I would not be surprised if articles like these are just another form of PR for tax preparation companies. The goal of these articles seem to be to convince us that taxes are complicated and difficult.
I would not be surprised if articles like these are just another form of PR for tax preparation companies. The goal of these articles seem to be to convince us that taxes are complicated and difficult.
I don't think it's a case of people making free tax filing is difficult. It genuinely is far far harder than it has to be.
The government can't automate it because a lot of these deductions are not things they can learn about looking at your W-2.
Tax preparation should be automatic and handled by the government, full stop.
I still think we're playing into the tax preparation industry by calling it daunting. I maintain the current process, while inefficient, is in fact easy for most Americans.
The IRS provides free fillable forms regardless of income level. The process for individuals is to first collect all of one's tax documents, read the instructions, and copy the numbers into the correct boxes. The forms calculate most of the math for you. If you make a mistake, the IRS will likely tell you. Not perfectly efficient, but far easier than I was led to believe.
The IRS probably could provide a more or less pre-filled form for many people. They have the information on most taxable income already. However, they dont. The reasons for this are complex, like the tax code, but mostly boil down to "politics".
[0] Here's the main tax form: https://www.irs.gov/pub/irs-pdf/f1040.pdf
For federal taxes, payroll systems typically transmit your data to our taxation office on each payrun, and then a few weeks (or sometimes, immediately) after the end of the financial year, your details are already in the system and you just need to hit the button to submit.
Our tax office has also tried to make it easier for individuals with simple requirements to keep records of work-related tax deductions, etc, such that you can use a mobile app to record them, and then it can also be imported into your return with a single click.
I think for many people - myself included - it's easy enough that you can (and I have) complete it on your phone on the way to work on July 1st (the first day of our income tax year, and the first day you can file for the prior year).
They absolutely are not - the crux of the issue is tax prep companies should be a very niche product - the government should provide an efile option. Since most people's taxes are fairly simple they should be automatically done for you so all you have to do is log in and approve of the autogenerated form. At the very, very least e-forms should be pre filled out with what the government already knows about you because your employer, bank, or brokerage reported to them.
All this standard in almost all other developed countries. It's absurd there is for profit companies calling the shots in this area.