TurboTax Takes Aim at Smaller Rival in Fight for Filers | Hacker News Reader

TurboTax Takes Aim at Smaller Rival in Fight for Filers

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Intuit's PolOps are also continuously trying to keep the US Tax system complex, so they have a reason to exist that isn't the case in other countries:

http://www.nytimes.com/2010/01/24/business/24digi.html?_r=0

http://techcrunch.com/2013/03/27/turbotax-maker-funnels-mill...

If you want something evil to disrupt, disrupt this.

Yep -- this is some pretty evil rent-seeking. Unfortunately, disrupting it (i.e. automatic filing) requires political action rather than tech. For people with a single wage/salary job, the IRS already has a good idea what they owe thanks to their employers' reporting. IRS could simply mail them "we think $X is what you made, and $Y is what you owe," and they could either say "okay" if they agree, or fill out the forms otherwise.

It seems that we should just require any company providing taxable things to common people (e.g. employers and banks) to do all of the work. Then the IRS can just figure it all out from that, you have a few checkboxes for if you have dependents, and it does all of the math for you. That way we have a smaller set of organizations doing the work once instead of every taxpayer doing it independently.

But think of the cost such regulation would cause upon our poor, under-served businesses! There's no way they could survive under such obligations! Won't somebody think of the businesses?!?

And don't forget to conveniently ignore the time cost of each individual taxpayer spending several hours every year doing their taxes (not to mention evaluating dozens of healthcare options...) or paying some business to do their taxes instead.

What work do you mean? There are already extensive reporting requirements for pretty much any entity involved in a situation where someone might make income. I think pretty much any tax document an individual receives has also been provided to the IRS.

(For instance, stock brokers must now track lots for their customers, employers withhold payroll taxes and report income, etc)

Pretty much how it works in most of europe. Not even mailed, during the filing period log into the tax authority's site, check that the pre-filled declaration looks OK and validate.

Sounds glorious. In the U.S., figuring out taxes is like:

Take line 39b, multiply it by your age as determined by worksheet 6689. If you are between 41 and 43 years of age, enter '0'. If you were not subject to the Railroad Act of 1938's exempt dependent pension clause (this is not common), add 13 to this number in hexadecimal, else, subtract 2 and multiply by 1.388688. If you did not have healthcare for more than 14 minutes during the prior year and line 17 is 4 or greater and you live in a zone designated as "clown free" by your local municipality, draw a unicode snowman on this line and prove Fermat's theorem in the margins of Schedule Q...

We can change this if we want. We just need to collaborate and apply pressure on legislators.

1. Propose legislation to allow the IRS to perform the work directly third parties are currently performing

2. Have it sponsored (look through opensecrets.org, find legislators who aren't taking money from intuit)

3. If you don't vote for it, we work to replace your with a competitor in your next election cycle

Is this really the case? Can't most people can just file with a 1040(A or EZ) and be done pretty quickly. I was under the impression that you only have to break out the crazy worksheets or software if you want to get fancy with your deductions or take advantage of tax credits.

You can save alot of money this way, but really it's the deductions that are the complication (and the audit risk...) but how can you simplify the deduction process, you have to get specific by the very nature of the task.

> I was under the impression that you only have to break out the crazy worksheets or software if you want to get fancy with your deductions or take advantage of tax credits.

I don't think you can use a 1040EZ if you want to take any deductions (like mortgage interest, student loan interest, etc).

I don't know why an e-filing system couldn't handle that, form wizards aren't rocket surgery, you'd just have e.g. a page were you select types of loans outstanding, which would insert steps to fill in relevant information. And the system could even remember that year to year so next year they'll be preselected and if you haven't taken/discharged anything you can just nextnextnext to whatever section comes after that.

You can file 1040EZ if you don't have any deductions, and it's pretty simple. Probably simple enough for the IRS to pre-compute it for you.

If you want to claim deductions (healthcare expenses, mortgage interest, charitable donations, etc) you need the full 1040. It's still pretty easy, but you would at least need to tell the IRS what those deductions are before they can compute your taxes.

I think the really complex stuff doesn't kick in until you have a complex scenario and you want to completely optimize it. I had a complex tax return one year when I got a large stock grant. Every other year it's taken 2-4 hours to finish a 1040 with some normal deductions.

2-4 hours is way more than I want to spend, but also not enough to get me motivated to fight for simpler tax codes.

Once you have a kid, spouse, house, or significant medical bills you had better not use an EZ or you're just throwing money away.

You can't file for free on the IRS site if your income is above $62k, no matter how simple your filing is:

https://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for...

Edit: I'd love to know a logical reason for that policy beyond "f- the rich".

"Tax software provides jobs for Americans, and if we remove obsolete laws that make the tax software important - you would cost Americans jobs!!!!"

As the site shows, Free File Fillable Forms is available to everyone, but it's not as easy as the step-by-step wizards of TurboTax and TaxAct. There's manual arithmetic involved, following the PDF instructions, looking through tax tables, etc.

While you can file for free above $62,000 (you have to use the fillable forms, and not the tax prep software), the reason I think the reason for the divide is ultimately that the sub-$62k annual income segment isn't of particular interest to the tax prep (software/services) industry, so providing free tax prep software to them doesn't hit the kind of political pushback that a generally-available solution would.

I don't see this working in the US without first simplifying the tax code. Right now if the government sent this out I would assume a majority of people would have some deduction they could take.

1. I was under the impression the vast majority only gets the standard deductions (which would probably be applied by default or something)

2. if the default doesn't match your status, you just change what you need to change and validate that

I guess it would work for anyone who can file a 1040EZ. The rest of us will still be stuck doing the same old forms to fix what the government thought we owed.

Most people have multiple valid deductions, but they add up to less than the standard deduction. If all of them add up to be more than the standard deduction, you have to itemize all of them, which is a PITA, but if you don't do that then you're paying too much tax.

There are some deductions you can take in addition to the standard deduction (student loan interest, moving expenses, some education expenses, etc). These all change the adjusted gross income, from which the standard deduction (or itemized deduction) is subtracted.

edit: I suppose some of this could be pre-computed if all the different companies sent the info to the IRS and states you lived in during the year. But that's probably too much work...

A lot of people at least get student loan interest deduction (with all the college debt around), which I believe pushes out out of 1040EZ lane.

Many deductions have to be supported by forms that are already provided by third parties both to the taxpayer and to the IRS. There's no reason these couldn't be included in pre-computed taxes sent out to taxpayers.

Its not done in the US because the makers of tax prep software and providers of tax prep services have lobbied against it the several times it has been proposed, and with a very substantial industry that is completely threatened, they have plenty of motivation to lobby hard.

Yeah, a very fishy company. Stay away: https://en.wikipedia.org/wiki/TurboTax#Controversies

Has anyone tried to make an open source version? Any 18f or USDS folks around who want to save us from Intuit and H&R Block?

Yes. The problem is the damn tax code changes every year (see: Intuit's lobbying) and you need to pay for an army of lawyers for when you get it wrong.

Inuit is not alone. Accountants and tax lawyers want it kept changing and complex, too.

Isn't it more like every day?

The trouble is that there would have to be a new version every year for the new tax code changes and it would need to be updated in a timely manner.

We're talking like Chrome or Firefox level of support for an app most people would use once a year.

The last couple years I've filled out my tax forms with a couple different online forms and found they gave different results. (Last year I filed my state taxes through one company and federal through another) The fact that programs that exist only to do taxes can't even agree on how much my taxes are shows how broken the USA's tax system is. (and my returns are fairly simply. I can't imagine how different they would be if I had complicated returns)

It's an interesting balance that Intuit is trying to strike. They want the tax code complex enough that people don't feel they can do it by themselves but simple enough that they don't feel that they need to hire a CPA. Since every filer is different, there will be some that fall on either end of the spectrum (though they have their free products to address the simple cases), but the goal is to keep as many people in that "comfortable using software" group as possible. What's truly amazing is just how little it costs to buy that influence. IIRC, it's in the $10m-$15m per year range, which is less than half of what they spend on hosting for TurboTax alone.

I've had conversations with Brad Smith (CEO) and Scott Cook (Founder) and often considered asking them how they can reconcile their "Integrity Without Compromise" corporate value with these kinds of lobbying activities, but I never had the stones to ask the question. I will say that from my interactions with them, I'm positive that they do have some rationalization in their heads that makes them actually believe that what they're doing isn't evil, I'm just not sure what it is.

Disclaimer: Former Intuit employee, though not on TurboTax.

But then wouldn't you be relying on the same thing? The only real way to disrupt it is through government.

I last used TaxAct in 2011, and would still be using it but for an increasingly complicated business situation which necessitates lots of accountant time (one benefit of which is that form manipulation is thrown in for free). It's great. If any of you are doing uncomplicated W-2 or small business returns which don't have a gazillion moving parts, give it a spin; it's much better than the price suggests.

Edit to add: I'd be remiss if I didn't note "Small software company in Iowa which doesn't have a blog, didn't invent Rails, and which > 90% of HN has never heard of before has > $100 million in annual revenue." It's a great time to be alive, isn't it?

57$ million of profit with just 150 employees too! I'll take 380k per head any day.

I also love TaxAct. For <$20 it allows me to do all sorts of small business deductions, k1s, capital gains, etc. I tried turbotax once and it was impossibly limited.

FWIW, we're taking on TurboTax in Canada, https://simpletax.ca.

The Canada Revenue Agency introduced an API this year that enables us to auto-fill much of the return: https://help.simpletax.ca/questions/how-to-use-afr.

When do you guys think you'll tackle Quebec? There's a tech scene here, tons of people would jump on-board instantly (as well as help develop it).

We added Federal Québec support this year and plan to add the provincial component next year: https://simpletax.ca/jobs.

Québec is a challenging province because of Revenu Québec and Bill 101.

It is, but I also think it is worth it. I will point the few accountants I know in your general direction.

I've used simple tax for my last two fillings and I must say kudos to you all on such a great product.

I've been using SimpleTax for the past four years and it's top-notch.

I've also been working on @suter for about that long to get them to make the years before 2012 available via SimpleTax, for those of us who have friends that have let their taxes slide for a long, long time. Hopefully one of these days the cost/benefit will work out.

Simple Tax is great. I've been using it for the past few years and it has worked flawlessly despite a relatively complicated tax situation. Kudos!

I've used TurboTax the past few years, and completely echo the sentiment expressed by others regarding the hidden charges that get tacked on when starting with a "free" return. Turned out that losing money on the stock market also cost me extra on preparation fees as well...

Partly because of the negative experiences with TurboTax, my co-founder and I just launched a company [1] in this space. We're actually "replacing" a TurboTax product that was recently discontinued called "Personal Pro". We're something of an "Uber" for tax preparation, acting as an online marketplace and platform for clients to get their taxes done by professionals. TurboTax had tried this for a few years but it appears they're betting on a continuing shift to DIY.

Has anyone had any experience here as a client of Personal Pro? Would love to hear how it went!

[1] - https://www.taxaroo.com

I use H&R Block TaxCut (going on 15 years). Costs about 39.99 a year for both my business and personal. Just keep an eye open for when it goes on sale (retail is 89.99 I believe).

I even dropped Quickbooks after their shit 2011 "upgrade". Worst fucking software I've ever used, but hey, it looks like it's WPF now!

I use a CPA for my taxes, since I never want to have to deal with an audit myself, but even if I wanted to do my own taxes, I would never use anything Intuit made, ever. My experience with Quicken has forever soured me on that company. Quicken was one of the worst programs I have ever used. Because of their need to sell a yearly version of it, the UI churn and addition of bugs, it got so bad it was nearly unusable for me. (I've been using Moneydancy for years and it's a great replacement for Quicken.)

> I use a CPA for my taxes, since I never want to have to deal with an audit myself,

You realize the doing of the taxes and the audit defense are two separate things, right? You can totally do your own taxes, and in the .01% chance you got audited - hire someone to help. It's not that scary of a thing...

TurboTax should focus on making long term paying customers happy. I did not file taxes in 2014 since I didn't really owe much and decided to put it off. I went last weekend to do my 2014 taxes before submitting 2015.

Turbotax told me I had to purchase the software for $60 even though I always have used their online service until 2013. A quick Google search and I found a free service that allowed me to get my 2014 taxes done in 30 minutes.

It was FreeTaxUsa if anyone else is in the same boat.

TurboTax and many others still have a free option: https://apps.irs.gov/app/freeFile/jsp/index.jsp

Not for previous years which was my whole point.

I've been using TaxACT ever since I became an "adult" and started filing my tax returns. I can't really compare it to TurboTax, which I've only used for business taxes, but I can't imagine anything else being easier or cheaper.

It amazes me how some people who have really simple tax forms still pay accountants..

Self-doubt and fear of getting audited leads many for paid second opinion.

>It amazes me how some people who have really simple tax forms still pay accountants..

My W2 is "simple" (single, no kids, etc.) but I give it to an accountant anyway. Costs $30 or so but the accountant knows certain tricks to maximize my tax return. Not illegal, but she knows how broad exemptions can be. For example, I work from home some days. I built a new computer. Technically, it's exempt because it's a work expense.

Would she be interested in another simple W2 customer? First year filing taxes. One job. No kids. Single.

How much do you reckon you save by going through an accountant instead of doing it yourself?

30 dollars is insanely cheap. And technically a new computer that is sometimes used to work from home is not a work expense unless you own your own business and use it >50% of the time.

She's betting you won't get audited.

> Technically, it's exempt because it's a work expense.

Ever play a game on it? Opps, it is no longer a work expense. Minor tax fraud is not exactly a "trick", anyone can do it!

> I can't imagine anything else being easier or cheaper.

If your tax forms are simple, the IRS could do it during your electronic filing (providing pre-filled forms with the information they already have and recomputing on the fly if e.g. you add dependents or non-salary income). That's how much of europe works.

Speaking of smaller rivals ... This guy provides free US federal tax forms for Excel : https://sites.google.com/site/excel1040/ ( old school shareware)

Fill in, print out, mail in. (Absolutely great if you have to file previous years returns to qualify for Obamacare subsidies.)

Turbo Tax tries to trick/force you into buying "audit protection": "Please enter your credit card number to submit form".

There's a fair bit of sleaze when you use TurboTax, at least this year:

* If you enter any IRA contributions, including Roth IRA, it suggests you update to Deluxe to get "your biggest refund" even though Roth IRA contributions don't qualify you for deductions.

* They plaster "e-filing your federal returns is free!" everywhere while obscuring the fact that they want $20 to help you e-file a state return

* The audit stuff you mentioned

* They no longer include one free state as they have in previous years, but this fact is not mentioned anywhere in the product description

Yeah, they really seem to have taken it up a notch this year.

I was presented with a refund that was only possible if I purchased a small business plan. When I declined, the UI reduced my refund by $2k and also said I'd have to re-enter my personal information it had saved from last year, basically penalizing me.

Curious, I went to H&R Block and began to file my current-year taxes from scratch. Lo and behold, HRB's basic service level calculated my full refund.

To add on to that, if you qualify for the free tier and used TurboTax in a previous year, they make a point of showing you all the information they can prefill from your last tax return. Then, they tell you that they will delete this information unless you upgrade to a paid version.

Way to reward loyal customers. I found another provider to do my taxes this year.

How marketing slipped this past QC is dumbfounding.

Maybe they know their little niche will face decline and they need to squeeze whatever they can out of it now.

Currently I use H&R and went that way after years of Turbo Tax simply for cost. Even now the F&S version was twenty bucks cheaper than the Turbo Tax equivalent. I figure many must think themselves locked into to continue with Turbo Tax.

I use H&R Block as well, because having an LLC it is substantially cheaper for me to do my business taxes than TurboTax.

I switched this year from TurboTax to FreeTaxUSA, as I we fed up paying $90 for a simple return, constantly getting up sold, and supporting an evil company. FreeTaxUSA was $12 for state and federal, and worked just fine if you understand how tax forms work and don't mind manually entering your 1099 data from your brokerage firm (turbotax can login to your broker in order to automatically populate this data, and is admittedly better at explaining the various questions that you need to answer to do your taxes). For this crowd, I highly recommend switching to something other than turbo tax.

I used them as well this year for the first time, because they seem to be the only filer that will file contracting income for free. I really liked their interface and the lack of upsells.

Due to a turbo tax bug my return was flagged for an audit. Not worth it. Never using it again.

Just curious...what year was this, and what was the bug?

2012 return, I removed a business expense from the return (I thought) but it still sent in the schedule claiming it to offset 1099 income.

It was really a UI bug... it's unclear when you start a segment/form that it is going to be part of your return even if you don't finish it or if you think you cancelled out of the wizard.

The core issue is the complicated tax code, but the UI that handles making the user aware of dependencies that a) must exist, b) should probably not exist is very weak... all dependencies are considered semi-optional and the only check is the "checking your return" step which did not flag the issue in my return.

I've been bitten by some poor TurboTax UI design before. It took me over an hour to figure out how to remove a particular form it had auto imported from the previous year.

But aside from that i've been pleased with them. But then again my taxes are very simple.

Curious, did you review your filing documents before submitting? Was it something inconspicuous?

I did not. I filed electronically. I might have caught it if I'd reviewed everything but it was a pretty complex return.

Fortunately the audit was simple once I realized what had happened and explained it, but it was overall very time consuming.

How does an audit work? Do you go to the IRS office? Is the conversation pleasant or adversarial?

It was fairly formal, but the auditor was friendly and professional. My return was flagged as part of an IRS program to audit the forms and overall tax collection effectiveness, so there was never any presumption that I'd tried to evade paying taxes.

I sent over a bunch of documentation and then eventually met with the auditor at the office for a few hours to finalize things.

If it wasn't for this story I would have used TurboTax again. I hope this backfires with free publicity for TaxAct and many people like me will switch this year.

Me too! I started using TurboTax years ago, and have always grudgingly paid the ever-increasing fees for the service. They're so slippery about state filing fees.

I estimate I'll be saving about $60 as a result of this article this year. For TurboTax, because I have a small mutual fund account, I have to upgrade to the "Premium" option just for those extra two or three boxes. H&R Block had similar pricing last year. TaxAct has a similar pricing strategy but much lower prices: instead of $50 for the federal and $40 for the state, it's just $15 each (or something like those numbers).

I'm thinking of it like this: TaxAct needs to afford their $200k houses in Iowa, while TurboTax needs to afford their $1M houses in the Valley.

> TurboTax needs to afford their $1M houses in the Valley.

FYI: While Intuit's main headquarters may be in Mtn View, TurboTax is primarily based in San Diego. That's not Iowa cheap, but it's somewhere in between.

My tax situation is complicated enough that I no longer want to do it myself, but I also can't find a good accountant easily.

Why isn't there a web service which will let you easily hire a good accountant online? There's absolutely no reason your accountant has to be local to you, yet all the information I've found online has been for finding a "local" professional.

I can't wait to see the Uberization of professional services.

I'm sorry to come in with a blatant promo, but we've just done exactly what you described! https://www.taxaroo.com.

We can match you with a preparer from anywhere in the country, we quote you a hard up-front price, and you interact with your preparer entirely online.

My co-founder (a CPA) and I just launched it this year, and we've received extremely strong interest from professional tax preparers. We actually did a Show HN a little bit ago, but didn't get much traction: https://news.ycombinator.com/item?id=11074466

Would love to hear your thoughts!

That's pretty much exactly what I was looking for and I'm giving a try right now.

It'd be nice to have some sort of ranking/rating system, or just some way of knowing that the preparer you recommended is qualified and good. Also it seems odd that nearly all the accountants you suggested were in CA despite me setting NY (not that that's a problem, it just seems odd).

That's awesome! We're excited to have you giving it a try.

Thanks for the feedback. I absolutely agree regarding the ranking/rating system. We've really just recently launched, so right now we just don't have many reviews. We do have the system in place, though, and we'll be building up those reviews.

Regarding the preparer locations - we plan to add the ability to sort/filter preparers, but we do only show you those that have specifically indicated that they can handle the type of returns required based on your quote. So, if you said you worked in NY and lived in NJ, the listed preparers will be able to handle both states. Same goes for rental property, capital gains, etc.

If you have any feedback or issues as you go, feel free to reach out to me directly at tim@taxaroo.com

The funny thing is, Intuit used to have a product called CPA Select that would connect you with a CPA to complete your taxes. It was even intelligent, so that if you'd started your return on TurboTax, the CPA could pick up right where you left off and didn't have to ask as many questions.

However I can't find it anymore, so I guess they discontinued it. Given how many people ask the same question you've asked, I guess they did a really bad job of getting the word out about it and didn't get adoption.

Yeah, they actually rebranded it as TurboTax Personal Pro before they discontinued it. It just shut down before this current tax season. We're picking up where they left off, with our company Taxaroo[1].

My understanding from the research we've been able to do is that there were a few issues:

- The branding was weird. TurboTax is supposed to be about DIY, so having a tax pro service under that was confusing. I spoke to several former preparers with Personal Pro who said they would get clients asking for technical support with TurboTax

- It started as "intrapreneurship" within Intuit, so it was a small team trying to grow it (not a top-down initiative). I suspect they had certain (large) targets they couldn't meet that were gates along the development process.

- I suspect ultimately, similar to above, it never became large enough to be interesting to Intuit, and it was likely cannibalizing some of their existing customers as it was.

[1] - https://www.taxaroo.com

I used TurboTax for years, but last year they messed me up so now I will never use them again. They wouldn't E-File my NY State tax form for my business because of some missing information on their side and kept saying it would be available soon until right before the deadline I gave up and switched to TaxAct in a hurry. Then I had to wait for Intuit to refund the cost of my software. It was a very unpleasant experience. I didn't like TaxAct as much because I was used to the Turbotax interface and it couldn't automatically pull in the numbers from the previous year, but I think it worked out OK in the end.

I have been using TaxAct for about 10 years. Thus far, I'm very happy with it.

There is one minor gripe that I have, they moved the location of the data files so the process of making a backup copy is a little different but that's easy to overcome once you're aware of it.

That, and they are started to get a little gimmicky with the upsells etc. Still, I enjoy using them for about 10 years too. Taxes done in about 1 beer - can't beat it!

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