Open Source Tax Software
ctskennerton.github.io
ctskennerton.github.io
It’s relatively easy to make a free 1040 file. The real problem comes from all. The. Edge. Cases.
1) do you support xyz state? 2) what if I lived in multiple states? 3) what if i…
And on and on.
And it’s not just one and done. Every year IRS and states are changing their shit so you have to go thru and make all kind of updates and verifications every year.
It takes an army to build and maintain. Generally not the kind of thing for open source (unless they’re paid). But then what’s the point? One may say it’s more transparent, but TurboTax etc are transparent with their formulas - you can check every box they fill in for you.
I think the only thing that can really disrupt this dynamic are “free” commercial software (like credit karma now cash app), or government provided.
The way we got this is interestingly twisted.
French citizens requested the software used by the administration, and they managed to get it!
But, it was written in Mlang, a proprietary language created by the french administration in the 90: https://github.com/MLanguage/mlang.
Someone then decided to create an OCaml compiler that takes mlang and emits python: https://arxiv.org/abs/2011.07966
As a result, we got Open Fisca. I now think there are other techs in the mix...
A slide of the story: https://www.slideshare.net/Etalab/opening-up-the-french-tax-...
But I believe it should be mandatory for the state to provide the source of every softwares they use internally to manage our lives. Also a test suite to allow any citizen to validate their own effort to comply with the law.
Just like laws should be published as diff of the previous laws, in a VCS repo.
This is not to day that the software is not useful (the API looks great after a quick reading), but it will be used by a very small population.
These add major complexities to the US tax code.
Just like France, they could open source their software.
A regular US person gets a US tax credit for taxes paid to foreign governments. But if that's less than they would've paid to Uncle Sam, they still have to pay the difference here.
That's not true for these overseas subsidiaries. That, as you said, is a major reason these subsidiaries even exist (I'm sure local laws also require them in many cases, but still).
And their existence guarantees that tax burden will be optimized globally, rather than locally - the nontrivial price of setting up and running a subsidiary has been paid, so of course it will be used to get benefits as well.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
> Free File Fillable Forms is the only IRS Free File option available for taxpayers whose income (AGI) is greater than $72,000. Taxpayers whose income is $72,000 or less qualify for IRS Free File partner offers, which can guide you through the preparation and filing of your tax return, and may include state tax filing.
As a comment upthread said. It's presumably legit because it's linked to from the IRS site but almost everything else sets off alarms.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
I'd be happy to have a full federal filing system even if it left me to do my state taxes "by hand".
One of those states (WA) doesn’t belong in the list of states that require personal income tax returns, unless you mean something else?
It all seems to be an absurd charade. Attempts to reduce the bureaucratic burden are opposed by the tax return return companies who bribe heavily to prevent any simplification.
Keeping taxes hard to pay is an important carrot in keeping the public mad about having to pay them in the first place. It's governance through dark patterns.
I am pretty sure the reason most people are mad about having to pay taxes is the thousands/tens of thousands/hundreds of thousands of dollars of their income that is taken from them.
On the high level, I always felt fortunate that I was in position to have to pay a lot of taxes. But it's pretty ridiculous. Case in point, we just bought a small, 100 year old house on a tiny lot. New York State didn't hesitate charging us a "mansion tax" on it. Believe me, it's no mansion. While there's a limit to how mad I am about that, it's not the paperwork that's annoying me.
Taxation exists in every functional modern democracy and there are no viable alternatives to it. States and municipalities that reduce their revenues through tax cuts wind up relying on things like speeding citations and civil forfeiture to bridge the gap. Wouldn't you rather suck it up and pay once per year than potentially having assets seized by a random cop that you then have to go through the legal system in order to get back? You're gonna pay either way. Even in anti-tax states like Texas, people get hit with massive property tax bills because it's one of the only ways that the government generates revenue.
The real problem is that the vast majority of people don't really care once the money leaves their hands. You don't like the mansion tax, which makes sense, but have you taken the time to look at your state or city budget to see where all of this money is disappearing to? Because that's where the more of the focus needs to be. Just glancing at the executive summary of the latest NY budget(0), it looks like $86B of the $212B total goes towards Medicaid alone.
So do we just leave the poor to not have healthcare? Why does healthcare cost so much and how come despite all of these tech entrants into the healthcare space, the cost never seems to go down? I really hope for the sake of your own argument that you don't work in healthcare, because what that industry is doing to communities across the nation in terms of cost is nothing short of outrageous.
[0] https://www.osc.state.ny.us/reports/budget/review-enacted-bu...
Perhaps this depends. In the USA, perhaps. In Iceland, not so much (https://twitter.com/iamharaldur/status/1355490017288867841).
In the USA you have to pay your taxes and then you have to pay for your public insurances, where in most of Europe these are the same things. And perhaps tax payers in the USA are not happy with this. So to amend your statement, perhaps a more accurate one is: Most people are mad about paying taxes because of the thousands of dollars of income that is taken from them without any tangible benefits.
US is vastly larger. New York City alone has 3X as many public school students as Iceland has people. We are vastly diverse ethnically, culturally and geographically. It is much harder to find "problems and solutions everyone agrees to" in the US than in Iceland.
I’m sure you’ll find way more happiness towards paying taxes in the UK and China then in the USA despite being as diverse and even larger then the USA.
Put another way, we are at the lowest tax rate this country has seen in a century. How much lower can we expect it to drop?
Even as a freelancer, it usually takes me 10 minutes on the web to fill my yearly taxes nowaday. It used to be way longer, with queue at the tax offices, real papers to fill, etc.
But I do have a very convenient status, administrative wise.
In the UK the government communicates your tax code to your employer payroll department to tell them how much tax to withhold on your earnings (taking account of tax credits etc.) Banks have to withhold the basic rate of tax (higher rate tax payers must file, but that already excludes 90% of tax payers from worrying about it.)
In the US the system seems similar except the government doesn't let your employer know how much tax to withhold so you fill in a form for your employer with the information that gets it mostly but not quite right (so long as you don't switch jobs that year!) Filing taxes as a regular employee ends up being substantially more complex than filing taxes as a self-employed person in the UK where the government provides an online system much simpler than that provided by the tax filing companies in the US (otherwise print and mail several different PDF forms and do the math yourself, fortunately if you get it wrong the IRS already knows what you owe so at that point they'll just point out the corrections and tell you what you owe...) And this beurocracy is of course all doubled because states have their own completely separate set of rules.
French tax law is actually very complicated, I guess like just about everywhere. If your only revenue is your salary, and you don't have a lot of deductibles, all you need to do is sign the form (electronically). But if you are self-employed, it is highly recommended to hire an accountant if you don't want nasty surprises if you get audited.
You don't interact with the revenue service as an employee, or fill out forms, or something.
Yes, as my finance professor used to say, make all of your decisions based on after-tax.
Which is very relevant on a personal level to, say, someone buying a house in the US with a sufficiently large mortgage to itemize deductions is going to be... unhappy if that deduction suddenly gets snatched away.
"Rules" obviously do change but there are good reasons to exercise restraint with respect to established rules that led individuals to make substantial commitments on the basis of that rule.
Some other countries just tell you where you stand because for the vast majority of people a standard filing is all that's required. In those circumstances, only the edge cases need to deal with complexities. In the US, everyone does.
But I am of course pessimistic on tax reform since that general populace just accepts "oh yeah filing taxes sucks" at the same time that tax service providers lobby congress who, absent a strong outcry from their voters, just follow the corporate money trail.
I'd say that's the most appropriate place, really. It's a designed system, sort of. It's malleable, in that changes occur regularly. The obvious place for bug fixes is here.
I get your pessimism in the sense that the same dynamics, politics and systems that have shaped the present problem seem unlikely to have the desire/capability to fix it. OTOH, things stay the same until they don't. There have been a lot of tax systems invented over the last N thousand years. 99.N% of those tax codes are currently extinct.
Also... we're due a shift of reigning economic religion, periodically speaking. Maybe the next one will take a differing view on efficiency.
Stuff like taxes were always enigmas productivity-wise. For a mill, product-out/labour-in = labour productivity... or product-out/capital for capital efficiency. Either way, efficiency is self evident. For a tax code, legal system or whatnot, there's no way to measure output and no "economists agree" way to know the value of the output even if you could. It could be negative.
Well... This now also applies also to JPMorgan, Pfizer, Alphabet, FB and such. Just like it's not obvious that more legal procedures = more justice, measurements of most of the economy's output is increasingly ethereal and unrelated to obvious scarcities.
That don't mean nothing definite, but we are in times of change... which means don't bet on long term saminess of most things.
It's not clear to me what "the returns should be file[d] automatically" means for this group of people.
In addition, there are many non-employment based events in the US tax code that change your tax liability. Last year I received a roughly US$3k tax credit because I installed a 6.6kW solar PV array on my house. There are dozens or even hundreds of cases like this in the US tax code.
The employer files the income forms and handles withholding. If you're self-employed, that means you are responsible for that part. And of course anyone with more complex taxes (e.g. non-W2 income) would still need to file, though they could start with the pre-filled forms.
> Last year I received a roughly US$3k tax credit because I installed a 6.6kW solar PV array on my house. There are dozens or even hundreds of cases like this in the US tax code.
Yes, and all those special cases should be removed as part of the reform. If they want to hand out money as an incentive for installing a PV system (for example) then they should make that a separate application and payment, since this has nothing to do with collecting taxes. For business income you can subtract legitimate business expenses (since this is about income, not gross revenues), for capital gains you obviously subtract the cost basis, and for personal income you subtract the official poverty level for your household. (If there are multiple filers for one household then they split the deduction.) If the sum is less than zero then you simply pay no taxes—there are no refunds. That's it. No special surtaxes or exclusions. Apply a flat percentage to the total and you're done.
[0] I don't agree about the flat percentage. The USA has had a progressive tax structure in various ways since its founding, and given the concept of marginal utility, I stronly believe that this is the right way to tax income.
The system I described is still modestly "progressive" in the sense that those with more earnings pay a larger percentage than those with less, due to subtracting the poverty level. (Up to the poverty level, nothing is taxed; at 2X the poverty level, only half your total earnings are taxed; etc.) It starts at 0% and asymptotically approaches the flat rate as earnings increase. To be sure, it's not quite so heavily biased as the current tax tables, but then we also have this principle that the law is supposed to apply equally to everyone and not discriminate on the basis of wealth or status, in either direction. The current political environment targeting a small number of individuals for special taxes or punitive rates based on either their income or wealth practically amounts to a bill of attainder–which would obviously be unconstitutional, and for good reason.
To a person who earns $10k/yr, $1k is huge (whether it is extra income or owed tax). To a person who earns $1M/yr, $1k is basically pocket change. The utility of that marginal $1k varies for them both. Ergo, to treat them equally, we tax them differently.
Marginal utility says that—most of the time–the utility of one more of an item to the owner is less than or equal to the utility of each item they already possess. (The exception would be where you need multiple items to do anything useful, but this is generally treated as a different kind of good rather than another of the same.) The concept of marginal utility says nothing about the relative utility of the same amount of money to different people. Utility is subjective, and there is no coherent concept of utility which applies across multiple individuals. It makes zero sense to say that some set amount of money is worth objectively more or less to different individuals based solely on how much they already own, much less on their earnings for a single year.
> To a person who earns $[X]/yr…
And here we have another issue: the assumption that earning some amount in one year—which is all the tax rules consider—is equivalent to earning that amount every year. Receiving ten years worth of income as a lump sum of $1M up front vs. $100k each year should not affect your tax rate, but in practice it does, which has various perverse implications. The law is biased in favor of regular, even income (W-2s), and against situations where you may earn a lot in one year and very little in others (e.g. running a small business).
I think this is nonsense. We can't put a precise worth on it for different people, sure. But I think it's indisputable that there's a curve, we know it's rough shape, and that it's a reflection of marginal utility. The lack of labels or positions on the axes doesn't make that graph useless.
> The concept of marginal utility says nothing about the relative utility of the same amount of money to different people.
Sorry, but this is just completely wrong. Here's the most relevant paragraph from: https://commons.lib.niu.edu/bitstream/handle/10843/22650/12-...
>The linchpin of The Uneasy Case is its rejection of the principle that income has diminishing marginal utility.' Diminishing marginal utility of income (DMUI) means that the greater a taxpayer's income, the less an additional dollar of income is worth to him. If DMUI holds, the government exacts a lesser sacrifice from a higher-income taxpayer, with each dollar taxed, than from a lower-income taxpayer. Moreover, any redistribution of income from a higher-income tax- payer to a lower-income taxpayer tends to increase aggregate welfare: The lower-income taxpayer derives greater utility from each dollar gained than 4 the higher-income taxpayer derives from each dollar surrendered.
Now, to be fair, there are arguments against the DMUI case for progressive taxation. For example, here's Donald Boudreaux writing for the American Institute of Economic Research:
https://www.aier.org/article/rich-man-poor-man-comparing-the...
The fact that it's a terrible argument doesn't diminish the fact that it clearly recognizes that there is a case to be made for progressive taxation based on DMUI.
Here's another one, equally bad:
https://www.econlib.org/archives/2011/04/the_uneasy_case.htm...
The key point here seems to be that even though DMUI is true, we don't know the actual numbers, and thus we should not act on it.
As for your remarks about $1M in 1yr vs $100k for 10yrs ... well, sure the tax code is necessarily imperfect. Optimize it for people with one income patterns and you've made it worse for people with a different income pattern. Such is life ... perfection is not an option here.
There is indeed a curve, and we do know its rough shape (it's nonincreasing). But that curve is for one individual. Utility is not an objective measure. Every individual has their own "unit" of utility and there is no conversion factor which would allow utility to be summed or compared across multiple individuals.
This is heresy to utilitarians, to be sure. How are you supposed to implement policies which ensure the greatest benefit for the greatest number if you can't calculate a collective utility score? That doesn't bother me, though, since I'm not a utilitarian. So far as I'm concerned the utilitarians are just implementing policies based on their own preferences and ignoring what anyone else actually wants.
> Diminishing marginal utility of income (DMUI) means that the greater a taxpayer's income, the less an additional dollar of income is worth to him.
This is a fairly standard description of the concept of marginal utility, aside from the fact that it's confusing income and wealth. (The greater one's wealth the less each additional dollar is worth. Income is irrelevant except as a poor proxy for wealth.)
Note that it only talks about one person. As I acquire more wealth I'm less and less willing to put in the same effort / pay the same cost to acquire each additional dollar. No issues there, this is not particularly controversial.
> If DMUI holds, the government exacts a lesser sacrifice from a higher-income taxpayer, with each dollar taxed, than from a lower-income taxpayer.
And here they make an extraordinary leap from talking about one individual's marginal utility to comparing the "sacrifice" (lost utility) of multiple individuals. They're making the assumption that all individuals have exactly the same utility scale, which is manifestly false. Everyone has their own utility scale, which varies over time and is in general unknowable, even to them, except as it is partially revealed through their actions. It can readily be observed, however, that a dollar of additional income does not have the same utility to two different people with the same wealth: For any given level of wealth, some pursue higher-paying work while others don't consider it worth the effort. Taking some amount of money from the first group represents a larger sacrifice than taking the same amount from the second group, even though their wealth is the same. Since you can't even say that equal wealth results in equal marginal utility, how can you claim that lower or higher wealth (much less income) necessarily implies higher or lower marginal utility? There is absolutely no reason why one person with $1M cannot get the same marginal utility out of an additional dollar—by whatever objective measure you care to name—as someone else with a net worth of $10k.
> … well, sure the tax code is necessarily imperfect.
I'm not asking for perfection. I'm just asking that the law, which is supposed to be just, not discriminate against people based on irrelevant factors such as annual income. The fact that a progressive tax system based on annual income imposes different levels of taxation on two people with the same earnings merely because one received their pay in a lump sum while the other received it in installments is a strong hint that the system is based on unsound principles.
This is a standard, widespread concept in economics, even among people who disagree that it should be the basis of the tax code. I am unable to find any mainstream or heterodox economist who disagrees that DMUI is real. The disagreements are about what the implications for taxation (among other things) ought to be.
I agree that DMUI is real. As I've said multiple times. But in attempting to use it as a basis to argue that there is a net increase in value or utility from taking some amount of money from a wealthier individual and giving it to another, less wealthy individual, it's being misapplied.
Attempting to aggregate a subjective, ordinal concept like utility across a group of individuals is, unfortunately, not novel either, but it is incoherent. You're not going to find any political (i.e. mainstream) economists admitting to that, of course, because it undermines the logical basis for their entire profession. However, even mainstream economics these days acknowledges that value is subjective, and the fact that it depends on aggregating metrics which cannot be quantified objectively is a common objection to utilitarian philosophy.
The idea that marginal utility is specific to the individual is hardly novel either. As Herbert Davenport put it in The Economics of Enterprise[0] back in 1913:
> As the human being changes, the utility changes — may become greater or may disappear entirely. [p. 87]
> All utility is relative to the individual. — The foregoing discussion should, by implication, have made it clear that utility and marginal utility and relative marginal utility have to do solely with the particular individual as an account of the way in which he arrives at his purely personal and individual decision to become a purchaser at not more than a particular price — to enter his own demand as one among the great total of demands. Strictly speaking, there is no such thing as the comparison of the utility to one person with the utility to another. Men differ in desires and in the degree and manner in which things appeal or appear to offer service. [p. 97]
Or as Ludwig von Mises explained in The Theory of Money and Credit (1953) on the subject of "Total Value"[1]:
> Value can rightly be spoken of only with regard to specific acts of appraisal. It exists in such connexions only; there is no value outside the process of valuation. There is no such thing as abstract value. Total value can be spoken of only with reference to a particular instance of an individual or other valuing ‘subject’ having to choose between the total available quantities of certain economic goods.
[0] https://archive.org/details/economicsofenter00dave/
[1] https://mises.org/library/theory-money-and-credit/html/pp/12...
The U.S. doesn't make you do this, either. Most people don't itemize deductions. You just plug in the data from your W-2. The percentage of people itemizing was 30%, but with the Trump Tax Cut which capped state and local deductions (i.e. lowered the maximum allowable deduction, effectively increasing taxes on a large number of people) this was predicted to drop to 10%.
If you're itemizing, you're in a minority of tax payers, and in most cases a voluntary minority seeking to minimize your taxes in a way that simply wouldn't be possible elsewhere.
The U.S. also has one of the highest rates of voluntary tax compliance, and hypothetically that might have something to do with 1) ability to itemize and 2) having to sign on the dotted line every year.
This is still a lot more work than in many countries, and you still need to either fill in a paper 1040 (plus state taxes where appropriate, and some of those (cough CA) are far from simple), use tax prep software, or someone like H&R Block.
In the UK, if you're in the majority of people who have one job and straightforward finances (e.g. not renting property, no CGT, etc) you need to do nothing at all for your taxes. Your employer deducts tax from your wages and that's it. I guess technically you should verify that your "tax code" (the mechanism used to inform employers of what needs withholding) is correct but again, unless your situation is more complex that is a standard figure shared by the rest of the employed workforce.
My parents never filed a return in their entire lives.
Not in my experience. The online options the IRS provides free of charge is pretty easy, and many states have similarly simple online forms for free.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
Although I do not dispute other countries do have it easier, and do it better than the US.
The IRS does a terrible job with the information it does have. One year, I had a typo in my daughter’s social security number. The IRS sent me a note that her number didn’t match the previous year’s return. I assume that they believed the previous year’s number was right, but instead of saying “we’ve amended the return by using the social security number that appeared on last year’s return,” they said “we’ve amended the return by removing that dependent and recalculating taxes; if you disagree with your higher bill, you’ll need to send us the following paperwork with the correct social security number” (of course, “correct” meant “the number we already have on file” more or less, but I had to figure out what that number was by looking at my own copy of the previous year’s return). Luckily, the previous year’s number was correct; otherwise I would have had to amend the previous return and then refile the current year’s.
People should have some "skin" in the game of taxation, if we allow the process to become seamless overtaxation becomes a real problem.
Even today people do not treat their Gross income as their income, they look at net. This is the wrong way to look at it.
I believe people should have to physically pay the government every month just like you do your water bill, your groceries, etc.
If people had to write a check, or trigger an electronic payment to their local taxing authority every month there would likely be more focus on where that money is going, and why the government things they deserve a huge chunk of my income (hint they do not)
This prevents the government from just raising taxes and hiding these increases.
We have history of this as well in the US, a prime example of this is property taxes. When a state raises the income tax rate there are a few grumbles but hardly anyone actively protests, however if property taxes go up people can be found literately in the street protesting because it causes their mortgage to go up (as most people pay property taxes via escrow with their lender)
This is direct payment of taxes monthly where the person received the money, then has to pay it out, has a vastly different psychological effect than if the money is seized before ever being received by the person
I maintain that the ONLY way the government can get way with the MASSIVE amounts of taxation everyone pays is for 2 primary reasons
1. Distributed collection 2. Automatic Collection
If either was not in place the government would have huge amounts of civil unrest because by an large most people would instantly recognized they are being fleeced by the government no different than a mugger on the street
Here in the Netherlands I don't have to plug in any data, everything is pre-filled. Income, bank accounts, mortgage, advances on deductions, etc. All you have to do is verify it (you can change things if necessary, but I've never had to do that). Takes about five minutes max.
I run a small biz, I do PAYE on a simple spreadsheet, then type the results onto an IRD web page, takes me less than 10 minutes a month.
Most people though just use a tax preparer at something like H&R block. A little searching indicates there's roughly 60k to 80k jobs like this in the US, and they earn (at least at H&R Block) about $16 per hour, and only for about 3 months a year. A small # of tax preparers with a bit more training & experience may provide other financial services in the off-season or assist small business with quaterly filings or bookkeeping.
Overall though, you're not talking about much of an industry collapse in terms of people employed. The ones that work in that area year-round will lose some extra hours. The ones that don't, having some experience in finance, might seek further training to get a higher level job of that sort (maybe become an actual accountant) I don't think it should be considered a barrier to ending regulatory capture within this area.
Apart from that, a few software products would collapse, losing most customers, retaining the ones that legitimately needed advanced guidance. And the company would probably have to charge the more for it, and possible compete with actual accountants on price in that respect.
But I don't think "industry collapse" is correct.
As for itemizing, again, you may not know if you should itemize or not until you actually go through the process and see where the numbers fall.
Meanwhile the IRS is held out as a boogey man who will ruin your life financially if you get something wrong.
For most here on HN who deal with interlocking blocks of logic, tech documentation, etc? It's fine, and probably for a plenty of other people too. For a very large number of people though, it's the common paradox that it's only easy once once you already know what you're doing. And for a few weeks/months a year the tax prep industry works hard to convince people it's not something they should try to navigate on their own, and if they do then they're a sucker throwing away refund money because of hidden secret tricks to get more refund money back.
11.4% of tax filers itemized in 2018:
https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-...
That is not the hold back for tax reform, any efforts to simply the tax code gets push back from every special interest that to keep their deductions, and they point to "the others" as "unfair" deductions, so it never changes.
People with kids want to keep the massive deductions for having kids, even though childless people believe that is unfair, people with homes want to keep the deductions for home ownership even though renters believe that is unfair, and so it goes down the line for 1000's and 1000's of loop holes and deductions...
Never a one shall be expunged from the code
Sadly law makers don't know how to code. If they did they would see what bloated monstrosity of complexity a few simple sounding sentences with some simple sounding exceptions produce. Perhaps a large bill and months of delay could provide enough of a clue.
> [U.S.] tax law drafting style follows default logic, a non-monotonic logic that is hard to encode in languages with first-order logic (FOL).
Edit: referring to the US
I agree with your sentiment, but not resolution. The truest resolution is in simplifying the tax code, which Intuit and co do not want.
Edit to add: When CreditKarma gave up on me, I tried FreeTaxUsa. It sounds like a scam I know, but they are top notch, and cheap. Highly recommend.
Ah! I remember FreeTaxUsa. They have this silly verification thing in their signup. Your email address must be on an "American" domain. Mine is self hosted on some other domain and they literally say it's "foreign". Just checked again and it's still there. Hah... sigh.
> We prefer customers to attach email addresses from widely recognized providers for security purposes. Additionally, our servers have a hard time communicating with private email servers.
> You may create a new email address to handle your tax returns through FreeTaxUSA with a major provider.
Perfect for open source - if decomposable, so each issue can be dealt with in isolation (or many can). e.g. using a "plug-in" architecture of some kind.
And somehow recruit non-dev folk - if you go to the trouble to understand some specific tax point, you often would like to share it, and also record it in some "easy to use" form, for next time (and a starting point for amendments).
Maybe a "tax DSL", "business rules"? Or a user specs it, and a dev codes it?
Not really.
The software as a whole needs to be verified across a wide range of everchanging rules, some of which are going to be a judgement call even among experienced accountants.
Why would people be interested in working on this project? It certainly doesn't break any new ground. It's just a long and ongoing grind to implement tax code rules. If for some reason, I have a lifelong ambition to work on accounting software, I'm sure Intuit, SAP, and Oracle pay reasonably well.
Many popular open source projects began as an open source version of something. e.g. linux. The structure of the software, to facilitate contribution, could break new ground.
I think the most significant and difficult-to-solve barrier is making contributing accessible to non-devs.
Sure it would be great if that was Open Source, but it does its job this way as well?
I then went and found out how many folks one of our competitors (a bit more mass market than us) had writing payroll software.
The answer was it was a six person team just to keep up with the government changes every year. We never bothered any more with that idea.
Payroll is surprisingly hard.
The new company I switched to did not allow me to do payroll on the days that I'd wanted. They only offered 2 or 3 options, none of which matched what I'd done before. "That's all we offer" was the reply. There've been a couple other 'restrictions' (lost flexibility) on some behaviors - nothing horrible, of course.
I've no doubt removing some of that flexibility has reduced their overhead - there's enough changing regulations every year in multiple jurisdictions - keeping the main stuff under their control as simple as possible seems to have worked out for them. I've had... 4 years with them without incident, but 2 years of pain with QB before.
FWIW, QB hosed up dealing with my state. Federal was fine, but they created so many problems with my state filings...
That flies in hte face of the usual comment torrent decrying centralized spying from any agency, government or otherwise.
In the 40 or so years I have been doing taxes I have not once seen the amount deducted as taxes match the amount owed. After various deductions (retirement savings, medical expenses, charitable donations, political contributions, governmental program incentives, etc) and jurisdictional disagreements (employer in one province, residence in another), I and those I do taxes for always get money coming back.
Requiring every financial (and otherwise) transaction I undertake to be registered with some central government authority to they can (in theory) correctly prefill my tax forms is anathema. Be careful what you wish for you might just get it.
I don't know if you're just not aware of this, or what, but most of the data on your taxes is stuff that already gets reported to the government. There's no reason for consumers to fill out a W2 every year, the government as it exists today already has that data. The same is the case for a lot of investment information, it already gets reported to the IRS today.
You don't need to build an expanded government surveillance program for the IRS to stop requiring filers to fill in information that the government already has. This has nothing to do with having a "nanny state", and everything to do with a coordinated campaign from bad-faith actors like Intuit to try and pretend that it's pro-freedom or pro-privacy or some crud to act like the government doesn't already have your W2.
If the government had to make the software we all had to use, as well as it being free, it would force the government to consider the cost of modifications when they decide in their infinite wisdom that some new tax-break should be created.
Inertia can be good to slow-down knee-jerk politics.
The reality is that governments use taxation as one of their tools to reward certain behaviors and population segments and to discourage/punish others. Simplifying taxation is taking that power away from governments. Why would any government choose to divest itself of those powers?
https://files.taxfoundation.org/20210217111150/Sources-of-ta... from https://taxfoundation.org/us-tax-revenue-2021/
My guess reading this (and my experience growing up in India) is that many countries simply ignore income taxes (if you're the average schmoe with a regular job and salary, you pay taxes. If you are a business person of some sort, you simply accept cash, hide your income and pay no taxes) and the country makes for this shortcoming with a 20% VAT.
There is then a process where people with more complex tax affairs then fill in a government questionnaire on a website which instantly calculates the tax rebate/payment required and adjusts your tax balance.
OR… Intuit can keep shoveling money into campaign funds. We know what it’ll be.
I've been using excel1040.com for several years now (2017 iirc), and I think it's been around for awhile before that as well -- so I don't think it's fair to call it short lived.
It's pretty amazing how thorough it is. Not perfect, but I found it much more comprehensive and flexible than the free/cheap version of Turbotax.
That said, it is maintained by one crazy guy in Kansas. I doubt the project will survive after he stops working on it.
Any service you choose might be missing your edge case. But if you can see all the code and figure out where to plug in your edge case, then you can contribute it for all users in the future to enjoy.
We've already seen people show up and implement features we hadn't researched yet. I encourage you to check it out.
What happens if you fall under two different tax-breaks or if a payment was taken on a certain date which falls before or after a cut-off point? A lot of complexity, that the developers could solve but will not necessarily know how to handle. At least when you submit this to the relevant tax authority, they can spot alarms like this and decide in a reactionary way how to handle it, adjusting tax codes or providing rebates.
There are just way too many things that change too quickly.
That said, I am all for simplification but then you wouldn't need open-source software, you could just do it in a spreadsheet ;-)
First of all I'm one of the maintainers on the project. Handling people between two tax-brackets doesn't seem like a problem.
A spreadsheet might be simple for you dealing with your own taxes, but you can't email your spreadsheet to tens of thousands of people and have them all improve upon it and share it amongst each other so all of them can benefit. That's the vision here, I don't know if it will succeed, but that's what we're trying to accomplish.
When I said simplification, I meant that if governments would ever accept that tax breaks and special cases are massively expensive to the companies who have to keep track of the changes and then pass on those costs to their customers, then we wouldn't need complex tax software and could use a SS. I can't see that ever happening but I would like governments to be on the hook for the decisions that cost business so much in admin/legals.
Further, people don't know what the edge cases actually are at scale. If I go do my taxes and it doesn't account for some weird thing, I simply don't know that this weird thing even exists in the first place to justify a PR to the tax service.
You might not know the edge case exists, but out of all the people that have that edge case hopefully there is one that does know about it and can implement the fix.
Also I'd be curious to know what edge cases you're thinking about. Many people just have a W-2 and a few 1099s. If someone has a complex business or some other concern they're probably at least partially aware.
Hard to know in advance, if OS communities can do something well or not. There are examples of taking on pretty sprawling problems successfully. On multi Language, portability and such they can often beat the "armies."
It's easy to have open source project where the stakes are "bad translation" or something that doesn't result in fines or problems with IRS/law.
I take the point that this is complex, but that doesn't discard OS/community by default. It's not impossible that community built OS could produce software trustworthy enough to be widely usable. FOSS has played in high stakes arena successfully before.
I would say that the point you and GP make demonstrate that "move fast and break" or "MVP" stuff can't be applied easily. That's not specifically something that impacts OS. It's just a difficulty of the space.
The question is, do you think the potential penalty will cost more than the tax software? It comes down to managing risk, and some people may prefer to take the risk, especially if they have relatively simple tax situations.
It avoids the state problem by not supporting states at all.
It's done by a single retired person. I always donate a few bucks and I suspect he's making enough off the donations for it to be worthwhile for him.
But yes eventually it might be abandoned if he doesn't find some successor, but so far it's very alive.
You just pick the state that gives you the smallest tax.
Most countries don't tax expatriated citizens. Even with exemptions you still owe for social security and Medicare. It sounds good since many people will want pension in retirement, but Medicare offers vouchers or exemptions abroad. This was likely the precedence used for “historically, we do not offer any healthcare services to those abroad” when asked if overseas Americans would get access to the COVID-19 vaccine.
Some of the tax rules come down to "humans argued in court, and another human decided between their two arguments, because the law on paper was vague or poorly constructed".
That’s why it was worth $7B for Intuit to acquire Credit Karma. They’re pretty aggressive about buying up potential disruptors.
The intensity of industry opposition to CalFile has not gone unnoticed in Washington, D.C. In February, IRS commissioner Mark Everson told Congress that he was reluctant to set up an IRS direct e-file system in part because of the bruising battle he witnessed in California...And that leaves federal taxpayers with little prospect of a direct-to-government e-filing system anytime soon...In fact, the industry already ran Big Brother-themed ads in California when tax authorities there were setting up CalFile, a direct e-filing system for state taxes. Lenny Goldberg, the head of the California Tax Reform Association, says Intuit is leading the charge against direct e-filing.
But looking at https://www.ftb.ca.gov/file/ways-to-file/online/calfile/inde... , it looks like I can file my taxes for 2020 via CalFile, so what is this about then? ReadyReturn?
Well, according to
https://priceonomics.com/the-stanford-professor-who-fought-t... There is one program in America, however, that provides some taxpayers with completed tax returns. Since 2007, around 80,000 California taxpayers each year have paid state income taxes this way under a program called ReadyReturn.
ReadyReturn survived corporate lobbying for one reason: Joe Bankman decided to make easy tax filing his personal mission, and he spent $30,000 to hire a lobbyist to counter lobbying by Intuit, the maker of TurboTax software.
but here's something more interesting:
Since 2015, the tax preparation industry has persuaded lawmakers to include a line in the annual appropriations bill that bars the IRS from offering pre-populated returns to taxpayers. The Financial Services and General Government Appropriations Bill approved by the Senate last month extends that ban another year.
The codification of Free File in the Taxpayer First Act and the extended ban on pre-populated returns in the appropriations bill are steps in precisely the wrong direction.
I think the popular counter argument is worth knowing. The TurboTaxes of the world argue that if the Government just sent you a pre-filled out form they could mess up many of them & you would possibly overpay if you didn't do your due diligence. This tends to get support from those who like to argue in favor of ideas such as "smaller govt" & "govt is inefficient compared to businesses where the capitalism market will pick the winners". Obviously both of these ideas are highly controversial.
Propublica is the definitive outlet for reporting on this stuff. They've spent years digging into bills and the millions that Intuit and H&R block spend lobbying around tax reform.
> “For a decade proposals have sought to create IRS tax software or a ReturnFree Tax System; All were stopped,” reads a confidential 2007 PowerPoint presentation from an Intuit board of directors meeting. The company’s 2014-15 plan included manufacturing “3rd-party grass roots” support.[0]
...Which is important because if you start from anywhere else on their site, they'll begin hurling upsell dark patterns at the user, despite proclaiming "free" in copy in many places.
Right now, if I google "file taxes for free usa," the page "TurboTax Free Edition"[1] ranks higher – which is not the same software. And, of course, they do not link to the actual FreeFile page from there.[2]
Edit: turns out that Intuit will no longer be offering that government-sponsored Free File alternative after this year (disclosed in a blog post titled "Accelerating Technology Innovation," hah)[3]. Good riddance. The US Treasury Inspector General found that only 2.4% of taxpayers (2.5 million) actually used the free file software, whereas 5.5x that number could have filed for free, but were likely charged for it instead:
> TIGTA estimates that more than 14 million taxpayers met the Free File Program criteria and may have paid a fee to e-file their Federal tax return in the 2019 Filing Season.[4]
This should exist. 80% of US citizens can just have this done right now.
>> government program that develops this kind of software
This should not for the remaining 20%.
It should also be noted that the IRS already has all of the information about you anyway. Your bank, your brokers, etc all send copies of your financials to them. At that point, filling in a tax return by hand is basically a potential form of punishment for not doing your homework right.
The interface is responsive. I literally can send my taxes while I shit. The biggest hurdle is that the day the tax season starts servers can't deal with the load (because apparently everyone wants to be Ned Flanders and file their taxes the first day).
Thanks to the national ID e-card (which does have a chip with a private key and a certificate signed by the government's certificate authority) I don't even need a login/password to enter the tax agency web site, the card proves my identity.
This is not some advanced e-government shit, it's routine and every advanced country is expected to have it (just like universal healthcare, clean water or paved roads). Even development countries are starting to have these kind of web services.
At this point I suspect some people get paid to spread bullshit like this.
But I agree that almost for everyone it is a 30 seconds exercise to do the taxes.
Now with the website it's all much easier still though.
Our brand of conservatism is informed by Calvinism and hard core Capitalism.
Those in charge believe in using religion to control and the purpose of everything is to make someone money.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
This is not a verbatim quote, but solar to what you have to do now to calculate health care insurance subsidies.
As a bonus, the spreadsheets are generally reusable, after checking to make sure there are no changes.
I failed to copy my self-employment tax back to my 1040 for 2020, despite having calculated it correctly. No warnings, the form filing went smoothly, and 4 months later I got a notice from the IRS.
It's insanity.
My suspicion is that it is deliberately deprecated due to pressure from for-profit tax prep companies.
PDFs aren't exactly used in a standardized way, so trying to make this work for even a fraction of the numerous tax form issuers requires a lot of work, and a lot of ongoing maintenance. You'll need to prioritize the actual tax forms, and annual updates to those first.
Hypothetically, even if an API existed, building the integration in your own app also costs FTE hours that are likely drawn away to higher priority tasks.
Eventually my taxes fell into the realm of forms that even CPAs can make mistakes on or are unfamiliar with. I am really conservative with this stuff and really make sure to pay what I owe. I, or my CPA, still make mistakes that result in the State or Federal government sending me small “you paid us too much” checks every so often. That’s been true when I’ve done it myself, used TurboTax, or used CPAs. I have a friend with similarly complicated taxes and she just got her first “you owe us $XX” letter for this TY2020 and another $XX check in her favor for TY2018 and TY2019 making the whole thing a wash.
If they can tell you that you paid the wrong amount a couple months after filing it feels like for those on a W2 and without unreported 1099 income they could just send a statement with an invoice if you owe and a check if you’re owed. The status quo for those individuals really is as you say. There’s enough complexity baked in that people throw their hands up in the air and just pay the $100 for basic tax prep that should be unnecessary in the first place and is not much more difficult than balancing a checking book.
Lmao no. Look at the number of people who eat out every day instead of cooking.
People go to H&R Block because filing taxes is tedious, boring and can land you in jail (or at least, serious legal hot water) if done wrong.
Yes, the IRS could do even this for you, but there's a myth that US taxes are always monstrously complicated that everyone likes to perpetuate:
1) The tax companies like it because it keeps people scared of doing it themselves
2) Tax reform advocates like it because it's they can cluck and shake their head at the corrupt government and tax companies
3) It _can_ get complicated if you have a complicated tax situation
Even when 1040-EZ was a thing (which it isn't any more), it was only relevant for filers with no dependents (e.g. no children), and given that something like 40% of households have children under 18 I am pretty sure that 90% is a bogus.
It’s possible to understand it well enough to get by, but you’re pretty much guaranteed to make mistakes in one way or another, and some of those mistakes are pretty much guaranteed to be criminal offences. You could live your whole life without that ever becoming an issue, but the gamble you’re taking isn’t that you’re never going to make a mistake (you will), it’s that the IRS will never commit any considerable resources to investigating your mistakes.
Genuine errors on your taxes are also not criminal offenses.
Unless there is malicious intent, the IRS does not give a fuck. They will bring it up, and ask you to fix it.
The US assumes that all people who have anything to do with other countries are billionaire owners of multinationals with armies of lawyers to fill out paperwork.
- https://taxcalc.pslmodels.org/
- webapp here: compute.studio/PSLmodels/Tax-Brain/new/
- webapp here: https://uk.policyengine.org/
However this system isnt good at telling you which forms you need to file. You could miss an important one. For example sometimes you need a Schedule D and sometimes you dont. If you income reaches six figures you have to calculate the AMT and NIT forms to see whether they apply or not.
You can also hire an accountant. Our accountant does our taxes for just a tad more than what TurboTax's self employed tier costs. Even if we could get away with TurboTax's deluxe tier, I'd still argue the slight added cost of the accountant is well worth it.
It takes me like 5 minutes to file tax every year.
The forms are not super straightforward but not incredibly complex either. For most normal people with a W-2 or 1099/self-employed income, retirement savings accounts, and some brokerage/investment accounts, you should be able to get it done in a weekend of research & work using resources on the internet, referencing the IRS's instructions for their forms, and using your previous year's return as a reference. And less time in future years once you've figured out how it works. You will need Adobe PDF software, but it's libre and a Windows virtual machine with the network connection disabled will solve that if you use Linux on your computer.
It's not for everyone, but if you don't want to support the evil tax industry in the US (there have been a number of posts on HN about this) then it's a good option.
Additionally, you can create an account on Turbotax and fill in all your information (but with fake name, SSN, employer tax numbers, etc.) and it'll tell you the amount of remaining tax obligation / tax return that it calculates. So you can use that to verify that you did everything properly. Turbotax only charges money to actually submit the return through them; even if you would normally require a paid TurboTax plan (e.g. for contractors, living in multiple states, etc.) you can still go through the process and get the final number without paying.
I did this for the first time this spring and was able to get it done in a weekend. I had W-2 and 1099 income/deductions and lived in multiple states last year. From what I can recall, basically the form 1040 is the 'root of the tree'; your W-2 income goes into that and every other taxable/deductible thing you do ends up aggregated into the 1040. The schedules (A,B,C,...) of the 1040 are like the first level child nodes; each one has a different topic(s) like self employment gains/losses, farming/fishing income, etc. so you can skim over them and see what applies to you, then fill out the ones you need to and enter their totals back into the 1040. The schedules will have lines into which you aggregate specific incomes/deductions, and the instructions for the schedules will have details on how to calculate all of that. And for other special deductions there are lines in the 1040/schedules that mention them. I'm not a CPA so don't blame me if you follow those instructions and something goes wrong.
The vast majority of people just want it to work like it works everywhere else. Computers handle it, and you overwrite anything that the computers can't know so that it's correct. That's what tax software is for, and that's what these projects try to accomplish in a FOSS way.
To me, the value proposition of tax software is that it walks you through all the topics interview style, so you can kind of relax and go with its flow. Otherwise you've got to create that structure yourself - determining what's relevant, sorting income into categories, figuring out what boxes it's supposed to go in, what schedules you need, etc.
I wonder if libre software that only did the interview portion would be more sustainable. It could create category tallies and supporting statements that don't really change every year, and direct you to fill those numbers in on the forms in the appropriate box. Then it wouldn't have the maintenance burden of creating print-ready forms that haven't even been released until taxes are due.
- https://imgur.com/a/NUZZlJM (file for tax returns)
- https://imgur.com/a/gUGf9wU (all income, automatically known by tax authority by electronic data exchange with my employer and broker)
- https://imgur.com/a/Nvh5RI8 (all my estates taxes, automatically calculated and sent as invoice to my bank)
Come to Brazil and the Receita Federal will suck you dry
You can largely use it if you know what you are doing or have the most simplest tax case, but it won't offer you suggestions how to optimize taxes, and doesn't include large lists of items that you could possibly deduct. This service is offered by proprietary tax tools like WISO or QuickSteuer which offer questionnaires trying to cover more details of your tax situation to find out opportunities to optimize, and include large help files that contain examples and explanations.
Cost for these proprietary tools can be very low, they go on sale for like €5-€10 at discounters during tax season or are like €20 for the fully featured versions.
These tools also manage items like long-term deductions over the years, so that's their lock in effect.
It's relatively easy to screw up your taxes by misentering a number into the paid software as well. The various guarantees the paid software people offer don't cover this sort of situation. I don't think this is really a factor.
Which is probably not the kind of mistake you’ll have on your taxes anyway. Basic arithmetic is easy. And if you do make these mistakes it’s not likely the IRS does anything more than correcting it. But it’s more than no guarantee.
Also they do provide human support.
There’s nothing about paid software development that requires source code to be kept private.
These kinds of initiatives don't get everyone all the way there (see: other comments about edge cases) but they can go a long way towards educating folks about what filing looks like -- and at least some of them will give it a go themselves.
tldr: good post