TurboTax Tricked You into Paying to File Your Taxes (2019)
propublica.org
propublica.org
Last year however I got all the way to the end of the process where they revealed I made too much and had to pay. That felt extremely unethical, as the information required to come to that conclusion was available far earlier in the process.
And yet what am I going to do but use turbo tax again. The perceived risk and effort of using a non-automated system to fill them out doesn't seem worth the cost.
I'd suggest FreeTaxUSA.com as an alternative. Federal is always free, and state taxes are ~12/state. I don't have anything obscure about my taxes, and their forms indicate they can handle much more complicated situations than I have. I've used them for 3 years now, with no issues.
I will say their system is a bit clunky. I feel like I get in loops sometimes where I go through already filled in information and wish I could just jump to the next section. I wish they would give me more questions on each page so I can better understand how a response to one question filters through down the line.
If you want to get some of your pre-paid taxes back, you will have to file but the tax office doesn't care if you don't.
Fun fact, they called the government provided tax software ELSTER which in German is also the name of a bird (Eurasian magpie) which is also known as the "thieving magpie". Who said the government didn't have a sense of humor!
For instance, there's been legislation where the IRS would simply tell you how much you owe and you pay it or dispute it. The IRS already know this amount, because this is what eventually happens.
Turbotax successfully lobbied for its defeat. It explicitly spends large amounts of money to complicate and convolute the system and structure it like a classroom quiz.
It is incredibly arcane, and in some cases individuals holding publicly traded assets are legally required to file income tax in all 50 states.
https://www.propublica.org/article/filing-taxes-could-be-fre...
California piloted a pre-filled tax return system (similar to Sweden and Australias, that the OP was talking about) called ReadyReturn in 2005 with 51,000 people.
Intuit then spent $3 million to smash it. They lobbied and then sued the state to stop the program. They are also profoundly incompetent technologists. There's an entire subreddit dedicated to how broken their stuff is (https://www.reddit.com/r/TurboTax/top/?t=all)
What did the participants of ReadyReturn, the pre-fille forms, think of the government program that Intuit killed?
"99% stated they were satisfied with ReadyReturn, 97% stated this is the type of service government should provide, 96% stated it was more convenient than how they filed in the past, 95% stated it saved them time, and 98% stated they would use it again"
Once again private interests sabotage and destroy the public will.
The line of "the reason taxes are so difficult..." is from sheer propaganda shills. Tax simplification has happened, it worked, and Intuit killed it every time. The reason is Intuit. They are the buggy whip industry that won. Shameless grifters that intentionally disrupt people's lives for profit.
Use another service. Any listed on the IRS website: https://apps.irs.gov/app/freeFile/browse-all-offers ... Never give Intuit a dime and click on every ad you see from them.
That said, there are a lot of challenges to such a program.
Ready return was limited to people who were single, no-dependents, standard-deduction, only-wage-income, one-employer, with a maximum adjusted gross income of $139,917
This is great for a number of people and should exist!
That said, if you fall into this category, your 1040 should take 15 minutes to file by paper.
Where automated systems break down is handling more complex scenarios. Selection of deductions, pass through business income and losses, charitable donations, corporate investment vehicles, ect.
Many of this things require individuals to make choices at the time of filing. This is challenging to automate.
There are some exceptions to this depending on business size i think but the vast majority of the data is in the feds hands.
That's one of the things I never understood, the US is only country im aware of where you have to file if you're a citizen, even if you're a resident overseas.
HMRC's website in the UK is far from perfect, but its tax form covering all UK personal taxes has the features people appear to be paying for with TurboTax (Q&A format, most sections being optional, references to industry specific deductions, guidance notes) baked in.
If your taxes are "easy" in the UK they come out of your payroll without you filing a return.
After learning about how TurboTax lobbies to make filing more difficult, I swore I would not use them any longer. I also take everything opportunity to let people know about TurboTax's lobbying.
So far freetaxusa.com seems better than TurboTax IMO. It's cleaner and to the point. No unnecessary animations or any of that nonsense.
LOL I just tried to sign up and they rejected me because my personal email is on a .ch domain:
The Email Address can't be a foreign email address ending with .ch.
The interface is fairly minimal. The workflow mirrors the questions/boxes on the IRS forms/instructions, a very helpful feature in my situation since I could easily cross-reference the relevant IRS publications when necessary. They provide excerpts from the documents as you go, which is all I needed in many instances. Unlike TurboTax, the prepared forms were actually correct (to the best of my knowledge, I am not a tax lawyer).
Simple, cheap, reliable. Would and do recommend.
EDIT: Story is related to last year, I plan to use them again this year.
Once my bookmarks are clear, I know I'm good to submit.
1. reporting scholarship income (goes on the line beside box 1 and nowhere else), and 2. state taxes are not supported, and my state does not have an equivalent service.
An example is figuring out whether I would owe taxes on the gain from the sale of a primary residence I owned for less than 2 years. Figuring that out manually took some googling, finding an IRS guide, reading multiple pages of regulations along with exceptions and determining where I stood.
Another is determining HSA contribution limits when my wife and I were in individual HDHP plans part of the year, and a family plan the remainder.
0: https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
The whole thing is a mess because TurboTax and H&R Block and the like want to stay in business. If the process is too easy then the middlemen won't survive.
(State taxes are a different matter; I've paid Illinois and Michigan taxes recently, and they do provide an easy and obvious way to e-file directly with the state.)
There are no income exclusions or anything. It is possible you will be unable to use it if you have to use some really obscure forms, but it does have all the forms that paid Turbo Tax can file for you. You also might not be able to use it if you have one of those weird tax situations where the IRS instructs you to write a message across the top of your 1040.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
It’s all electronic. You get an email confirmation.
Interesting, I use TaxHawk (parent company to FreeTaxUSA, same software) and I find their UI excellent.
I had to quit turbotax because one year I was a 1099 worker and every year since, it pushes me to go with their "small business edition." Each year it got harder to avoid "upgrading."
Seriously, just do it. Quitting TT is so much easier than quitting anything else.
Things like backdoor Roth contributions (which aren't that exotic, tbh) were very confusing in credit karma, to the point where I actually did my taxes with another service just to verify that the calculations were correct, then submitted with CK. I found several mistakes in the CK results that were due to bad/confusing UI.
You likely won't hit this problem if you're just doing a 1040EZ or 1040 with standard deduction, no stock sales, etc. But if you have any complications...sometimes there's a reason to pay for software.
(definitely not defending Intuit here, though. Tricking people into paying is not cool.)
> Intuit Inc., owner of the popular TurboTax DIY tax preparation service, has moved forward with its $8.1 billion acquisition of Credit Karma, Inc., after satisfying the government’s requirement that Credit Karma divest its tax preparation business.
https://www.natlawreview.com/article/anticompetitive-concern...
Divest their tax prep business? I just did my taxes on creditkarma, and it was the same website that was trying to market me credit cards that i prepared the taxes on.
AHA, that article has a date "January 3, 2021", so I guess still in progress?
But ok, divest their tax prep business... the WAY CK was providing free tax prep was by funding it with the rest of their portfolio, the credit card marketing and such. The tax prep got people into their system (and possibly got their data into their system, I'm not sure how much was opt-in or opt-out).
Divest their tax prep business? Into it's own business? It won't possibly be able to provide the service for free anymore right? They will probably quickly go out of business.
I don't know how the heck anti-trust regulators think this did anything positive. Intuit one way or another succesfully eliminated the competition from free creditkarma tax prep. Gah.
That just makes me wonder what Credit Karma is getting out of the deal.
In several years of using it, they've never emailed me advertising anything, and while they're obviously sharing my info with credit card companies and banks, I haven't gotten any marketing from them either. If you don't care about the recommendations, as I don't, you can use it for your taxes and never think about it the rest of the year.
This would all be in addition to what they knew about your credit score or anything else you input on the other parts of their platform.
But as others pointed out, that part of CK got split off when Intuit bought them.
The DOJ forced them to sell that whole unit if they wanted to be acquired because of the super obvious data mining consolidation
After that been using CreditKarmaTax; no shenanigans.
At least look into the options. Credit Karma Tax, FreeTaxUSA, 1040.com - there's a bunch of stuff out there made by companies that don't actively try to make the IRS less functional.
Credit Karma was free for filing both state and federal though they did make two attempts to get me to install Cash App, both of which I declined.
Unless your finances are extremely complicated, it's fairly easy to do it yourself.
I've done all these things painlessly with regular tax software. I've also tried a professional CPA once, and he was useless. Just sat there asking me every question that the software normally would, and then typing my answers into his software. Nice guy, but not worth $400 compared to $50 software.
Unless you know exactly what your cost basis is, yes. It gets complicated with construction loans, HELOCs, refinances, having lived in a property for quite a while before renting, etc.
But yes, Accountants can help you evade taxes in ways unlikely to be audited or caught.
I would say it only gets really complicated once you venture into dealing with equity and AMT and stuff.
It’s funny though that people will scour the web and clip coupons to save money, but they won’t research how their biggest expense (tax) is calculated.
So does deal finding and coupon clipping, which is what the parent was comparing to.
If you have just a salary, no mortgage, and no stock/equity transactions, nothing has changed in 20 years, and it takes all of 10 minutes to fill the Federal form out (and I'm being generous). Every once in a while there is some extra credit, but it's usually prominently advertised. A simple hack is to look at the previous year's tax form and compare to see if anything has changed, and look up the guide related to those entries.
If you do basic stock transactions (RSU, SPP, buy and sell), then it's a bit more pain, but still easy.
Deductions are things one can easily miss, but even then, once you figure it out, you just have to keep an eye out for changes to deductions. The recent tax changes screwed it all up (although they also made taxes overall easier for those not in high COL states), but the usual deductions to watch out for are mortgage interest, state taxes, property taxes, and charitable donations.
If you have other things going on (side business, etc), then I would suggest paying for a CPA.
Worst case, just plug the numbers into TT and see if what you get is the same. If they imply you can get more, then pay someone to do it for you.
I know people like to think it will take a lot of effort, but at least for my salary, if I count the hours it takes for me to do all this, it's always cheaper than paying a CPA.
It isn't really - a lobbyist is just exercising the free speech available to all individuals - they just happen to be doing it on behalf of a group of individuals.
I'm purposefully ignoring the whole "corporations are people" aspect because that's a different discussion. But, what you seem to be arguing is that I cannot gather with my neighbors, select a person from the group, and send them to DC to talk to our Congressperson about whatever topic interests us. Instead, we all have to go individually?
Edit - I actually do find the current lobbying situation to be problematic, but it mostly relates to campaign donations. It's not as simple as lobbying (by itself) is bad.
Like I said (in the edit), the problem is campaign financing, not lobbying. The two are related in the US, but we can probably fix financing without impeding free speech.
And lobbyists are free to far, far, far out-contribute your block, rendering it effectively powerless.
Why do you seem okay with that?
Right... but only one side of that operation is the problem!
It's like saying 'a glass of milk + cyanide capsule = death' and blaming the glass of milk!
Lobbying is a neccesary and healthy part of a functioning democracy. Do you want decisions about you and your life taken with no input from you apart from voting once every few years?
This is comparing a gun to a nuke. Yes, you could kill just as many people with a gun, but the nuke is hyper efficient at the job. They're not the same.
Lobbyists may be akin to a policy nuke. They have an arsenal of tools from influence, to money, to unethical and sometimes illegal behavior. Their positions have become so effective that it drowns out most others.
edit: Another way to think about it is that Lobbyists have changed, i think, from the voice of a group of people to a voice instead of a group of people. Leaving many people voiceless in the face of insane capital and influence.
I'm not convinced this is true. If a lobbyist is not speaking on behalf of people, who are they speaking for? After all, corporations are just legal entities composed of people - with stockholders/owners, a BoD, employees, and customers.
The simple act of Joe Lobbyist meeting Congresswoman Schmidt for a coffee and chat about some topic isn't a problem. The problem is that with that cup of coffee comes an implied donation on behalf of the people Joe represents. The problem is campaign finance, not talking to our representatives.
Organizing millions of poor people to financially compete with lobbyist funds seems a losing battle.
The lobbyist, who used to be that senator's chief of staff definitely does......
As an example why can't I who don't live in your state go to your representative and get him to act in my best interests? Why would it be wrong for your representative to act in my interest instead of yours?
hence the amount of wealth that politicians, their family which usually means children, gain while they are in office is phenomenal and can lead to positions at state and city levels. the real one percent are these upper end politicians and bureaucrats who just operate with near impunity because its basically impossible to follow all the trails or because much of it has been made legal; usually by making laws that say one thing and do another.
If the government wanted to put a back door in encryption, who is it that tells them why that’s a bad idea? Quite often, lobbyists (in this case on Behalf of companies whose security would be compromised). Industries organize lobbyists to advocate for themselves because politicians can’t possibly understand all the ramifications of the laws they pass.
There are definitely issues with organized lobbying but the alternatives are lacking.
The US is currently permissive. Legalized corruption.
Oh, that's easy. Lobbying is legal, bribery isn't.
The 1st Amendment:
Congress shall make no law [...] abridging [...] the right of the people peaceably to assemble, and to petition the government for a redress of grievances.
This is the core idea, but obviously the concept of "lobbying" embodies a lot more than just assembly and petitioning in current usage.
I do think it is important to realize that we do have a right to advocate for change. Laws that regulate or curtain "lobbying" need to be carefully crafted to avoid infringing on these rights.
It is illegal to bribe a cop. It doesn't seem like "a clever loophole" to buy the police department new equipment - it still seems like a bribe to me.
There's no legal reason we can't craft law to be different than it currently is, closing these "loopholes". Campaign finance reform (publicly financing campaigns and limiting campaign spending) would be a great step.
Of course. I didn't say differently. But lots of people don't understand the conceptual relationship to "lobbying" and the 1st amendment and I thought it was worth pointing that out.
As you noted by your statues example, protests can be quite effective.
Simple, easy, and free tax submission is pretty universally believed to be a good thing. Except from lobbyists... that's what I meant to convey.
There was also a subtle comment about Us vs Them politically being harmful, where Us vs Them (lobbyists) is likely helpful.
There are a lot of deductions a taxpayer can use that the IRS doesn't know about. Charity donations are probably the most common, but also business expenses and medical expenses. Teachers who spend their own money to buy class supplies could and should be able to submit those receipts and get a deduction.
That can't be easily simplified. The IRS could eliminate those deductions which would make a lot of people unhappy, or there could be some kind of complete retail overhaul where a teacher would be able to tag items as 'deductions' at the time of purchase, and the vendor would send all those tags to the IRS.
The IRS could just send out bills assuming no deductions, and teachers could then add supplemental information on business expense, but ( the argument goes ) teachers might not know they can, or they might not feel it's worth their effort, and so the end result is that a lot of taxpayers overpay.
Disclaimer - I have worked on tax software, but I wouldn't shed any tears if the industry went down. I'm relaying opinions I've gotten from coworkers at the time.
No, they shouldn’t. The class supplies should be paid for by the government, not the teacher.
Deductions need to be completely removed, and replaced with cash. Government should have to account for whatever it wants to incentivize.
Also, I think few teachers probably get past the standard deduction amounts in order to make sense for them to itemize everything in order to get a deduction for classroom supplies.
A lot of the blame goes ( justifiably ) at private companies and their lobbyists, but even without these vested interests there's a lot of complexity that cannot be easily removed
There's nothing logistically difficult about removing the complexity of deductions/exemptions/credits, it's a few sentences typed into a law voted in by the legislature.
The difficult is all in the politics since costs of various subsidies and incentives granted via deductions/exemptions/credits become transparent and part of the government budget.
A turbo-tax like interface that covered say, 80% of the working public perfectly well and was free or really cheap is certainly in the realm of possibility.
Then, why wouldn't the IRS be able to offer that same functionality? The whole idea that "the IRS can't know" about this type of deduction feels like a lie to me, but I don't know enough to be sure.
It's also the answer to why we have a lot of nice things. It's how experts can get their voices heard over popular beliefs when laws are created. Without this lobbying bills on complex issues would have little chance of being useful, since without experts lobbying for nuances those crafting the laws would not have the expertise to create good laws.
Lobbying groups include electoral reform groups, small business groups, human rights groups, child healthcare groups, and on and on.
The second biggest lobbiest by spending in 2019 [1] was lobbying for immigration, foreign relations, and disaster planning. These seems like reasonably good things for society.
Lumping all lobbying into one simple basket is terribly shortsighted.
[1] https://www.opensecrets.org/federal-lobbying/top-spenders?cy...
Then I write all the numbers down and file for free on Free File Fillable Forms.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
Thanks H&R!
If your state doesn't have income tax you're done, you pay nothing. If you want to continue on to e-file your state, it's only $15 (currently on sale for $13). If you want to do your state's taxes any other way (their website?), no problem, just stop after e-filing your federal return, you still pay nothing.
Taxhawk is a company that has been around for 20 years, they are authorized to e-file with the IRS, and their software is (in my subjective opinion) excellent. Been using them for a decade. I am not affiliated with the company, but I advocate for TaxHawk on HN all the time, because I'm extremely satisfied with it and apparently not many people know it's an option. My taxes are not straightforward either. (multiple W2s, 1099-INTs, 1099-DIVs, 1099-Bs, and business income)
Thanks H&R!
https://www.mass.gov/how-to/explore-filing-options-for-massa...
https://www2.illinois.gov/rev/programs/mytax/Pages/il-1040.a...
https://portal.ct.gov/DRS/TSC/TSC-Online
https://www.njportal.com/Taxation/NJ1040/
https://www.ftb.ca.gov/file/ways-to-file/online/calfile/inde...
https://www.oregon.gov/dor/programs/individuals/Pages/free-f...
I used the online form a couple years ago and the process was so annoying compared to freetaxusa that I will gladly pay the $12 to avoid dealing with the Oregon.gov site.
It was on Patriot Act with Hasan Minhaj
Given the popularity of it, I can't help but wonder if this is one of the many reasons why (aka, they pissed off too many of the big powerful folks).
For some reason, the TurboTax version of FreeFile is now limited to below $33000 AGI. It wasn't last year. The FreeFile from other companies has the limit of $72000, which is what I thought the law said it has to be. I am not sure how that is possible, but I'm sure it took some extensive lawyering and lobbying by Intuit.
Perhaps the agreement is that only some software provider has to be available, not necessarily every software provider.
Perhaps I do not need TurboTax, but I know that the laws at the state and federal level change every year and that I have no real ability to track any of this, but the penalties can be high for failure. I rarely understand tax jargon, in any case; I always feel like I am on the back foot of some "clever" debate team tactic of convenient definitions.
So, aside from just the lobbying aspect -- which is not trivial -- I would say that the general terror of the IRS (Al Capone, after all, fell to them), the shifting territories of tax law, and the jargon barriers also contribute to keeping TurboTax in business.
Perhaps you are not fussed by the prospect, but I do not ever want to get a letter from the IRS telling me I need to pay them ten thousand dollars.
The answer is I don't. Even tax experts seem to make mistakes, as pointed out. Faced with that, I tread lightly. Remember, the IRS has worked very, very hard to get a certain kind of reputation and there are knock-on effects from that.
Also, we buy it at Costco for a 5-seat license and split it amongst family. That takes the cost down to something much more edible.
Been considering hiring a professional because you always hear that they are worth their weight in gold. (Our tax situation is not particularly complicated though, typical Silicon Valley married homeowners).
Well, last year, did everything in turbotax, said we were short by like 15k. Believable, BTDT before, but didn't want to believe it. Hired an accountant on a recommendation. She did all our stuff, came up with a bill, turned out we owned $500 more than TurboTax said.
Okay, paid it.
2 months later, get a check from the IRS, we overpaid by $500. Yup, TurboTax had it right all along!
Tax professionals may be worth their weight in gold if you can rearrange your finances to do things they recommend to reduce your taxes. If you're just a regular person (perhaps highly compensated), there's not that much to do. Especially with the cap on State and Local Tax deduction, there's not much room for a professional to ask about deductable things you might have forgotten, because even if you have them, they will likely not add up to the standard deduction.
Now, if you own a business that makes a lot of profit, a professional should be able to advise you on how to reduce or delay tax on that. There's lots of options there, and they might not be apparent.
Should I feel old if I didn't know that?
https://www.cbc.ca/radio/costofliving/indigenous-nations-and...
It might still be the best of the available options, but the days where it is an obvious choice are over unfortunately.
As noted, SimpleTax can mine your data where previously (pre-WS) it did not.
A list of NETFILE-certified software is available from the CRA, though as I type this it has not been updated for the 2020 tax year yet:
* https://www.canada.ca/en/revenue-agency/services/e-services/...
I've mostly used StudioTax, which is a client run locally: in the past it's been donation-supported, but starting this year you will have to pay CA$ 15 to upload your data. The 2020 version is currently available (but not yet officially certified). It allows you to log into your CRA account and fetch all the available T3/4/5 data that has been uploaded by financial institutions.
I've been using Studiotax free for years... this year they've introduced a fee to use it... so now I'm reconsidering my (off-line) options again.
Perhaps if this year we revolted and submitted paper tax forms then maybe the CRA/IRS would re-consider providing their own online system!!
2. It's actually pretty easy to use the electronic forms or just use paper.
3. Tax software is good, and a competent tax preparer is even better.
Why we have a tax system which creates so much work there is an entire set of industries (tech, tax preparers, etc) built around it just to pay the government is kind of loony...
Ironically in reality this is actually pretty much the opposite of taxpayer protection and amounts to additional tax paid to private corporations on TOP of our existing taxes.
[1]: https://en.wikipedia.org/wiki/Grover_Norquist [2]: https://en.wikipedia.org/wiki/Americans_for_Tax_Reform#Taxpa...
However - as Ted Cruz showed everyone - being able to do your taxes on something the size of a postcard is only possible if just about every specific deduction is cut out.
Once people saw that, it was DoA.
Also, while I'm here, can someone explain what was supposed to replace the IRS in Cruz's plan? (State Governments?) I mean, somebody has to administer and manage this process, however simple it might be.
At that point, you just sign the form and send it back.
It's also unlikely to happen because a dedicated faction in the GOP specifically want taxes to be as annoying as possible to make people resent it more.
You'll want to be very clear about which of his ideas "make sense." You're talking about the guy who equates estate taxes with the Holocaust.
https://www.npr.org/templates/story/story.php?storyId=145298...
https://www.washingtonpost.com/archive/opinions/2004/01/06/o...
> Also, while I'm here, can someone explain what was supposed to replace the IRS in Cruz's plan?
It wasn't meant to be good government, or even tenable government. It was an idea designed to appeal to stupid people. That is all.
(The failure of such a stupid idea to actually work or be implementable could be spun politically. The spin wouldn't have to be especially plausible, either, because, you know... stupid people)
My mistake.
Part of the reason is because more tax rules means more loopholes to take advantage of.
This is an area where there could be a lot of improvement. Many people work at least partially as a contractor and have to self-report and make payments. The self-reporting and making payments is where a lot of the problems start with automation. Employees? Mostly solved except for where people do stuff that isn't paid with employment wages.
"Part of the reason is because more tax rules means more loopholes to take advantage of."
Loopholes are often deliberate ways of encouraging behavior with money. For example, an exemption on mortgage interest lets people avoid paying tax on most of their spend on their mortgage. Why? To encourage people to buy homes. Guess what, people with big, expensive homes with large mortgage payments benefit the most. Another was the infamous Hummer credit in the 90s and 00s where if you bought a big SUV or truck, you could take 100% depreciation on it in the first year. So people bought lots of Ford Excursions, Hummer H2s and other gigantic gas guzzlers. It did help the US auto industry.
I don’t buy this. There is an easy way to encourage behavior with money. Give people money in exchange for the behavior.
If the goal is to encourage someone to buy a house, then pay them to buy a house.
The reason politicians don’t do this is because this lays bare all the costs associated with the incentive. Whereas with tax loopholes, they can understate it using whatever assumptions they want.
The tax deduction method allows for loopholes to open up, as well as discrimination by way of making it complicated, and understatement of costs. A straight cash incentive, on the other hand, reduces the avenues of corruption, has a transparent cost, and does the job just as well.
This is a good thing, exactly the type of corruption that needs to be eliminated.
>For example, if I take deductions for my dependents on my w-2, I have less money taken out of my paycheck. The other way around, no loopholes, would a) discourage having dependents
The other way around would be to pay you for having dependents. I do not see how that would discourage having dependents.
>and b) would force me to act as the bank for the government.
I do not understand what acting as a bank for the government means.
I'm not sure this is corruption. Encouraging people to buy a home instead of rent is largely viewed as a positive thing. Helping people afford to have kids is a good thing. Encouraging people to favor green energy is a good thing. Encouraging people to buy a giant SUV like we did in the 90s and 00s? Not as good.
"I do not understand what acting as a bank for the government means."
I would pay more in tax (no deduction) and have to wait for the government to pay me for the kids. They would be taking a loan out of every paycheck. Incidentally, the current income tax system where employers withhold and you get a refund for overpayment is a form of banking on taxpayers. Allowing people with dependents to declare them and reduce the amount withheld is very helpful to lots of not-so-wealthy people's personal cash flow.
A mortgage interest tax deduction rewards people who purchase a home by borrowing money. The more you borrow, the more you are rewarded. It does not reward purchasing a home. It also disproportionately rewards people who are able to borrow money for a home, and punishes those who cannot, such as descendants of slaves who may not have grown up with the necessary resources to establish the necessary income and credit in order to borrow. Or get past the redlining. And last, but not least, it's a handout to the mortgage banking industry who now has a subsidy for the product they sell.
This simple example shows how easily deductions are corrupted. It's not even really encouraging people to buy a home, as that would have been a simple deduction for a home's purchase price. It's encouraging people to borrow to buy a home.
That's all leaving aside the separate debate of whether or not the government should be rewarding home purchases or not.
>Helping people afford to have kids is a good thing.
How is a deduction/credit on taxes anywhere near the optimal way to achieve this? The government can simply give people cash if it wanted to. The government could provide better parental leave if it wanted to. The government could provide healthcare if it wanted to. A $2k tax credit and a $3k deduction for childcare is far down the list of things that make kids affordable.
>Encouraging people to favor green energy is a good thing.
Or we could be more straightforward and tax fossil fuels for the externalities they cause, thereby raising the price of fossil fuels and making green energy a more sensible option to choose. But that would be bad for our resource consumption driven economy that depends on increasing consumption to meet the budgeted increases in revenues to pay for the ever accumulating debt.
>I would pay more in tax (no deduction) and have to wait for the government to pay me for the kids. They would be taking a loan out of every paycheck. Incidentally, the current income tax system where employers withhold and you get a refund for overpayment is a form of banking on taxpayers. Allowing people with dependents to declare them and reduce the amount withheld is very helpful to lots of not-so-wealthy people's personal cash flow.
This is all clerical. There's no reason the government can't electronically deposit money into your account every week or 2 weeks.
What makes it possible is a comprehensive national ID system. Which has advantages and disadvantages.
Which, if it works for you, is both free and open source.
Curious tech choices. Coded in C. Deal with raw column numbers as the paper form instead of meaningful aliases. guess it makes it easier to implement at first from the forms but might make it harder when the form updates/add lines.
uses a special format raw text file as input. this is a pragmatic as it can get i guess.
some bold choices overall. i think i like it.
> This will mark the 18th consecutive year that OTS has provided updated tax programs.
Given this implies the first version was 18 years ago, the choice of using C might not, at that time, have seemed as odd as it does now in 2021.
I'm sure its still terrible but this info is a little out of date.
For starters, there's so much complexity to it that unless you use software like this or a CPA it's almost certainly the case you're leaving money on the table. And it also means that if you're a very high net worth individual there are a lot of loopholes that allow you to defer or significantly reduce your tax burden.
I don't want to do it alone. If enough people gather together, put some skin in the game, and form a community to make it happen, we can pull it off.
I know the math works and how to build the tech. But building the community is the hard part.
It would be great to get an open-source tax library, split into two parts. One can be the library which does the calculations, the other can be any graphical interface for users to use.
The fees TurboTax charges are worth it to me because I don't want to have to sit at the kitchen table every year and hope that I understand the instructions well enough to fill out all the necessary forms. I can't Unit Test my tax forms. But TurboTax can (and does) and thus it's worth it to me to pay a yearly fee for the convenience. They keep up with all the tax code changes and I complete a 45-minute survey once a year. Boom. Done.
I don't like coughing up the few hundred dollars every year but I'm also lucky enough to not have to think about it much other than on whatever weekend afternoon I choose to slog through the endless prompts.
The IRS could have made it much more specific as to how these "free" solutions can be presented. They did not. Why not?
Each time the journalist/researcher selected a links, they wereclearly marked with "ad" as advertisement. Why?
I have used this for many years to prepare and file online. It is FREE and uses the IRS forms. No annoying wizards or questions. Anyone can use it, no limitations.
It drives me up the wall that we as a country have to all do this stupid homework assignment every year.
But, having to spend a day or more every March, or pay a CPA a few hundred dollars, is infuriating. My taxes aren't that complicated - two upper middle class salaries, a normal (for dense suburb) mortgage, and no kid at home any more (he flew the coop 3 years ago).
Outside of the years we were impacted by AMT (a whole other rant), the IRS knows exactly what we earn, what we've paid to date, and determining our mortgage obligation should be trivial (submission from bank to IRS or similar). They should just mail me an index card that says "your good!" or "you still owe $1200" or similar and that's that.
It's absurd.
If the US wants to improve its image abroad, joining the rest of the world (well, except Eritrea....) and doing residency-based taxation would mean that whenever a US expat is asked what they think about the US (e.g. by someone looking to go there for work opportunity, education), they wouldn't unleash a littany of dire warnings about the pesky taxation issues. My answer is always "yeah if it'll help your career I guess get in the H1B lottery, but be very careful to not pick up that green card or you'll be royally screwed for a looong time to come".
For what it's worth, I've had to fill out tax assessment forms of greater-or-lesser complexity in all of them. The US is certainly the worst, but the trope that "all other major economies just take care of the tax for you" isn't exactly right.
... is quoted literally from the original post on this thread.
https://slate.com/business/2012/04/grover-norquist-and-h-r-b...
I was hoping for at least a poll of some sort.
Bribery (lobbying) should be banned - for all political parties.
If you look directly on the Congress website, there are 20 Democratic cosponsors and 8 Republican cosponsors in the House for the Taxpayer First Act: https://www.congress.gov/bill/116th-congress/house-bill/3151...
I do agree that most people really don't need it, and they need to simply report their wages and submit an 1040EZ.
It's about their unethical reneging on the agreement they made, where they agreed to provide a free product in exchange for the government not providing one - but it's a free product carefully hidden with the darkest of dark patterns.
> The fifth link, a government site, looked like it would take us to the actual Free File program.
>
> But not so fast! When we clicked, and then clicked through to a second page, we found a whole new set of choices and restrictions. Each of the 12 companies that have signed on to the deal with the IRS offer their own Free File product. But they all have different requirements based on age, income and location.
But I don't, so...they didn't trick me?
[1] https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
The article leaves this out.
Yes, it would be great if the IRS were able to provide software as slick as Intuit's to assist with this, and it would also be nice if Intuit didn't use so many dark patterns, and at the same time they've built a product that makes self-filing far easier to do correctly than any other option out there.
> If you choose Free File Fillable Forms as your Free File option, you should be comfortable doing your own taxes. Limitations with Free File Fillable Forms include:
> It won't give you guidance about which forms to use or help with your tax situation
> It only performs basic calculations and doesn't provide extensive error checking
> It will only file your federal return for the current tax year
> No state tax return option is available
I don't want to "do my own taxes". That's the whole point of paying for a service that makes it easier. And also it's not even available right now:
> Free File Fillable Forms reopens Feb. 12, 2021 at noon ET.
What I mean by that is that even for people who were eligible for doing their taxes for free last year, they offered additional services like e-file (literally sending a file akin to the effort and cost of sending an email) at some ridiculous price, and then for those having to do state taxes both charging for the state return software (understandible) and the state e-file … but at rates that ended up tallying up to higher than if the "free" filer had just bought Trubotax with state and free e-file at some discounter or in some cases even at higher rates than the full price.
What a lot of people are not aware of is just how utterly evil that these "tax preparer" companies are in their practices, they aren't just unethical or even corrupt, they are deliberately evil and even criminal in their methods. The leaked emails from TurboTax illustrate that. They actively sabotage efforts to, e.g., make it possible for citizens to simply upload the tax return or even just the tax form output from the software so that the utter nonsense e-file has to be used that the companies have a gate around.
It's just one of the many ways and things that are modern forms of company stores, traps that are intentionally and deliberately constructed to ensnare and entrap and pilfer from people for little to no value. It's quite literally BILLIIONS of dollars that are drained from the middle and lower classes to file taxes … information the IRS already has.
Taxes-as-funding can be simple. Those are revenue type conversations that also happen in every business on earth.
Taxes-as-behavior-modification is where things get truly convoluted because you have different groups tacking on their own dis/incentives (so the thing as a whole will lack cohesion) and the number of edge cases simply explodes. "We want A, but not B, but A->B so we'll add a new rule, but that..."