anything specifically textfile-based. But this is definitely the electronic version of doing your taxes "manually" with full control.)
[1] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...
That's interesting. Apparently submits electronically sometimes - but if you need attached statements, for example for f1116, you have to print the product and mail it. Otherwise supports surprisingly MANY forms - many of them with some limitations which are enumerated for you. Some schedules are not included, for example this year f1116 requires 1116 Schedule B for carryovers and that's not provided here. So again if you need f1116 then you'll be printing and mailing that. Really... Many forms are included.
2017-01-01 open Expenses:GA:Insurance USD
tax_form: "1040 Schedule C"
tax_line: "15"
tax_description: "Insurance (other than health)"
Being able to write comments is also super-useful. A real life example:
; We can make a "Section 1.263(a)-1(f) de minimis safe harbor election" to
; treat repairs and improvements to tangible property as an expense, which
; would otherwise have to be capitalized. A statement that we are making the
; election must be attached to our tax return and should include name, address,
; and Taxpayer Identification Number. Under the election, we must apply the de
; minimis safe harbor to all expenditures meeting the criteria for the election
; in the taxable year. The limit is $2,500 per invoice.
;
; https://www.irs.gov/businesses/small-businesses-self-employed/tangible-property-final-regulations
2016-01-01 open Expenses:RD:Hosting:Repairs:DeMinimis USD
tax_form: "1040 Schedule C (R&E)"
tax_line: "21"
tax_description: "Repairs and maintenance"I'm considering whether to move away from it but it would of course be a considerable investment of effort.
I love the idea, but not being an accounting expert (maybe you are), I'd be afraid that some immaturity or lack of expertise in the software would cause a big problem in a critical way. What makes you confident in it?
Also, how do you share data with accountants, etc.?
Arizona
California
Florida
Massachussetts
Nevada
New Hampshire
New York
South Dakota
Tennessee
Texas
Washington
Wyoming
Someone please correct me if I'm wrong.
Not quite; ~71.8 million constrained to just individual income tax filings based on 2022 stats[1]. Excludes estate, corps, gift, tax-exempt orgs and excise, but includes both paper and electronic filings.
AZ 4,197,918
CA 23,209,479
FL 14,563,047
TX 16,750,330
NY 13,115,425
---------------
71,836,199
===============
US 204,434,236
[1] https://www.irs.gov/statistics/soi-tax-stats-state-data-fy-2...
#Income reporting
W-2 wage income
Social Security and railroad retirement income
Unemployment compensation
Interest of $1,500 or less
#Credits
Earned Income Tax Credit
Child Tax Credit
Credit for Other Dependents
#Deductions
Standard deduction
Student loan interest
Educator expenses
I wasn't terribly mad about the money (if I owe $7,000 then that's what I owe, it was my fault), but what I was mad about was the fact that I had to do anything in 2021 at all. If the IRS knows enough to know what I owe them, then why exactly do I have to file, just to have them validate that the numbers I give them match the numbers that they have on file.
There's the notable point. If states integrate into it, it's a game changer. No need for the vast majority of filers to use any 3rd party.
This is what I was mostly curious about. So, I'm guessing things like ISOs, AMT, capital gains from investments etc would not be supported by this service yet.
Income reporting
-W-2 wage income
-Social Security and railroad retirement income
-Unemployment compensation
-Interest of $1,500 or less
Credits
-Earned Income Tax Credit
-Child Tax Credit
-Credit for Other Dependents
Deductions
-Standard deduction
-Student loan interest
-Educator expenses
If anything, this will compel the tax preparation software companies to get even better than before, and offer an increased value proposition.
Competition benefits the consumer, and for a long while there's been limited, mostly fixed competition (via Brand awareness mostly).
FreeTaxUSA is amazing, and cheap, but it does not yet have the brand power the incumbents do.
It's unlikely the IRS offering will be as easy to use or as pleasant as the existing offerings, but it will be a huge shot across all of their collective bows.
Keep in mind the IRS offering a free online service for tax filing does not reduce the complexities of the current tax code - nor does it make for a more fair tax system (one where having means to access professionals reduces your perceived tax liability). This system merely means fewer people need to pay $49 a year to file taxes...
Yes, there are alternatives, but what possible enhancement could any of them provide that is worth anything? Tax preparation is largely deterministic, and maximizing deductions is a largely human-lead task that is only beneficial to higher earners who have an accountant that does their taxes for them and don't care about services like TurboTax and FreeTaxUSA.
For most working class Americans a guaranteed free solution provided by the IRS itself is a no-brainer. You know that the government isn't in the business of maximizing profits at all costs, and you get the peace of mind that the IRS itself calculated your taxes, and that you are unlikely to get the blame if there is an error.
Tax collection is a critical function that the government relies on, it should overwhelmingly be a government-lead process that doesn't cost people any more than what they owe in taxes. I hope all of these predatory tax filing businesses go under, because paying taxes is a civic duty that people shouldn't be reliant on private organizations to fulfill for them.
Though, I also do my taxes on TurboTax to double check my work (I don't submit until both programs report the same amounts to the penny). I just don't submit using TurboTax.
It's not that deep, man. Not everything in life has to be an all-or-nothing scenario. This is a big win for a solid percentage of Americans who have a relatively straight forward tax situation.
Tax fairness, IRS tyranny, bought-out politicians, corporatism -- let's leave that for another day.
Let's learn to celebrate wins no matter how small.
This implies that the state of tax preparation software is "good", which really doesn't line up with overall consumer sentiment. Personally, I hardly consider clunky UI/UXs loaded with dark patterns to be anything but good.
I don't know that this is really true anymore. Maybe a little, but mostly just no.
I support many public goods, including this one, but they are a tool with appropriate uses just like private enterprise is. I don't want operating systems to be a government-provided 'public good'. Also, I think freedom is the core, but not only, value here, including in commerce. When government takes over, it's no longer a free market with free people.
I support the IRS's new service, as a general matter (i.e., without knowing details), but you raise a serious issue.
If an industry exists because of the government and it can be replaced by a public service, then it doesn't deserve to exist.
FWIW, public defenders are a public service used to interact with a government-created system, but the private legal defense industry is alive and well. So, it's not like making a public service is sufficient to kill any government-created industry.
It was created by a public service. It would be better if they'd just made a rule that those with super simple tax affairs just didn't need to file, as we have in the UK. But there's probably no pork in just making things better.
If I have to manually input 5 billion crypto and stock transactions including every damn weekly staking reward just to pay taxes it's just bleh.
It doesn't to suck.
Also, my wife paid a joint filing online under my SSN, and the system couldn't figure that out and claimed we were in arrears. I'm not hopeful.
* cost of TurboTax Pro Ultimate will be deducted from your refund amount, plus interest.
It's not surprising the system couldn't figure that out. There is no such thing as a joint-filing under a single SSN. You need to include both spouse's SSNs or ITINs on the 1040 to file jointly, and the return is treated as a "joint" return (meaning, equally by both spouses).
[1]: https://www.ibo.nyc.ny.us/iboreports/understandingthebudget....
All other taxpayers will continue to use systems that ideally maximize deductions as government continues to tax endlessly.
Because the "problem" they're solving has been solved in other countries without a profitable middleman. Intuit's continued existence in this space is dependent on their lobbying team.
I hope this IRS effort works out.
It's almost as if you don't actually live in a democracy.
https://www.propublica.org/article/inside-turbotax-20-year-f...
They already do your taxes in the background to confirm your return is correct, so this is not significantly more work for them (in fact, it is probably less work).
In some countries with such a system, unless you intentionally lie, you are absolved of legal liability if the government screws up your taxes.
The article makes it sound like they are building a crappy turbo tax clone instead.
This is a common misconception. Most places that send you forms also send them to the IRS (but by no means all places). The IRS makes sure that the information you put in your forms is the same as the forms they got, but they know nothing about your dependents, whether you pay mortgages interest, etc.
Now, the counterpoint to that argument is that c.90% of people just take the standard deduction anyway now that there's not SALT, but the argument there is that we should move completely away from deduction-driven taxes (which is probably the solution).
As for TurboTax et al, those places are not sending your forms to every state tax agency (why do people always forget about state taxes in these threads?), so there's still very much a need for some solution there. Probably IRS data sharing, but good luck getting all the states to agree with the Feds on tax forms (just look at the SALT battle).
You fill your shopping cart with a bunch of groceries then you have to write down what you think it all costs. The shop keeper then checks if you got it right. Then they call the police for each 12.3th customer who got it wrong. The odds to get it wrong are so big the help of a different company is needed who will add up the shopping cart for you.
You cant make it up.
I used the FileFreeUSA and TurboTax Federal Free in the past and it worked well. I just use TT's paid offering now for the F-income declarations.
I agree it's probably a bit much for most people though and not filing should be akin to not reporting anything else and the IRS should automatically calculate your return and mail a check or a bill if you owe.
Federal taxes only. Except for entering in your W-2s by hand, it's pretty straightforward. You can save a PDF copy to your local drive. The nice thing is you save postage and do not have to pay someone to prepare / file it for you.
“Free vs Turbotax”
and everyone with a CPA just has to pretend they dont do that
God knows why it took this long.....
If Trump wins again he's going to have a lot of work destroying all the progress Biden has made in just one term.
Tax prep companies: $90M lobbying against free tax-filing - https://news.ycombinator.com/item?id=37363616 - Sept 2023 (231 comments)
IRS moves forward with a new free-file tax return system - https://news.ycombinator.com/item?id=36804710 - July 2023 (221 comments)
IRS tests free e-filing system that could compete with tax prep giants - https://news.ycombinator.com/item?id=35950836 - May 2023 (567 comments)
Call on the IRS to provide libre tax-filing software - https://news.ycombinator.com/item?id=35705469 - April 2023 (129 comments)
60M Americans have taxes so simple the IRS could do them automatically - https://news.ycombinator.com/item?id=35476709 - April 2023 (277 comments)
Lobbyists begin chipping away at Biden’s $80B IRS overhaul - https://news.ycombinator.com/item?id=35381701 - March 2023 (214 comments)
Intuit pouring money into lobbying amid push for free government-run tax filing - https://news.ycombinator.com/item?id=34840039 - Feb 2023 (178 comments)
IRS builds task force to explore running its own free e-file system - https://news.ycombinator.com/item?id=34764952 - Feb 2023 (199 comments)
IRS Free File: Do Your Taxes for Free - https://news.ycombinator.com/item?id=34462122 - Jan 2023 (247 comments)
IRS will look into setting up a free e-filing system - https://news.ycombinator.com/item?id=32753099 - Sept 2022 (408 comments)
The IRS could be on the verge of changing the way Americans file their taxes - https://news.ycombinator.com/item?id=32550841 - Aug 2022 (17 comments)
IRS will study free tax filing options - https://news.ycombinator.com/item?id=32502321 - Aug 2022 (25 comments)
TurboTax’s fight against free tax filing - https://news.ycombinator.com/item?id=31072202 - April 2022 (394 comments)
Filing taxes could be free & simple. H&R Block & Intuit lobby against it (2017) - https://news.ycombinator.com/item?id=30856968 - March 2022 (114 comments)
FTC sues Intuit for its deceptive TurboTax “free” filing campaign - https://news.ycombinator.com/item?id=30846071 - March 2022 (587 comments)
Ask HN: How does TurboTax get away with dark patterns? - https://news.ycombinator.com/item?id=30409523 - Feb 2022 (122 comments)
Why do Americans have to pay much to file their tax returns when the IRS knows? - https://news.ycombinator.com/item?id=30267361 - Feb 2022 (22 comments)
Filing Taxes Could Be Free and Simple. But H&R Block and Intuit Lobby Against It (2017) - https://news.ycombinator.com/item?id=30185484 - Feb 2022 (18 comments)
California tried to save the nation from tax filing, then Intuit stepped in - https://news.ycombinator.com/item?id=28944200 - Oct 2021 (283 comments)
The IRS has a big opportunity to fix the way Americans file taxes - https://news.ycombinator.com/item?id=28177289 - Aug 2021 (12 comments)
--
(for example, this irs page links to googletagmanager)
https://epic.org/report-id-me-lied-to-the-irs-about-wait-tim...
I don't think there is any stipulation that the US government can't use products sold by US based companies. In fact, they enjoy doing it. You should ask your elected representatives to prohibit tracking on government websites; if they pass a law, the IRS's web design team will follow it.
You have form 1040, which gives you a run-down of every possible form you need to reference. You fill out the boxes with the info it wants, then you go down the list, filling in each number box that applies to you: Got W-2s? Probably, attach 'em and sum them up. See a phrase you don't recognize? Read the relevant instructions. Got interest? Time to fill out a Schedule B, which itself references some other forms, and attach some 1099s. Sell any investiments? Schedule D, which might have you fill out an 8949 (strictly speaking, you can skip this one if all your investments have declared basis on your 1099-Bs that you received from your brokerage). If you think you might have more deductions than the standard, there's Schedule A, but for most people you can safely skip that one and take the standard. Taxable income determined!
Then the taxes section contains a bunch of forms that apply to you if you're in certain situations, maybe you have a kid (Schedule 8812), the instructions are very helpful in telling you what you need to care about here. The first box is important, it includes your income tax which the instructions will tell you how to calculate.
Sum up your witholdings from the W-2s and 1099s to figure out how much you've already paid the government, then figure out if you owe the fed money or they owe you.
Sign, stick in an envelope, and send. Whole process takes a couple hours the first time, when you need to learn what you actually need to fill out, and in future years less than 2 hours.
If you can read at a 6th grade level and do basic addition and subtraction you can fill out your tax forms.