And that is speaking as something who used to work inside government.
- Many if not most software engineers in California earn more than the $200K household limitation for using Direct File
- From my understanding there is no way auto-generate my state tax return from Direct File so I would have to do all the work twice even if I can use it
- Complicating my tax situation (legally) allows me to save more money, I would save far more than the price of TurboTax by using TurboTax instead of Direct File, as much as I hate it
There are 50 states, and every single one of them has their own idea of what an income tax return should look like, so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain.
The US also has significantly more tax planning/tax structuring opportunities than do other countries, and DirectFile doesn't even try to handle those...but neither do its foreign counterparts. If you have a more complicated tax situation, like most software engineers do, than DirectFile isn't for you, and never was intended for your use case.
Or just contract one of the companies that already do it with a public-private partnership. HR Block or whatever gets paid say 2x their current tax prep revenue in exchange for being the white-label direct-file available for free to everyone.
Like these tax prep companies are crazy cheap for just being able to hit import next next next next next submit and never think about taxes ever. The work is already done, why duplicate it?
The IRS tried that already and the 3rd parties just used dark patterns that tricked customers into paying for unnecessary services.
That's not my problem. The states are part of the country. This is as bad as restaurants charging tips instead of stating one number. Government dudes should meet and work it out between state/federal and give me one damn number.
All I want is one number.
You would never take the one number if you could save money by making it a thousand instead. Eg. if your state did that simplification, youd move to a different state that doesn't have the simplification so you can save a couple bucks on the taxes
States are NOT an administrative subdivision of the larger country. This is a common misconception. They are not at all like Japanese prefectures, not like Canadian provinces, nor like the counties or parishes that US states are subdivided into.
States are fully sovereign entities that retain to this day certain inalienable rights vis a vis the federal government.
A good analogy is that the US is more like a stronger version of the EU. States like New York and Texas within the US are more like Germany or France-- they've ceder some rights to the federation but retain many others. The US constitution, which is short and easy to read and required reading for the US Citizenship test, clearly outlines which powers are reserved for which part.
>That's not my problem. The states are part of the country.
America has or has traditionally had a strong culture of self determination and citizen involvement in and ownership of politics and government policy.
Another word for this is democracy. Real, genuine, messy democracy. America is not a service provider to you. It is a union or coop you are a part of.
You are not a customer of your country. You are a member. A shareholder.
This attitude is I know very foreign to many people who come from elsewhere and only know authoritarian states or democracies in name only. Or very young people who have caught on that civic culture is dying in most of America.
But it's fundamentally diametrically opposed to what this country has always been intended to be at its best. it is very very much your problem
The original idea of the US was a decentralized state. The Union is the sovereign entity, while power rests with the individual states, unless explicitly given to the federal government. Over time, it became clear that you can't run a country like that in the modern world. Slowly, with creative interpretations of the Constitution, the federal government gained more and more power over the states.
One of the distinctive features of the actual US system is that it's often unclear which level of government has the authority to regulate a particular matter. Much of the political debate is about the constitutionality of laws and regulations, which may have been in force for decades. And controversial legislation often ends up in the Supreme Court, which may then decide that the state or the federal government did not have the authority to regulate that.
The way to extend this, if the federal government wanted to push it, would be to define a standard export format from IRS DirectFile, containing all the information in it...
... then make some federal money contingent on states implementing a filing system with an import function (for the shared data).
Nice clean interface, and still states' choices on if they want to support.
In any case, like the root of this comment tree says, the best way to make sure this program lives to reach us is to make sure it paces itself. If that means another year or two of TurboTax, that's A-OK!
Saying the majority of engineers in California make at least $200k makes you even more out of touch. According to Glassdoor, over $200k for a SE in CA is 90th percentile. The average SE in CA makes $132,000
https://www.ziprecruiter.com/Salaries/Software-Engineer-Sala...
https://www.levels.fyi/t/software-engineer/locations/san-fra...
48 x 40 x $70 = $138,240
Which is far from $200k. How are you computing?
Most of Hacker News and indeed the tech community at large exhibit "I don't understand life outside of California cities." syndrome, this by itself is nothing new.
$200K as the entry level for FANNG ( what it used to be call ), and then Big Tech and now Magnificent 7 has been the norm on HN since 2016. It wasn't until 2023 did reality started to hit many.
One of the best ideas the Reagan administration had was paperwork simplification, they introduced a 1040EZ for (roughly) the same kind of filer that Direct File works for.
My son put off paying his 2023 taxes to the last minute, I told him he should try Direct File (I'd believed the story that it would be easy) but when he tried it he had extreme difficulty authenticating himself, I think because they check you against consumer databases and they could not compare to past tax returns, credit history, etc. because this was his first tax return and he had no credit history.
We were forced to wait for a long time to talk to a human operator for him to verify his id. In that time I found out that there was no longer a 1040EZ, see
https://www.investopedia.com/terms/1/1040ez.asp
but I was able to fill out a complete 1040 and the New York equivalent of it before we got through to the operator. We just got the check from New York the other day after about 6 weeks, haven't heard from the IRS yet.
My wife and I combined make about $300K/year. We don't run a business, don't make charity contributions, only pay ~$5K in mortgage interest, and don't have kids. We don't even do retail stock investing (EDIT: And I haven't exercised any employer stock options), just a 401k, an IRA, and a 5.25% savings account.
We take the standard deduction. I can't imagine a CPA would be able to find so many possible deductions that it would be worth itemizing.
I had just bought a house, just bought a hybrid, started working from home, and was new to the US.
"What are you claiming?" "What can I claim from this?" "I'm not sure. But I can put these numbers in here and see what it says."
You're literally paying for someone to type in the same numbers you would, with as much (or at times less) knowledge than you (who is also less invested than you in getting it right, but much more invested in selling their 'audit protection' stuff).
I do my taxes first. You (CPA) look over it, if can save me any additional money, I'll give you 1/2 of the additional money saved as your compensation. Deal?
All they did was fill out Turbotax for me, and charge me an extra 150 for that.
There are alternatives to CPAs, who are licensed by individual states and don't necessarily specialize in taxes. Several states, including California, require testing and registration for paid tax preparers who aren't CPAs or Enrolled Agents. EAs are the only federally-licensed tax professionals with unlimited practice rights before the IRS.
It's reasonable to assume that CPAs pass along the costs of their marketing and lobbying efforts to their clients, without any guarantee of higher quality compared to the other professionals available.
Though it's also very likely at these high incomes that you would be disqualified for other reasons (investment income etc)
Did I do something wrong?
Edit: I understand now. DirectFile is for Federal and MassTax is for State taxes.
have complicated taxes, due to how they're making that much money. I don't have a problem with them optimizing for the simpler case (eg the intention behind the 1040EZ) while software engineers, who can afford a CPA to deal with optimizing their tax burden off non W2 income, aren't initially able to use it.
In terms of societal and long-term impact of eliminating the middlemen, Direct File has much more potential. Hopefully, in a few years, states will integrate their tax systems with Direct File. Perhaps one day the government will finally send us a completed tax return as opposed to the other way around.