Just don't outsource it. I'm sure USDS could have it ready in less than a year.
But did they also send any interest? Notice if you owe them, you also owe interest, unless you negotiate. If they owe you, you don't usually get the interest sent do you.
"I can take out $2k to fix the flooded basement and it'll cost me $200 in penalties? OK."
Source: I've filed a 1040X twice, both times in my favor (due to my own mistake I noticed on my own later). The IRS issued me a 1099-INT the next year for the interest they paid me. The rate was substantially above market!
Experiences like that aren't unique and are enough to put lots of people off trusting the government to be on their side for resolving disputes like this. Most people don't separate out their state or local authorities from the feds. It's all just "government" to them. And even the IRS can make life extremely stressful by auditing people who aren't all THAT rich to begin with (because people with real money have lawyers who make it expensive to go after them).
I, personally, think the solution is to make the federal (and state) bureaucracy more service oriented rather than treating everything like a punitive law enforcement role. But apparently not many people agree.
Sure, interest after 6 years can accumulate into a nice penalty sum on top of what is owed. If IRS ends up owing you, and they discover it 6 years later, would they send you the refund with an interest as well? I am guessing they won't.
They also sent me some form the year after that so I could declare the couple dollars interest I got from the IRS as income.
This is probably just a practical matter, because accounting for interest during the tax year would be complex/impossible because you would need to know when the various amounts of withholding exceeded the amount owed. I'm not even sure there is a single consistent way of doing this.
I am REALLY trying to do this on my own without an accountant. I think I got it right with 2019, but I will find in a few week how far off I am when I try to file.
I'd say my interaction feels like the IRS is just painting by numbers - they are just running the numbers and checking if you filed correctly or not. If you did not and the number is significant, they send you a letter.
you can overpay the IRS by the amount you would pay if the exceptions you are pretty sure apply actually didn't.
They will return the extra to you, and you lose the interest that money could have earned but gain the knowledge for next year of whether you can or can't do what you wanted to try. Depending on your specifics might be cheaper than a tax adviser.
Disclaimer: YMMV, I'm not a tax advisor, I pulled this out of my * * *, etc.
It was not a pleasant experience. So they knew about this account, all the years before and then all the years after. We got a letter that said I under-reported my income for some year 5 years prior. I mentions the account and the amount. Explains that since I didn't report that account, it's treated like normal income for that year I owe them $80k plus penalties.... I forget the exact wording but prison time was mentioned for tax evasion in the initial letter. Hired a lawyer, hired an account, refiled that year and then the subsequent years since the account found some more deductions. Then it took about 2 years to get it closed out. We'd write a letter, 3 weeks later we'd get a letter back the said they'd respond to our letter within 90 days. After like 9 months the accepted our new tax submission but insisted we pay the penalties. It took another 15 months for those to get waived. It is infuriating fighting over penalties that no longer apply.
I've underpaid precisely once, when I didn't know about qurterly reporting, and the so-called "penalty" was nothing unfair -- just the interest the money earned in my account instead of the IRS's.
The IRS already knows the numbers on W-2 forms because they get the same data from employers. Financial institutions also send them 1099s and other forms.
So the IRS already knows all the numbers. There's little point in making people manually re-enter the data.
The IRS should automatically fill in everything it knows about, and then let people add deductions and unreported income if they need to. It would make filing taxes almost a no-op for a lot of people.
The one time I underpayed I promptly received official letters from the federal and state governments giving me time to pay them with a very minor penalty (it was well under 1% due to the short time frame). It was simple and easy.
Ironically the Trump tax cuts made this even easier as the standard deduction was doubled making it much less attractive to itemize.
The ask is for the government to declare what it knows about a resident's taxes upfront, and then letting the tax-payer decide how much they want to invest in contesting the government's calculation. The conjecture is that for most people the need for contesting the government's math will not be needed. Currently, the part you call "responsibility" results in tax payers paying a third party millions of dollars every year. The expectation is that this waste of money can be largely avoided. How is that whining?
For example. I'm considering installing Solar Panels on my house. The entirety of the official IRS guidance (in the manuals) is this:
"Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed. The home doesn't have to be your main home."
So of course the first question you ask is "Ok, I have to fix my roof to install solar, and that appears to be covered. But does it only cover the part of the roof covered by the panels or does it cover the entire roof job? Does it cover the costs of only a basic roof job or a premium job? If it only covers the portion under the panels what is the procedure to prorate the costs?"
It wasn't clear to me so I called the IRS help line, figuring that this is their job. They are the ones that ultimately decide one way or the other if my deduction is valid or felony tax fraud. The official guidance from the help line is "We do not offer guidance on that issue." The money we are talking about isn't trivial either. It can amount to thousands of dollars, guessing wrong could theoretically mean actual jail time or massive fines if someone at the IRS decides to make an example of you.
Like WTF IRS. I'm trying to do right here and you're literally making it impossible.
I'm not a tax attorney, or an attorney at all, and so this isn't legal advice, but IME if you make an honest mistake, the IRS will usually send you a letter informing you of this and you'll get a chance to make it right.
E.g. For §25D
https://www.irs.gov/pub/irs-wd/201809003.pdf
https://www.irs.gov/pub/irs-wd/1130003.pdf
You also apparently did not review
https://www.irs.gov/pub/irs-drop/n-13-70.pdf
(Which even has a contact phone number for the author; call it! Worse that can happen is they point you somewhere else.)
If you google "IRC §25D" you'll find a wide variety of resources. In reality, what you'd likely do is a read a bit, and try to come to reasonable conclusion. If the tax amount at issue is substantial, try to find someone with expertise in the topic. Also try to take ideas to their logical conclusion. If 25% of your roof is solar panels, do you think the credit should apply to the cost of an entire new roof as well? It's a credit to encourage energy efficiency, not regular upkeep.
There are also specialized search engines. E.g. search for 25D at http://www.legalbitstream.com/irs_materials.asp?pl=i1
But then the documents they send are poorly documented, and very difficult to extract the required information from. The documents you want might also arrive after the annual filing deadline, or never.
And what they calculate for what you owe never includes optional means of reducing tax owed. So in some cases, the number you calculate for yourself can be both lower than theirs and yet still correct.
If you are in a business that includes a lot of cash transactions, or have to report additional income from sources that do not automatically report on a 1099 or w2, a FOIA request should be able to tell you what the IRS already knows about, and can prove that you earned. That will allow you to calculate how many patriotic brownie points you will earn for reporting those sources that aren't already noted in your file. As with many things related to government administration, be warned that if you choose to play stupid games, you might win stupid prizes.
the raise of the standard deduction; doubling; in effect made deductions simpler for many and transferred wealth back to those earning less
One caveat is that you can't attach forms you've been sent from your bank or employer or whatever; you have to transcribe your W-2, any 1099s, 8949s, etc. This can be tedious. I don't know if e.g. TurboTax somehow makes this better.
I am sure that there are people for whom free file fillable forms is not enough, but IMO these people should probably be working with a CPA.
[0]: https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
It is largely due to Republicans that we don't have such a program. Voting matters. https://priceonomics.com/the-stanford-professor-who-fought-t...
And Intuit did not lobby Republicans, it lobbied Grover Norquist.
>> That morning, Frommer polled his colleagues in the Assembly and found they were a vote short. No Republicans would vote for the bill, and some Democrats would vote ‘no’ too.
>> Once again, Intuit had blocked ReadyReturn.
It's definitely an Intuit thing, but being bought by Intuit seems to be a majority Republican thing.
That's not what the article says though. It says Intuit bought Grover Norquist, who then caused Republicans to vote against it (but not because of money they got).
And it says: "In 2007, Eric Cantor (a Republican leader) and Zoe Lofgren (a Democrat from Silicon Valley) had introduced a bill to ban return-free filing. Both received contributions from Inuit."
Bush campaigned on (among other things) rewriting and simplifying the tax code. Bush's executive order pushing that forward was signed January 2005: https://en.wikisource.org/wiki/Executive_Order_13369
Maybe Intuit's donations and lobbying were not caused by that, but doesn't it seem really strange that a popular initiative suddenly changed direction after a big pile of money was given to Republicans?
Politicians shouldn't be willing to change their stance for money. It's as much Intuit's fault as it is the people that took the money.
Intuit had just given $1 million to a Republican running to unseat John Chiang, an FTB member who supported ReadyReturn. The chair of the FTB, Steve Westly, says the support drummed up by Bankman gave them more political space to vote for a program they felt strongly about.
Let's not ignore the fact that the Republican platform fundamentally lines up closer to Intuit's business interests.
When Ronald Reagan was governor of California, he opposed a reform that would make paying taxes more seamless on the grounds that “paying taxes should hurt.”
...
That morning, Frommer polled his colleagues in the Assembly and found they were a vote short. No Republicans would vote for the bill, and some Democrats would vote ‘no’ too.
And that’s a lie:
https://www.tedcruz.org/postcard/
Paul Ryan also proposed something similar. However, Democrats opposed it. Basically if it’s simpler and cheaper taxes, Democrats cry foul. Auto filled forms with the current tax system is just lipstick on a pig.
Gerrymandering and voter purging matters
I think gerrymandering is an issue, but it's only a fraction of the reason why representation is not particularly proportional.
> I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or it they try, they will shortly be out of office.
> We do not influence the course of events by persuading people that we are right when we make what they regard as radical proposals. Rather, we exert influence by keeping options available when something has to be done at a time of crisis.
This is the /very/ important distinction. Our entire country was gerrymandered when they gave every state 2 votes in the senate. It's truly crazy how few Americans can sway the makeup of the senate/house/EC.
Edit: removed "(and 3 base in the house)" because that's not correct, I was mixing it up with the EC in my head.
That's not gerrymandering. That's the result of a federal system of government where every state is represented equally in the senate, and on the basis of population in the house.
It's fine if you don't like it, but it's not gerrymandering. Gerrymandering is manipulation of district boundaries. Senate representation of entire states is something else.
Except I don't get to vote on single issues like this. The US is a republic and I get to vote for leaders who supposedly represent the voting population to which I belong.
Problem is, there is never a viable representative who even somewhat closely matches my views on all issues - especially since the parties have so much influence in elections.
So it's not very helpful to just imply that I should simply vote for someone else.
Voter education is important for issues like this. If an idea becomes popular among a party's voters, the party will start to support that idea, which in turn influences their candidates.
I'm happy to pay my taxes. I'm very much NOT happy to collect all of my information and carry it to my accountant. And then be afraid that I forgot something.
In fact, if its the accountant's lobbying against this, I'd be happy to pay $400 (what I pay for tax prep) into an accountant retirement fund or something, just don't make me collect all the information that the IRS already has.
The federal government provides a lot of valuable services that private companies can’t or won’t do, but building something like that in a year isn’t one of them.
But how else would you charge millions for half broken and otherwise still shitty software and UIs? Sorry I'm super bitter because all the government sites are absolutely garbage and so many links for more information, explanations, other forms, etc, don't even work and makes dealing with anything related to the government the most frustrating experience.