Killing TurboTax

At some point they are going to calculate what you owe based on what you provide them and what is reported to them, no matter what.

Laws that authorize "auto tax" can also come with extra reporting requirements.

Tax prep software is worth every penny IMO, but they do nickel-and-dime you for many pretty simple situations.

Most people file somewhat simple returns. We can get most people using "Auto-tax", where basically the IRS sends you some information to check over, including what you are going to get back or owe. We can do this for all of the commonly used forms, not just the EZ forms. Most folks aren't subject to "subjective" taxes.

Other places do it, after all. The IRS has the information. And it would probably increase tax revenue since it is easier to collect taxes that are easy to pay. (Sales tax is collected at purchase since few people self-report: Sales tax is even easier on the average person if included in price instead of added at the register).

You can require that the IRS err on behalf of the taxpayer and require it to give the maximum refund (or pay the least tax). And it isn't like the auto-file would be final: You still get the option for corrections (because mistakes happen) and can still self file.

I'd just not vote for that person again.

We now have an opportunity to test your hypothesis- for at least two years there will be single party rule by the other party.

It blows my mind that The USA doesn't have something like this. It's basically taxes at work

But plenty of other countries have those too and manage to not have an insanely complex tax-filling regime?

> but it's not that simple

I think if the main difference between the US and other countries is the aforementioned "corporate bogeyman", it probably does boil down to being that simple.

That's not how the proposed systems work. The proposed system is: gov sends you a notice "here is your filled out tax return based on everything we know about you" and then you look over the return, make any modifications you believe are correct, and send it to them. You're not "challenging" something.

Nearly every bill out of Congress can effect tax law and this includes even special appropriation bills; all the covid bills have had tax law changes.

there are some three thousand pages comprising Federal tax law however much of this is additionally subject to various regulations that can affect when and when not a tax takes affect. then throw in every state, city, and more.

To be honest I don't know of a good fix. there are too many forms of income and taxation that Congress would have to reduce the number of definitions for what is income into much simpler categories, say employer paid income, interest, capital gains, money transfers from others, and such, and then macro the rest into miscellaneous subject to a permanent fixed rate.

As in, account for the most common forms of income at a lower rate and they get all those that don't fit that definition and charge it at a higher rate as likely none of these would ever be claimed by the average tax payer.

when it comes to deductions, simply do what the Trump tax change did in 2016 but do it again, raise the standard deduction so that if you are under 250k you never need to itemize.

https://youtu.be/rStL7niR7gs

https://www.nytimes.com/2006/03/05/magazine/who-needs-the-mo...

It just isn't logical for most people to know that their unemployment income is also unearned income, and that you could be underpaying your taxes even after filling out the 1040 completely (and following the instructions in the 1040 instruction book).

Maybe this case is called out specifically, it doesn't apply to me so I haven't looked for it in the instructions, however it was just something that I ran across that made me scratch my head.

But your point about the state income tax is well taken, this does make it a much harder problem here than in Australia.

There isn't a need for anything else...

I am in camp-AMT-only and it seems like both parties could get on board.

But it's really interesting to me that what you wrote is about the feasibility of the idea and not the idea itself. Of course, you may think it's a shitty idea - and it may indeed be! But I'd claim that it says something really fucked up about America that your first response was what it was: "couldn't ever happen, plus it would hurt what we do have if this were 'mentioned out loud'" instead of "here's why that's a bad idea".

> imagine the field day conservatives would have if any national figure mentioned this as an idea out loud, and how that might be used to shift the balance of power such that other meaningful programs that could deal with additional governmental support and regulation (healthcare) get set back.

"Shhh! Don't say that too loud -- they'll hear you and then take away our nice things!"

My reply to this is that "other meaningful programs" are already being set back with or without talk of currently-insane ideas like nationalizing a ghoulish company like Intuit/TurboTax. They've been getting set back since the 70's at least, and so-called "conservatives" are coming for more! Let's ask George W. Bush, who at the end of what he deemed a successful presidency only regretted that he wasn't able to kill Social Security!! These peoples' mission is to ensure that any vestige of a welfare state in the US is not only erased, but that merely talking about such a thing becomes so ludicrous-sounding that people dismiss it as impossible. It's working!

The other part of this is just this: love him or hate him - and yes, he's not the president - Bernie friggin' Sanders has walked around this country extremely visibly for the past half-decade calling himself a "socialist" in public, advocating for a complete "political revolution" and millions upon millions of Americans heard him and went "actually that doesn't sound so bad".

I believe that the world we live in is one we made. That's scary, because look at this fuckin' place, but it's hopeful too: we can make a different one. If there are obstacles to doing so, so be it -- but our silence, no matter how rational, doesn't need to be one of them.

With Apple it's like anything else, if you are fully bought into the ecosystem it's going to be the best. I think there is a reason Apple Card isn't compatible with Intuit Mint right now. From a privacy and business model standpoint, Apple thinks they can do better. What I think we'll see soon is a budgeting tool similar to Mint built into the iPhone, with the Apple Card supported and a way to link 3rd party credit cards, with a pro-privacy data sharing model. Apple spins up a bank account for you via Goldman Sachs new platform. Apple encourages/incentivizes payroll deposits. Tax filing gets added to this product.

> A system that only taxes spending fundamentally has problems in that the richer people can afford to save and invest.

That is an existing problem inherent to any tax system. It's just saying "Rich people can afford to not spend all of their money". I don't see how that's fundamental to taxing only spending.

Also, quality of living is determined by income, not wealth. Fresh retirees are generally wealthier than other age-groups because they've saved for retirement. But that doesn't mean they consume more. Also, consider the citizens of the Netherlands. They enjoy a comfortable existence while servicing an enormous amount of debt. If wealth were the primary determinant of quality of life, you'd think the Netherlands were as as destitute as Somalia.

What's the value of a painting? You could use the price I bought it for, but what if we just swap paintings instead? You know, I give you this fancy painting, you give me some Goodwill shit and you pay me a $100k "finders fee".

What's a yacht worth? What are super fancy houses worth? One of Mike Tyson's old mansions is still abandoned, so I assume it was worth nothing since they couldn't sell it.

Properly valuing things is hard. Wealth taxes are also regressive, in a way, because poor people are much less likely to have access to financial instruments that will return greater than the wealth tax rate. The poor and the middle class are far more likely to have their money in functional investments (homes, cars, etc) than they are to have them in something that generates profit.

So you'd still have to just not assess the tax on assets under the value of a reasonable home and car, at which point we're basically just back to what we have now, which is carving out a loophole for the poor.

> The big picture: The very richest Americans pay much less tax, as a proportion of their total net worth, than the rest of us.

> By the numbers: The bottom 99% of Americans pay about 7.2% of their net worth every year in taxes, per Warren. The top 0.1%, by contrast, pay about 3.2%.

Source: Section 3 here: https://www.axios.com/newsletters/axios-capital-d213524e-b2f...

That's okay during times like ~1990-2020, a time of wonderfully low dollar inflation. The justification behind the long-term capital gains rate is this: during times of high dollar inflation, taxation on capital asset values turns into an outright tax on investment.

If the dollar is inflating rapidly then an investment which simply maintains its value in real terms -- neither gaining nor losing real value -- will see its value in dollars increase and will therefore be taxed, heavily. The lower rate for capital gains tax was in recognition that not all of that gain in nominal value was real income. All of the major reductions in the long-term capital gains rate (i.e. reduction of the rate, shortening of timespan for "long term", and increase/removal of cap) occurred after highly dollar-inflationary periods (1934, 1942, 1978-1981).

Without a lower capital gains rate, during times of high dollar inflation the wealthy will shift all their money into non-fungible assets (real estate, artwork, patents, Persian rugs, domain names, antiques) which aren't fungible commodities with liquid markets and therefore can't be marked-to-market or taxed until sold. This kind of economy-wide, sudden, and simultaneous disinvestment would be a catastrophe for the economy.

Not to mention the resulting real estate boom would make the homelessness problem an order of magnitude worse in a matter of months. When your money is losing value every day, buying up every apartment in sight, jacking the rent to the moon, and evicting the tenants (so it can sit empty and maintain value without any management effort) is, unfortunately, a great strategy.

Note that the 1990's were a boom time for the US (Cold War peace dividend), and from ~2000-2020 we had a massive onlining of cheap Chinese labor providing a deflationary counterpressure to our outrageous money-printing escapades. All the cheap Chinese labor is now fully online and "Fed go Brrr" is in permanent COVID-hyperdrive, so the party will end real soon now.

I’m sure it’s cool if you’re worth a few millions or above. VATs are highly regressive taxes, though they are also consumption disincentives (essentially luxury taxes on a number of non-luxury, which is why essentials like food tend to be low-rated).

Perhaps the main tax of the whole humanity should be a carbon tax, at least in the 21th century.

I re-filed with paper... still hasn't showed up on the IRS website.

[1] http://achewood.com/index.php?date=02102004

[2] http://achewood.com/index.php?date=02272003

Why not pay an accountant? Why is everyone trying to do their own taxes? By the time you've spent a couple of hours looking for alternatives... you might as well have just paid a professional to do it!

On other hand, if you are audited, it is not a big deal as long as you were not intentionally defrauding IRS. My boss used to get audited almost every year for his business. IRS would ask for receipts, and once he provided those, it was end of story.

https://www.irs.gov/e-file-providers/free-file-fillable-form...

If you’re reading Hacker News, you can probably figure it out.

In the UK you can file electronically with the HMRC using their website. It guides you through several forms, tells you what numbers to input from your P60 (end of year notice from employer of salary and tax paid) P11D (end of year notice of taxable benefits) and a few other sources then produces a downloadable PDF copy, and submits them electronically.

It's not for everyone, e.g. Lloyds Names can't use it, but for 99% of people it's fine.

Why is it better in the UK? I don't think we have quite the level of regulatory capture, and still somewhat believe in public services, and spending money to make things better for everyone.

It was really simple, something like:

- You clicked a button in the toolbar or right clicked and chose menu option

- a dialog showed up, you chose how often it should check the page and how big differences it should tolerate and clicked OK.

- once every hour or 4 times a day or twice a day depending on your choice Firefox would download the page locally, compare it and tell me if there were changes.

Yes, we oldtimers mostly complain about TST, but there were an entire ecosystem of brilliant extensions - so brilliant I figure it would habe been hard for me to believe today if I hadn't experienced it back then.

That's what you can have when you have brilliant people making brilliant software to empower you :-/

Edit: seriously, I would pay $20 a month for someone who would fix the new Firefox. If someone made a realistic Kickstarter I'd support it right away and then monthly if necessary.

All they're doing is lining their own pockets with millions from TurboTax et. al to make sure laws are favourable for those big companies. But because it's perfectly legal, and there are no thugs with guns or drugs or "bad members of society", it's absolutely not corruption.

/s

If that were so, there wouldn't be so much money spent on lobbyists by companies.

I guess there's a reason they call it "the dismal science."

Any given legislator has 1 maybe 2 issues that they care about, for which they will advocate an agenda. The rest, they rely on what they're hearing.

Intuit's lobbying effectively drowns out alternative view points. Assuming that anyone anywhere is consistently advocating for something like free auto-filing.

Source: Have lobbied. Know legislators and their staff. Also read many books about legislation. Most legislators would LOVE to hear from their constituents; will bounce out pro lobbyists to give their own people an audience.

Auto-filing and simplification would be so much cheaper.

No, no they don't. At most they have your mortgage interest deduction - side hustle expenses, charitable contributions, etc. are not reported to the IRS automatically.

I think simplifying the tax code first requires trading in our deduction system for a flat tax or lower taxes across the board. Then you could get to a simple postcard bill every year. Too many special interests to let that happen though.

The IRS will (mostly) know your gross income, but it won't know the exact details about claimable deductions such as business travel, business meals, supplies, etc.

The only way it could know that would be to peer inside your credit-card statements, bank statements, etc. and make judgments about what was work related and what wasn't.

I'd rather do the tallying myself -- which is a chore -- rather than have IRS software make guesses that are a) awfully nosy and b) bound to disadvantage me.

Same thing happens in the US. When most people file their taxes here, they get money back because they already overpaid.

For example I spent a few thousand trying to launch a business this year, and that is all tax deductible. So I'll file that with my tax form that my employer sends me (with the salary info prefilled), and I'll end up getting some money back because my taxable income is lower than what the gov't expected.

And every year there's a "blue dog" Democrat living in a purple district which bends to the pro pay day loan lobbyists.

Vetocracy is a tough problem. Our civic legacy is to fear the mob, tyranny of the majority. (Thanks Plato.) So it's rare that mere popular support ( >60%) is sufficient to attain progress.

So, to your point, mere 50% + 1 vote ain't ever enough.

For 2 years. And spent basically the entire time barely getting ACA through. Not a lot of "political capital" leftover for battling to have free tax filing.

And thank you for the link, but this news segment basically is big on opinion, low on specifics. Feel free to link me to a detailed article on how non-U.S. countries handle self-employment or dependent tax issues and whether/how those things are easier elsewhere.

Good luck prying that out of the cold dead hands of boomers (and eventually Gen X)

If all your tax returns reference are the handful of items you mention, your tax return can be done in a matter of minutes on a short form.

Yes, it could be better, but it's a fantasy to think it should be as simple as getting a bill from the IRS at the end of the year.

This used to be a real nightmare especially when there were acquisitions in stock, splits, etc. There were a couple times over the years when I just said F' it and put down a reasonable number.

But these days, unless you have some pretty old investments, the brokerages generally track your basis.

Just to illustrate, let's go through your examples and how it'd work in Germany:

> side-hustle contracting (IRS doesn't know what expenditures are for the business)

You'll have to mandatory file income taxes since the income from contracting is not salary and there are no payroll taxes deducted from it. Not sure how common it is in the US but in Germany the vast majority of people don't have side hustles like this (for a variety of reasons; certainly a bad thing)

> stock sales (your broker may not know your basis)

There's a default tax rate on capital gains (25%) with a 800€ allowance. You assign how you want to split the allowance between your various banks and other capital gains generating accounts (you're responsibility to not exceed them) and the banks will report your cap gains with your tax ID to the tax office. If you did pay taxes it's often worth filing to make sure the allowance evens out. Also, if you want to carry forward a loss you have to file (but you got 5 years to do so)

> home improvements eligible for tax deductions

You'll probably want to file but you don't _have to_. You just won't get the deduction.

> sold a home (IRS won't know your basis or selling price)

If it was the home you lived in, you don't have to file (it's tax free). If it was a house you rented you'll have to file but you'll have to do that anyway for the rental income.

> did you move for a job? IRS won't know whether you are eligible for tax deductions.

Same as with the other deductions, it's in your best interest to file but you don't have to. No (legal) consequences if you don't.

> crypto gains/losses

This gets tricky but if you owned the coins for more than a year (to the day) they're tax free and you don't have to report them. But you better have documentation on this if you ever get audited.

> inheritances (basis again)

This one is actually interesting as it's a completely separate tax and thus separate process from income tax. There's an allowance based on your relationship to the deceased (500k€ for spouses, 400k€ for children, etc.), if the inheritance exceeds that you'll get a letter from the tax office asking you to file a declaration for inheritance tax. At that point there's not much software that'll help you and you'll better hire a tax advisor :)

Only then do they actually know.

For example, you yourself may have filed with the status, "Married, filing separately", but the other person in your relationship may have filed with the status, "Single".

The IRS has no idea who is right without actually talking to the two of you. And because they don't know which status is correct, they don't know how much each of you owe.

I do take advantage and do not lift a finger to achieve it, because the tax man knows about this already.

> However, you're over-simplifying things and ignoring the complicated parts.

IMHO, you are overcomplicating things. If tax laws are as complex as you wish them to be, if the tax-man cannot know what you owe to it - then it's just a very good environment for the wealthy not to pay anything, while screwing over other 99% with over complicating things.

I do not pay taxes in the US and unless you have a company, I guess 99% of individuals do not need to do any taxes at all, i.e. just confirm what the tax agency already knows about them.

Think about taxes as a negotiation process.

That being said, it seems "freer" to me to tell the IRS what my financial situation is rather than let it dictate to me what I owe, and then have to fight the government in order to take a deduction for donating to GoodWill or the Salvation Army. I'm splitting hairs trying to play devil's advocate here.

There was a lot of noise made last year when a law almost made that permanent.

I'm not sure if the API you're talking about would apply, but I'm pretty sure it would and passing a law would be difficult.

https://www.propublica.org/article/congress-is-about-to-ban-...

If you put your money in a bank, the bank reports it to the IRS. That's how it works everywhere.

Most calculation or categorization errors aren't "prima facie" evidence of tax fraud. In general they need to show intent to deceive. Most of the cases where I have seen someone being fraudulent they are going somewhat out of their way to do it. For example, not reporting cash receipts, just checks and credit cards. Paying their children as contractors even though they do not do any work. Recording only half of the haircuts they do and none of the tips. Claiming to have an unsuccessful business that doesn't exist yet loses money. People have to go out of their way to make their illegitimate books look legitimate and they usually fail to take into account that the IRS has seen it all before. Unfortunately for everyone, the IRS doesn't catch these things for several years if at all, so some get rewarded, some think they're fine when they're not, and some get hit by a huge tax bill.

For the average person, if they make a bona fide attempt at doing their taxes correctly, and they make mistakes because they are not a seasoned tax accountant, the penalty will be back taxes, interest, late fees, and representation costs.

The (previous) existence of the 1040EZ showed that a lot of people have simple returns that the IRS could do for them.

That's partly because banks send all of their information to HMRC.

For example, one could tweak the deadline for contributions to those accounts to be say March 1, make the financial institutions report to the IRS by March 15th, send everyone their estimate on April 1st and have a deadline of April 15th to confirm or adjust their tax filing.

Most of the big things that involve deductions are already tied to a financial institution that already report to the IRS.

He'll just have to take your word for it, and send that in to the IRS. He won't be liable for it if it's a lie; you will. So what's the difference to you telling the IRS directly?

And no, checking a box "I did not have any income besides my tax-withheld salary [_]" and filling in an integer "I have [_] dependent children" seems like something most people could do on an IRS web page without having to buy software or pay an accountant every year. (And if you tell them when the kids were born the first time you do this, they could carry them over year to year and age them out automatically when they turn 18, and then you wouldn't even have to do that any more unless and until some exception occurs.)

All these pro-status quo comments sound so weird, like desperate apologetics for the world's most needlessly complicated system. Are you all just finding it impossible to conceive of there being a better way than The American Way, or what's the reason?

It's really no different from doing your taxes by hand on paper, except it does almost all the math for you.

I've been using it for years (with about 15 different various forms) simply because I refuse to support the tax prep software companies out of principle.

And each year I just look at the previous year's which I saved as PDF for reference in case I forget which number goes where.

Private electronic tax filing systems (and the fees they charge) should not exist.

This is false. There's no need for 90% of people to hire an accountant to file their state tax return, for which Intuit charges.

This is false. It's plenty possible to be in neither scenario, and every year millions of Americans are.

Further, the 1040EZ system no longer exists. Tax filers often charge for "tax accountant" services like having a moderate income or filing state taxes.

This is incorrect in practice. Through dark patterns and otherwise, an extremely small minority filing without paying even if they should be “eligible” (which is itself an absurd position).

You mean like the Internet?

>The fact that TT (and H&R Block) have impressed upon reps that they will participate in Free File, it mitigates their need to make a government-sponsored program.

It's a half assed solution so they can say they did something and give them political cover.

It's difficult for me to believe that my representatives actually believe it's in my best interest to pay TurboTax $100 every year, compared to having the IRS automatically file my taxes.

On the other hard, it's easy to believe that my representatives have been cheaply bought with political donations.