IRS makes Direct File a permanent option to file federal tax returns
irs.gov
irs.gov
It was so clean. So simple. I could understand every single step of it, even the helpful breakdowns along the way. Bonus: No bullshit screens holding you up while it "checks the accuracy" or "finishes things up" like other tax prep software does if only to make you feel like you're getting your moneys' worth out of it when it already computed those numbers 5 hours ago.
I had one (major) snag with the NY filing side which was fixed revolving around data transfer (and I suspect I was filing early enough in the program I caught it 'first' so it took a little longer to fix), so I hope that helped everyone else in NY that got to use it!
I legitimately cannot wait to file my taxes again next year with this system.
EDIT: Here, I know it's silly, but here's a (redacted) screenshot of my whopping $73 refund from the government: https://i.imgur.com/9FoxRts.png - nice, simple English breakdowns are... so good.
That's awesome!
One of my big pet peeves around TurboTax is the way is intentionally pauses my multi-core, hyper-threaded, zillion gigahertz computers from doing 1960's level calculations (IF user checked off option A, then multiply by whatever)... so that it can look like it's busy.
Congrats to Intuit for fully automating the process of "looking busy for the boss", I guess.
For the state side it's a little more complex (because of Events), but essentially the flow is to wait for the IRS to accept the Direct File first (which took only 2 minutes). Which also meant - holy hell, the IRS has already signed off on my tax return, basically, which kicks off the refund flow. Once that happened, I was invited to continue the data transfer and approve an IRS Oauth-esque flow to send data onwards to FileMyStateTaxes.
I assume now that I fixed the snags this time around next year the state side should also only take about 10 more minutes.
There are so many posts on /r/personalfinance where people claim they “paid $0 on taxes this year”. What they typically mean is that they owed nothing when they filed a return, or received a refund.
They still paid taxes, it was simply taken out of their paycheques and paid in full by year end.
I've used the Free Fillable Forms option before, but that places a large burden on you to get everything right. Direct File will solve a lot of issues.
Which is just infuriating, because obviously (nearly) everyone has to file both.
It's like a restaurant telling you all their soda is free, but then it turns out they charge $3 for the paper cup it comes in, and you're required to use their paper cups.
You're not required to use their software to file the state return though. You can file the federal return and do the state return yourself. Many states like NC rarely have any steps beyond copying the federal AGI and multiplying by the state tax rate for common situations.
You're signing up to file your taxes for free and spend a couple hours inputting all the info, and then discover you'll have to pay or else now do your state taxes separately on paper and mail them in, taking another hour.
It's bait and switch. That's the problem.
(Personally, I also do my federal taxes manually, with the IRS's Free Fillable Forms. But either way, there's no need to pay for the state forms.)
This also reminds me of my apartment building, which has an “amenity fee” of $100/month for rooftop+gym usage, on top of the normal advertised rent. In the leasing office, I asked for details about it, and was told it’s a “non-optional” required fee which everybody has to pay. Stuff like that should be illegal - the only reason they would do that is to advertise lower rent.
States aren't charging citizens to e-file their taxes. At least I sure hope not.
2011: $17.95
2016: $49.98
2018: $66.95
2019: $97.90
2022: $124.90
2023: $133.95
I mean, yes, my taxes got a little more complicated over the years, but not 13X more complicated. I don't see how these guys justify this price trajectory.
Until now, you were paying it. "People will pay it" is all the justification needed for price hikes.
I tend to pay a little bit extra for services I don't necessarily need but whatever. Like Deluxe. It's way cheaper than what I would pay for a professional to do it, and still less than I'd pay for Turbo Tax or similar. As long as the quality of the app keeps going up and the price gouging stays out, I'll keep using it.
FTC judge rules Intuit broke law, must stop advertising TurboTax as “free” ( https://arstechnica.com/tech-policy/2023/09/ftc-judge-rules-... ) 360 points 9 months ago | 89 comments https://news.ycombinator.com/item?id=37441982
The link says they’ll open it up to all states that want it as an option, but what does that mean if it only supports filing federal?
Next step: Just send me a return I can sign off on, while still giving me the option to file my own if I like.
And then there's the state return, which is not free. The federal government gets a few brownie points, but the tax preparation industry still gets its pound of flesh. It's really unimpressive, it's politics that no one is better off with.
No; this is really an MVP. It doesn't work for people with certain types of income (including gig workers), for higher incomes, for cases where you need to itemize deductions etc etc
Eventually the goal is that it pulls in all the different forms and edge cases of the tax code but it's not there yet.
Currently it's just basic "W-2, (maybe a 401k), and basically nothing else" but the trial was also intentionally limited to a small portion of the tax base to keep the project from biting off more than they could chew for the first year.
But yes in the next ~5-10 years as long as the next admin doesn't cancel it, this will probably be a default "public option" for everyone.
For basic returns, FreeTaxUSA has been the best "tax prep service" I've used, UI is simple enough and there are no hidden fees from what I've experienced.
And the most helpful of all is using the IRS's own portal to see everything that is on file for you - this is especially helpful if you have a lot of non-standard income and you're not 100% sure if you've filed everything the IRS expects you to - https://www.irs.gov/individuals/get-transcript
My tax guy uses this, but it should be noted that they don't have all the forms until after the filing deadline. You still have to file an extension and pay if you owe anything before that portal is available.
They don't because witholding is easier for everyone and everyone would hate having to write a check to the IRS every few months.
And people used to have make quarterly statements, they switched it because it was cheaper to make the employer do it instead of enforcing when people forgot.
I'm just saying, if anyone wanted to keep taxes "painful" they would not have implemented withholding in the first place. It's more painful to have to pay "out of pocket" than to have the money taken before you ever see it.
Am I really the only one who downloads their entire paystub every paycheck and enters all the tax numbers, benefits lines, 401K deductions and so on into a spreadsheet or Quicken so I can check on accuracy and tally everything up at the end of each year? I've found errors once or twice by doing this. Come on, there must at least be dozens of us, out of hundreds of millions of employees, who do this...
This sounds like nonsense. Did you read this somewhere credible? You need to know how much has been withheld because you might have multiple jobs during the year and the tax is bracketed depending on your total income during the year. If they hid that information during the year, people wouldn't have the documentation they need to figure out if they need to adjust their withholding to avoid a penalty (or a free government loan).
And you don't need to see your social security and medicare taxes on each stub, because you can't change their withholding. You only need it on your W2. And in fact your employer pays half of those taxes already. That was the compromise. That your employer pays half, which you don't see, and you pay the other other half.
They could have easily had your employer pay the full amount and then you'd just make less, but they purposely did it this way so that you get mad about how much the tax is.
It's honestly really nice to see the GSA getting relied on by agencies to do infrastructure and web design because they have gotten really good at it (and an overwhelming majority of their work is heavily open sourced).
It was also interesting to see the comments made that they are considering eventually open sourcing tax computations. That would be massive.
I've used an accountant the last 2 years for filing because starting my LLC kicked my taxes up a notch into an area that I do not feel comfortable doing myself (via paid products). After I saw it done once for me it looked like it wasn't too bad but still not something I would do without software. Most of the work was just itemizing and categorizing expenses.
I use the spreadsheet from https://sites.google.com/view/incometaxspreadsheet/home to help.
The first year there was some anxiety as to whether I was doing it right, but I've never gotten any notices about errors for that so I assume it's all good....
If you haven't, check out the Free Fillable Forms from the IRS. It's basically the same as the paper forms, but you don't have to shuffle actual paper around and you can just submit it online.
Are there any signs of hope this will get better? Direct File seems to be going well so hopefully it increases general will to do stuff.
Since the tax preparation fee itself is presently a $20,000,000,000 private tax on the US economy, that's wonderful news.
But in the short-run, let's all look forward to the intense fear-mongering which is going to come from the ever-benevolent TurboTax marketing department...
What's new here is the IRS providing the user-friendly tax prep software, at no cost to the user. It's still "in beta" (so to speak) though, so it doesn't yet support many tax situations.
efpts.gov uses login.gov, irs.gov should do likewise...
The tax prep industry spent more than $93 million on federal lobbying to prevent direct file since the 2003 launch of the Free File Program.
“Direct File is not free tax preparation, but rather a thinly veiled scheme where billions of taxpayer dollars will be unnecessarily used to pay for something already completely free of charge today — free to the taxpayer and actually free for the government,” said Intuit’s spokesperson Tania Mercado