IRS Free File: Do Your Taxes for Free
irs.gov
irs.gov
They charge $14.99 for the state filing. Usually a coupon code available. Or go to the state's website (CA at least), and file that for free, too. But for the convenience of not having to input my info again, I'll pay their fee.
If anyone has any recommendations I’m all ears
I send my bank statements, credit card bills and other documents to my accountant. He produces a return, together with optimisation advice for the coming year. It’s well worth the money. (I also have real estate, private equity, fund interests and emerging trust situations, and am multi-state.)
1. You don't have to figure out which forms to file by yourself. This quickly becomes non-trivial if you run a business, take a lot of deductions, or have weird forms of income.
2. The IRS sees that your return was prepared by a professional, so it is much less likely that they will try for an audit (since a professional will be representing you).
If your tax liability is under $100k and your return is under ~20 pages, you mostly don't need one, but an accountant also doesn't charge much either (about the same price as TurboTax).
No affiliation or anything.
I would say you need your own accountant and not software if:
1) You have complexities involving trusts/inheritance
2) Anything involving crypto (this is just a grey area to me and things change)
3) Anything that sounds more complex than anything above.
If you're getting a bunch of 1099-DIVs/INT & W2/W9s it's not super complex.
5) Foreign income, other than simple investment income (e.g., own stocks in foreign companies).
That is not true. Perhaps what you mean is that capital gains on assets held less than a year are taxed at a different rate than capital gains on assets held longer than a year?
Don't mean to get pedantic but I didn't want someone to read your comment and think that they owe no taxes on short-term capital gains. (What a crazy tax incentive that would be!)
Also, supporting TaxHawk means supporting a company that cares about their employees. They have done so many things for my relative that it makes me jealous. They have also kept raising wages ahead of inflation.
Anyway, TaxHawk is a great company to support!
Some states don't offer a free-file option. My memory, which is at least a few years out of date, is that MI doesn't.
My problem has never been with the filling out the forms—my situation isn't complicated enough for that to be difficult, especially compared with the federal forms; it's with the filing. I just get so annoyed at the refusal of these agencies (like MI's, at least back when I incurred taxes there) to accept something that is surely more convenient for them and for me both, namely for me to file electronically. What do they gain by requiring me to print out and mail them a paper document that they then have to open and scan?
Do you have an example of what other products provide for this? Does IRS Free File do better in this regard?
My relative has had to do UX work, and at least to me, it sounds like they care about it. But my relative also talks about how they're not the best at it.
So can you explain in more detail what you are wanting? Do you want some sort of way to see a line item list of what the tax bill is?
(and it really bothers me that taxhawk.com and freetaxusa.com are mimics of each other... why have two sites with different branding that are under the cover the same thing?)
The two sites are targeting different kinds of people. That's why they exist. They are the same (and same company) because in the end, everyone has to go through the same processes for taxes.
As for keeping the tax return data on their server, it's for convenience and possibly for other reasons. My relative believes that, for legal reasons, FreeTaxUSA is considered a "tax preparer" and needs to keep those records.
I've looked at https://www.trybookmate.co/tax previously
Intuit does try to prevent the IRS from making it easier to file electronically for free -- that much is true.
Lobbying, my friend. Intuit spends money to actively lobby to keep the tax code complex.
Don't trust my word? Google it, or start with this [0].
[0]: https://www.nbcnews.com/business/taxes/turbotax-h-r-block-sp...
A complicated tax code is different than a complicated filing process.
We can all hate Intuit for one but not the other.
They surely want to make filing as complicated as possible so they can streamline it for you. Intuit surely lobbies to prevent the IRS from advertising free tax filing options. I’m sure they would like the forms to be as arcane as possible but I don’t think that congress has anything to do with the layout of the forms and worksheets.
Besides that, you’re definitely wrong. They do lobby to keep it complicated and actively try to confuse customers into thinking they need to pay more for no legitimate reason at all.
Intuit causes great harm and so does anyone that works for them.
The UX can be easy or hard, to input data that meets said ruleset.
Even with a complex tax code, you could still fill in three values and get your correct result
This is generally how a lot of software works: a simple interface in front of a complex process
If you chase up the comment chain you replied to, you're really agreeing with me using a tone of disagreement. sockaddr says that filing has to be complex because tax codes are complex. We both disagree with that.
They have a question search [1]. When I searched for "rental depreciation," it showed [2]. The first result dropdown had this:
> Rental Depreciation:
> Menu Path: Income > Business Income > Rental Income (Schedule E)
> Enter on the Depreciable Assets screen. If you are filing a Schedule C, then that screen will be within the Business Income (Schedule C) screens. If you are filing a Schedule F, it will be within the Farm Income (Schedule F) screens. If you are filing a Schedule E, it will be within the Rental Income (Schedule E) screens.
[1]: https://www.freetaxusa.com/help_tax_tips.jsp
[2]: https://www.freetaxusa.com/search_faq.jsp?apptype=freetaxusa...
I'll pass along your message!
Many people in the UK go their entire lives without ever interacting with HMRC (our equivalent of the IRS)
Self Assessment (doing taxes every year) takes about 20-30 minutes and that's when I'm claiming tax reliefs
Anyway what's crazy is that we have to do this at all. In normal countries the government calculates the tax you owe based on information filed by your employer, bank etc, and then sends you the bill. If you agree with it, you pay that. You are required to do no work at all unless you want to dispute the bill.
How do you track deductions like installing a heat pump?
More than likely this would be politically infeasible: Look at the uproar over their (now deferred) attempt to collect information on relatively low-dollar Venmo accounts.
That some small sliver of people have complicated taxes or want to itemize their expenses is not a good reason to complicate the activity for the majority that have straightforward taxes.
And then if you want to simplify, just eliminate deductions altogether (and shift brackets to compensate). Eliminating top bracket income for the mortgage interest on a huge house is pretty regressive, for example.
And then once they start doing it, they can probably figure out how to do it for a larger and larger percentage of people over time (and the tax code can be adjusted to make it work better in cases where it makes sense).
Getting excited about saving taxpayers 15 minutes, and trading off $thousands of deductions for a few more minutes, suggests that you’re optimizing for obscuring the primary burden (the cost of government) rather than reducing it.
It’s the weird ideologues who typically want an extremely simple system. But it’s very hard to make such a system as progressive as what we have today without reintroducing complexity.
It's also sort of silly to go on about making sure that people understand the "burden", when government should obviously be restricting itself to things that are a net benefit to society. Of course there will be disagreements about the value of a given activity or service, but the notion that government must be a burden is pretty backwards.
This is already what happens, except you're paying a third party for the privilege of copy/pasting some fields from one form to another.
America isn't unique and special, solutions to problems in other countries aren't magically impossible here. The reason you think this is because you've been tricked into thinking our tax code is complex by necessity.
In reality, things are only this bad because TurboTax and other tax preparing companies have lobbied for more complex tax codes and less access to free automated filing.
If an independent company can produce software to file your taxes and charge you $150 for it, there's absolutely no reason the IRS can't do the same thing for free.
but yes, they should just eliminate all deductions and shift how much you are taxed to compensate
Why is all this being sent to me and not the IRS?
If it is also being sent to the IRS, why isn’t the IRS sending me a pre-filled “return” that I can simply send back with a “Agree” checked?
Yes, there are years I have things that are unexpected/unusual. I’m happy to add that stuff to the above pre-filled form and submit it. But it’s absolutely infuriating that every April I have to spend a day sorting through a pile of paperwork and stress about whether or not I’ve forgotten something or gotten something wrong (or, these days, pay a CPA to do it for me, even thought there’s absolutely nothing unusual about my tax situation).
While the Tax Compliance scam is something that needs to be addressed, I am also not a fan of completely automated and "easy" taxation. I think government taking our money should be painful, and in your face.
I am not even a fan of automated payroll deduction for this reason, people should experience having the money removed from them every month, week, what ever just like any other bill they have to pay.
This psychologically is a check on government overspending as if people were paying 25+% of their income, as a bill payment every month to their government they would be more prone to ask why, instead of what many do today which is just look at their net income and treat the refund as a savings plan or even worse the government "giving" them money
We have made it entirely tooooooo easy for governments to take money from us
I don't need this pain and nonsense every year. I'd rather be enjoying the one life I have.
A lot of those people would spend that money instead, and then be unable to pay their taxes at the end of the year. This results in people borrowing money to pay taxes, which is really just an opportunity for lenders to take advantage of people.
Consider automatic deductions as deposits into an account you can't see or touch and is only accessible for taxes. That's pretty much exactly what most people would need to save for their taxes in the first place. Once your taxes are withdrawn from that account, you are refunded the difference.
And it gets better every year too. More and more data automatically pre-filled. More and more of the form intelligently hidden unless you need it.
And yet every year I’m blown away by these stories from the US about all the hoops they need to jump through just to submit a simple tax return.
Why not set it at $100,000 or $500,000?
It fails on some really specific use cases, but it works for the vast majority.
Is there a way to eFile directly with the IRS?
Based on the emails I’ve received from six companies across six different industries in the last six weeks, this is apparently the end state for every commercial interaction I’ll have.
Not that it makes it OK by any stretch of the imagination.
[1] https://www.irs.gov/pub/irs-utl/Eight%20Free%20File%20MOU.pd...
The cherry (or pepper) on top, after certain years (in 2022), the discontinued that option, & progress by IRS for automated taxes were already lost.
Surely, there can be a database at the IRS of everyone’s W-2 and 1099 income.
Agree, most countries (including India) simply opens their portals, you sign in, check all numbers, report anything missing like income or deduction, and press the final Enter.
The IRS has always responded in a really positive way, so it is really worth talking to them (well, unless you think you may be in real legal trouble... I guess "don't talk to the cops" applies here too...) if you're in the situation where you think "oh, yeah I messed up" or "oh, yeah they messed up" it's probably best to just reply... but yeah if you think it is serious talk to a tax attorney... (not an accountant, which isn't a tax attorney).
The "they messed up" for me was a crypto thing, where I actually took a small net loss, and didn't file (because you don't need to, for capital losses, from my understanding, though I guess you should) and they thought I took some insane gain b/c of the $ value of the trades.
I just mailed them the trades, said "I didn't submit the form for this b/c I didn't think I needed to for a loss" and they said "yay, thanks, see ya" a bit later. Positive experience.
Anyhow, I'd imagine in any case it is still useful as a way to validate information.
In reality only if you take standard deductions and only get paid with a W-2 can they actually figure it out. But I agree that overall the process is messed up.
add in retirement trusts owned by self directed IRAs invested in leveraged real estate and id love to see a 30 min tax return
i pay $1k and spend a few hours setting data up to give to the accountant
oh let’s not even consider the mess crypto or poker winnings are
That looks like one or two W2s, maybe a 1099, deductions, no state taxes, capital gains... and that's about it.
I hire an accountant if there's something new I don't know how to do and then just follow the same process on my own for subsequent years.
US taxes are stupid.
I ended up switching to the fillable forms after that; lo and behold it turns out it's a tiny adjustment to one line on the 1040 and is clearly explained in the instructions. If your taxes don't change much from year to year it's trivial to work out the form each year. Like you it's always taken me about 30 minutes after gathering the various forms together.
People are generally way more afraid of the IRS than they should be. People that hate the IRS for being unreasonable are very likely aggressively reporting deductions or whatever, not just making typos on their freefillableforms.com return.
This was before the kinder, gentler IRS but still.
How much did they pay?
I just know they had the money and didn’t want the IRS to harass them while it got straightened out so paid it.
Taxes and health care in America are just so broken.
It’s a while since I’ve had to complete an Australian tax return.
https://sites.google.com/view/incometaxspreadsheet/home
I use it every year and find it to be great.
Also looks like that's the only IRS e-File option for AGI over $73K that doesn't involve using a commercial software/service (which I assume will probably sell user's financial data, and then also let it get breached).
People shouldn't have to surrender their data to third parties just to have a website walk them through their taxes.
"The Department of Justice announced today that it is requiring Intuit Inc. and Credit Karma Inc. (Credit Karma) to divest Credit Karma’s tax business, Credit Karma Tax, to Square Inc. in order for Intuit, the creator of TurboTax, to proceed with its $7.1 billion acquisition of Credit Karma."
https://www.justice.gov/opa/pr/justice-department-requires-d...
It makes me wonder who "we" are in terms of controlling policy and direction in the country. It also makes me wonder what the motives are of the "we" if it's really inclusive of your typical voter and not a small subset of self-interested parties, many of which may not even be people.
Dude insisted I was the one who initiated the contact and probably expected me to give personal information to correct the “mistake” or, at the very least, to figure out who is plotting my death.
Guess I’m getting old enough that the scammers think I’m an easy mark.
Fillable Forms is closed for the year
November 17 was the last day to access accounts, make changes, print or resubmit a rejected return. After November 17, 2022, you will not have access to your Free File Fillable Forms account and your 2021 federal tax return.
I would suspect that it will open in this next month or so. Does anybody use free file (https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...)? If so, what do they think of it? Why is it better than just sending postal mail (which one has always been able to file for free)? From a security point of view, is it better to send postal mail or have to worry about hackers and filing over the net?
Also, note that there is open source software that might work for some people (depends on state and forms needed)? I found:
https://opentaxsolver.sourceforge.net/
Is there other opensource software?
How is the IRS supposed to figure out how much money to take away from your W2 when you could get a billion dollar windfall at the end of the year and massively change tax bracket?
The 1 job W2 literally takes 15 minutes to fill out if so, and it is pretty much signing off that you didn't make a million dollars on the side that the IRS doesn't know about.
Spain's equivalent is basically 'we know you have a kid and this income so here you so. just sign on the dotted line'
Millions of American kids vanished when the IRS decided that to claim a kid you must provide a valid SSN. [1]
https://www.snopes.com/fact-check/declaration-of-non-depende....
Yes and is often the case, fully justified.
When it's the time to file taxes, you go to a government website that tells you all it knows about you - inheritances, donations, salaries, etc etc. You can add stuff if you want (e.g. special deductions), but for most people it's a matter of next next OK Finished. On a government website everyone knows (that send you a letter/email to remind you it's time), for free, and works for everyone regardless of complexity. Contrast that with the US where tou have to provide all the information yourself, but first you have to find filing software that you sometimes have to pay for (either because of your situation or because you were tricked by dark patterns).
It's honestly weird. Nobody likes taxes, that's why they should be as easy as possible to file and pay. The American model of adding middlemen for their benefit is going directly against that for no good reason.
Put differently, if I’m paying very high tax rates, of course I’ll be doubly pissed off if it is also arduous to file.
And you also have non-insignificant property taxes.
I had a friend who barely filled out a 1040, sent it in and the IRS sent back a “corrected” 1040.
Of course I wouldn’t trust the IRSs numbers but if you pay it, you’re done.
For the majority of people they have complete knowledge of everything you are going to report. If you don't believe this its easy to test: file your taxes with omissions and see how quickly they contact you to let you know you messed up.
There should absolutely be an option where you just tell the IRS to figure it out based on electronic reports that are already being reported to them from your employer's payroll system and other sources and have it just show you a summary that you checkmark (or override if you're one of the minority that has an exceptional case).
This is basically what things like TurboTax do for most people, most users rarely enter much of anything, the data is pulled from databases that have the same data that was already forwarded to the IRS. But of course there's a fairly substantial price for this 'convenience' when it should be built into the federal tax system and free for everyone to use as it is in some other countries.
What's stopping this from being the norm isn't the small percentage of exceptional cases but rather lobbying from Intuit, etc.
Canada forces most people to file a return too. Though it’s simpler than a US return.
I mean that puts you in the top 1% here...
The "What Is IRS Free File?" section below it explained most of my questions, so I think the "What Is IRS Free File?" section should exchange it place with the "Choose from IRS Free File" section. This allows the reader to have a clearer mind when preforming the filing process.
Just my two cents.
I wouldn't take the matter lightly though, because based on my understanding and what I've learned from the movie Everything Everywhere All At Once, IRS tax filing is a serious manner thus the tools designed to do that should be more user-friendly. I don't think getting kungfu-attacked by the IRS lady is enjoyable for any American (as well as going to jail/getting fined for misfiling).
Most Americans have been painfully aware that we have been unable to file online directly with the IRS and searching for a free file software is a giant nuisance. Given that the user base will be mostly Americans, I imagine it's probably fine.
Most low-earners don't bother with this and use the Foreign Earned Income Exclusion Act [1]. Don't forget about FBARs if you have more than 10k across foreign banks accounts.
[1] https://www.irs.gov/individuals/international-taxpayers/fore...
Of course, this doesn't change the US Tax code being intentionally designed to be easy to make errors that can lead to significant fines.
The reason I would go with a company rather than the free IRS stuff is because they offer audit protection and representation.
Also: just be rich. They don't investigate non-billionaires. Jeez.
Eventually they ended their participation in the IRS’s free filing program after all 50 states sued them for $141M for scamming the lowest income tax payers into paying unnecessarily.
I had 1099K with $1M worth of transactions from CoinBase, which generated only like $10k of profit.
My relative is one of the people working on Free File. If you have any issues, don't hesitate to contact me [1]. Free File is something they are deadly serious about because they know Intuit, TurboTax, et al are scummy, and well, it brings in business.
But Free File can be complicated (my relative complains about it a lot), so there may be issues. Please let me know.
Question: How does FreeTaxUSA make money to support this?
There are two answers: state filing (which sometimes costs) and add-ons such as their "Deluxe" offering.
They make money by being much smaller than TurboTax and the others. Less people means less money spent. They do this by optimizing for the easy 80% use case and letting TurboTax et al take the hard 20%.
If you do this, set aside an entire evening and expect to do only taxes. It isn't exactly hard, but the number of documents you need available can get large quickly. Instructions are confusing and there's a lot of cross-referencing.
It's very tedious, but totally approachable for most people, I think.
The funny thing is, I kind of like doing my taxes. Oh well
For the wider market, I'd imagine there are a lot of people stuck in their patterns and discontinuing the product might make them look at other options.
I don't want to use the internet for my taxes, so I do TurboTax locally and save that information in local files.
I do wish my approach were more scalable so that lots of people would do it. But for now I'll have to be content with personally not supporting the racket.
Also, piracy is not stealing.
How is piracy different from shoplifting shrink wrap software from a store?
The argument that a digital copy doesn't remove it from the original owner. It's straight duplication.
I believe piracy can be stealing, but I've heard all thr arguments ad nasuem.
…is likely more security-conscious than doing it using the Official Licensed Software, given how valuable financial information is and how easy it is for a program that Officially Doesn't call home with it to send it all back home. As long as you're sufficiently thorough about the cracking, of course.
In my estimation, one simply cannot trust proprietary software. They'll advertise trust and serving your interests on the front end, and then flip your information to the surveillance economy on the back end regardless. The more you try to avoid it, the more valuable your data becomes. Webapps have led the charge, but proprietary desktop software has the same dynamic now that Internet access can be taken for granted. Without a general privacy law like the GDPR, there is little downside to them doing this - the only risk is that they get caught by an independent researcher, and lose the few customers who notice and care enough. Essentially, since there is no political will for privacy regulation we're left with a low-trust relationship. And since I've got to spend effort protecting myself from the law of the information jungle, I might as well embrace it.