TurboTax’s 20-year fight to stop Americans from filing taxes for free (2019)
propublica.org
propublica.org
I want to blanket my area (well the whole country really but baby steps…) in signs with the URL during tax season. I really do loathe the entire industry at this point due to their gross practices around free filing. Some offer “free” online filing but deceptively upsell until they squeeze some money out of the customer. So I want to make any little push back I can against these companies.
Freefile helps ensure you keep your entire refund unlike TurboTax and other filing services which takes money from your refund. This tax season the choice is yours.
An offer and suggestion. The offer: I'm happy to blog and otherwise share your site with folks in my little part of the world (Northern Neck of Virginia).
Suggestion: Consider a redesign where the text is not white on a dark background. I just found this design guidance from CDC https://stacks.cdc.gov/view/cdc/11938; not sure if there is updated research. If there is, I'd love to read it.
To clarify, do you have a blog that you've managed to share with your local community? Or are these two separate statements?
I ask because I've been lately interested in the idea of a "community" site - a 'hub' for locals - so if that's what you do, I'd love to hear more!
> There was a recent effort by the U.S. government *to* create a no cost,
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An error occurred during a connection to freetofile.com.I just spent like $200 to file mine with TurboTax only because I have a very simple 1099-K/Schedule C since my wife sells things on Etsy. I know Schedule C can range from my simple setup to absolutely ridiculous, so I don't totally grudge it. But at the same time, there are a lot of small business owners where that's a big chunk of change for them.
[0] It also has other things such as RSUs, stock sales, real estate, cash distributions from businesses, etc... For personal taxes I do not see why anyone would pay a tax accountant as opposed to using TurboTax.
[Edited some formatting tags]
I think the worst thing I had to do was write a FIFO calculator to go through my thousands of tiny crypto transactions back in early 2020s thankfully I don't screw around with that anymore (especially when I got rekt and lost $4K)
Even without RSUs, I usually have hundreds of transactions across multiple brokers.
Approximately zero brokers do this, because RSU are still noncovered shares.
> Even without RSUs, I usually have hundreds of transactions across multiple brokers.
As a corollary, "hundreds of transactions" of covered shares collapsed into one summary line.
RSU is a pain though to enter. Technically you can enter a summary line and send in a 1099 to the IRS (last year was the first year that could be done electronically, so, fingers crossed it actually works correctly).
I suspect many others on HN have something similar setup.
And I suspect the #1 most common tax form H&R does for retail clients is the 1040EZ, the one that should take anyone with a $2 calculator a total of 10 minutes to get through. For the privilege of having H&R do it for you, you get to pay about $75 and they'll generously loan you your own few thousand dollar (due to EITC) refund on the spot, at an effective APR of like 7,000%
What tax complexities exist for low income people that would cause $200 fees?
I've often taken on a side project or two a year for software dev/consulting and it usually winds up being $200-350 to have my taxes done. If I only have W2 income, I'll do the electronic version of TurboTax though. I also do 0 deductions and have extra out of each check taken out just in case, I don't set aside or do quarterly payments and usually get a decent return back.
This is how it's done in most other countries.
E.g. in Finland employers deduct taxes directly from salaries. Also some capital gains taxes are directly deducted by banks etc, or at least the income is reported to the tax office. Yearly the tax office sends a prefilled report based on these. If you are fine with it, you don't have to do anything. If you want to add e.g. deductions, you add them on the tax office's website and it calculates the new report.
I've been getting taxable incomes for 25 years or so and I have never had to do any tax reporting.
If you don't fall in that bucket or run a business, you tell them those things and send back the corrections form.
They don't know your business income either of course and you do have to declare that, but most people have only income as an employee and they do know that figure, so most people don't need to "file" anything here. It's all automatic.
When you're buying an item you declare you need an invoice on it and punch in your tax id.
Later, when you're filling your monthly taxes, you include that invoice in an XML file (plenty of generators available along with the free government-issued one), sign it with your digital ID and send that to the Ministry of Finance servers (MF servers for short). The MF servers then compare your entry to what all the people that sold you stuff entered.
This exists largely to prevent VAT manipulation, but at the same time gives all involved parties a clear, regular indicator that everything is fine in terms of taxes.
I'm a contractor and do this little dance every month using an accounting SaaS.
Gemini says 90% of the American workforce are employees.
It’s an extremely successful business in that it does things to ensure more profit can be made.
Healthcare, education, defence contracts, tax collection, etc etc.
The goal is to make more money for some company.
The fines for wrongdoing are so tiny the incentives are to always do bad stuff and just pay the fines - that’s how to maximize profit and there’s no downside.
FWIW I think the "money is speech" is actually a bit of a distraction. What we really need is wholesale reform to corporate/LLC law. Corpos are not mere groups of people exercising their individual rights, but government-created liability shields. Thus it makes perfect sense to regulate them to prevent obvious mechanisms of harm that leave others holding the bag. The vaunted "man in the arena" needing minimal regulation can actually get into that arena with a sole proprietorship or general partnership. (which is exactly where most small businesses actually are, regardless of any LLC filings)
https://priceonomics.com/the-stanford-professor-who-fought-t...
It's republicans. Republicans are against making taxes simpler to individuals because, and they have explicitly said this, they want taxes to hurt so that Americans will be more likely to vote for tax reduction.
I'm sure some democrats get a few thousand from Intuit somewhere but at the end of the day, it's republicans voting down things like free file and the government's digital initiatives and refusing to let the US gov do your taxes for you.
It's frustrating how often people in the US blame "the government" instead of the very specific subset of that government that they keep voting for that objectively and openly and loudly do things that harm them.
More recently, Elon Musk was publicly proposing a mobile app for making filing taxes easier (See https://www.fox26houston.com/news/doge-tax-filing-app), but then once part of the Trump administration, they happily killed Direct File, a program to do exactly that.
How would the government be able to know the income and deductions for small businesses? And in the USA at least lots of people have small businesses (cleaning businesses, landscaping, sub-contracting in construction industry, mowing lawns, consulting gigs, Uber/Lyft drivers, etc...)
Does the IRS get a form when a child is born or dies?
You could say, yes, the IRS should keep tabs on all this life activity, but that seems pretty gross.
Determine the amount of average deductions for small businesses, benchmark against however much money you want to extract from small businesses, then give all small businesses a blanket standard deduction.
It really has very little to do with TurboTax lobbying, but that’s a framing that sells.
I know people who mess it up every year and the government just sends the forms back corrected. In fact they started treating the government like a tax prep service. Do people actually get in trouble for this?
Unless they willingly and provingly try to grift IRS on a continuous basis, no, people don't get in trouble for this.
If you mess something up or underpay on your taxes, and if (or when) IRS detects it, they will send you a letter explaining their concerns and provide you with remediation options (as well as an opportunity to dispute, of course). The remediation options provided by IRS typically include both "pay it now and we will go away as if it never happened" and "talk to us, and we can work out a payment plan with you (in case you aren't able to cover at the moment)".
So no, IRS isn't some boogeyman that is gonna get you in trouble over a mistake. If they catch a mistake, they will work with you to remediate it, and their terms are typically extremely reasonable, and have zero negative consequences for utilizing them (unless you are, beyond any reasonable doubt, trying to defraud them or refuse to cooperate entirely).
Mostly because of:
> TurboTax’s 20-year fight to stop Americans from filing taxes for free
For taxes, how is the government supposed to know about the work you did in exchange for cash? Or make a difference between a vacation and a tax destructible business trip. They will sometimes look into it if they suspect fraud, but they have no way of knowing exactly what you owe beforehand, and that's a good thing, surveillance is as bad as it is right now, not mentioning the costs.
The best they can do, and that's how it is done in most countries, is to tell you "according to what we know, you owe us XXX", but it only works in the simple cases, like for those whose only income is their salary. If they missed something and their estimation is wrong, you must declare it or you can be in trouble. It is just a convenience, you still need to do your taxes correctly and you are responsible for it.
One may argue the rules could be simpler, but they are complex because the world is complex, and even small changes can make or break industries.
So the IRS has correlative algorithms to signal an audit if something looks strange. But besides that, you are evaluating your real world activity and classifying it according to the forms they have.
This is why accountants and lawyers are useful in tax. They can help you interpret the tax code and argue to the IRS your interpretation,
- how much of the year your wife are kids are living with you? - whether you took college courses? - how much you put into your IRA? - which purchases count as medical expenses? - the cost basis of the stock you sold?
Just because you personally disagree with something doesn't mean that it's a ridiculous lie.
There used to be a libertarian wing that thought paying taxes should be a little painful so people wouldn't vote for more taxes, but I've not heard anyone say that since the bush era.
So much for the "drown the government in the bathtub" talk - turns out it was always just about the rich not paying more.
Each year, you should file an extension and then wait for your IRS to publish its transcript (in May I believe) that shows all the wage/income and other info the IRS has on you.
Outside the Overton Window, why are individuals taxed rather than businesses?
There was a time when the government had no business knowing the financial affairs of the citizens, but then some kings got the idea that they could tax everyone to pay for their wars. Nowadays we assume tax paying is good and socially responsible, with only tax-dodging scum not wanting to pay their taxes.
Due to tax havens and whatnot, for a company to compete and be successful, some tax avoidance is needed. So we have every corporation opting out of paying taxes. Consequently, taxation is for the citizens, not the corporations.
Companies have accountants and bookkeepers. Individuals don't unless they are seriously wealthy. As I see it, it would make much more sense to just tax companies and not individuals. Think of the amount of time that would be saved, particularly if VAT is a tax, which it isn't in America.
I have to say that the American tax system sounds like hell, compared to what we have in the UK.
The big question to me is, why do we tax production rather than consumption? We shouldn't have income taxes at all. We should have sales taxes. Make basic necessities like food exempt.
And it might be good to try and limit accumulation even if the accumulation doesn't have real economic effects; it can still create resentment or bestow power.
Because rich people would find ways for all their income to be realized by businesses they control, resulting in zero personal tax liability.
> particularly if VAT is a tax, which it isn't in America
America has sales tax, which is functionally the same as VAT. It's levied at the state level, and some states have a zero rate at present. We also have high import tariffs now, which again work like VAT.
> I have to say that the American tax system sounds like hell, compared to what we have in the UK.
True.
Anyways, something something Georgism something something.
Sure, but taxes are applied due to political feasibility, not because they "make sense".
The most sensible approach is to tax natural resources (land, carbon, mines, wells, electromagnetic spectrum) and other forms of economic rent, but that is politically infeasible (edit: or more accurately, very challenging) in a capitalist democracy.
It’s more accurate to say it it’s politically infeasible in our capitalist oligarchy.
Just because this is the way our society works now, we shouldn’t be duped into thinking this is the natural order of things. It’s not. A democratic society with a free market economy could work very differently.
So of course it doesn't work. Also plausible deniability, if you overpay, rarely will the gov give you back what you give them, and if they do, it's months afterwards.
This is precisely how it works in both EU countries in which I've lived.
In every other country in the world, taxes are handled by their respective financial authorities.
Why must every service and thing in the US must be a private profit making thing?
1) How the welfare state is administered - as an example, the US does a child tax credit as part of the tax code, other countries have agencies that are setup to give parents money directly. We are trying to do _more_ with our taxes.
2) State taxes - the fact that there are multiple agencies that have their own rules and procedures makes things more complicated. Many localities have their own laws which can be hard to deal with. Efile has improved this since there are fewer ways for states to ask for new information
3) A lack of political will to simply. For the purposes of taxes, the us have multiple definitions of "are you 65" (were you 65 on Jan 1, were you 65 on Dec 31, etc). This makes taxes more complicated than they need to be
4) Conflicts between making things simple and incentivizing a behavior things like no taxes on tips or an EV tax credit both make filling taxes more complicated with the way that the tax code works right now. With better systems, this could all be taken care of for the taxpayer but right now it would require a more complex tax filing process
Direct File was able to solve some of these problems, even automatically using data the government had already where possible. Ultimately I think it is possible to make taxes automatic in the US but the data flows required for it are probably more complex than in other countries due to the fragmented nature of the US government.
It seems to me that there are many conflicting interests. We want simple taxes but we also want special protections and carve-outs.
I'd also add the color that one of the main reasons for that complexity is political itself: In our zero-trust zero-confidence in government world today, even the notion of two .gov entities sharing data freely with one another terrifies people on any side of the political spectrum. Leftists freak out that say, their HUD application data could end up with ICE and allow a criminal immigrant who lives with them to get deported, while rightists freak out about their financials being shared with IRS to allow IRS to guarantee all taxes owed are paid.
Yes. When there's a negative behavior that the free market incentivizes, tax code updates can address it without sounding as scary as "More Industry Regulations". Same with social policy and other goals.
A lot of Americans are against the idea of "big government", which incentivizes government to use the tax code and other low-visibility means to accomplish larger goals.
Lobbying corrupts this a bit. However they are not lobbying to suppress private competitors only government-run competition that has no profit motive or competition. When the government runs it we still pay for it, except now people who don’t use it also pay. Also wealthy people pay a disproportionate share as compared to their use due to progressive income tax.
In theory anyone can start a company if they have a better or more efficient product or offering and get the profits instead.
Thats the rationale in a nutshell.
If you look at it as a practical or technical challenge, you're addressing the wrong question.
Your take is the classic economist's "it works in practice, but does it work in theory?". Obviously tax filing works better when it's maintained by the government. You're severly underestimating the harmfulness of profiteering monopolies lobbying against any improvements and buying out the competition. Also, look at DOGE, with all the ruckus they made they just couldn't find that many inefficiencies. And for such "simple" software projects as a tax-filing platform, I just don't buy that private is better than public.
But there is a profit (or rather income generation) motive: taxation is what funds the government. Parceling this work to a private 3rd party means paying a bunch of salaries that are much higher than what government employees get paid, generating profit for the company that gets taken out of the tax revenue, which increases the cost of the service for end users or the government receiving income.
Some politicians argue that government is inept and wasteful, and sponsoring no-nonsense projects that reduce middlemen in this process interferes with that narrative. If you got into office screaming that the government is your enemy, you’re not going to support projects that make it easier for citizens to interact with the government.
This does not apply to government / public work that has to be done anyways. Nor to any public service in general for that matter.
The US is special because the process of writing the tax code is corrupt. (Not uniquely corrupt, but certainly near an extreme among major countries.)
The US is also special because it has 50 states, all of which have their own thoughts about taxes.
But I don't have the articles at hand, and don't feel like an internet debate today, left as an exersize to the reader!
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That being said, my Dad worked for a few years at the IRS part-time before he finally retired. He loved it. (My Dad is one of those people who enjoys taxes and finds them soothing.) I concluded that the IRS is a white-collar make-work program. It also leaks a lot of confidential social information, because he got to see all kinds of tax returns from all slices of economic status.
For more complex cases where you have more deduction and income sources the government doesn't really know all the individual setups you may or may not qualify for and they only audit a small percentage of filers every year.
The reason it's been blocked is a mess of ideological and economic. Ideological from people who interested that want to make taxes more annoying so people are generally more anti tax and then they get elected and make cuts to the top percentages/businesses permanent while the tax cuts for the majority of citizens are temporary. This sets up a debt crisis when those 'temporary' cuts are also extended they can use to leverage for government cuts. On the economic side there's a huge amount of money made each year by preparing taxes for people too intimidated by the complexity to DIY it. So they ally with the generically antitax side to keep their business going.
[0] https://www.irs.gov/statistics/soi-tax-stats-tax-stats-at-a-...
Taxes are simple if you live in one place and only receive income from your employer. If you have multiple sources of income, connections to multiple countries, etc., things can get very complicated very fast. That's why the tax prep industry exists - and not just in the US.
That being said, the Internal Revenue Service could prepare the taxes of most Americans. A simple system of, "Here's what we think you owe, based on the information we have on hand - sign and submit if you agree" would work for most people.
IRS Direct File[1] did exactly this. It apparently worked really well, and people liked using it, netting ~$20 billion in savings to the Americans that used it (roughly half of that came out of the pockets of the tax-prep industry).
Then, DOGE got to it and the new administration's IRS commissioner killed the program.
They already do that -- if you calculate your taxes wrong, they will send the adjustment (they will do it both ways, pay you back or ask for the remainder). I guess they might not be aware of all the deductions, but standard deduction beats itemized one for the majority, so they can 100% automate this whole process if they decide to. For complex cases and businesses, sure, you are on your own, but at least most W2 should be covered.
Presumably much less if one pays more than the IRS calculates is owed.
Essentially both the IRS and tax filers verify correctness of the tax filer's return and the tax filer can be prosecuted if they make a mistake according to the IRS.
Whereas I guess American Exceptionism (tm) means you all have to pay a rent seeking company to file taxes…?
It is not that rare at all for Europeans to have other sources of income, and thus to have to file their own taxes.
Here in Australia everyone must fill in an annual return, but it’s a fairly well automated online system and they’re probably already already have most of the fields filled in, you just need to add anything more complicated or any deductions you think you’re owed.
In both systems you can have an accountant file for you, or use other software, but you don't need to and most British people will never file a single return in their lives.
That implies the government would know significantly more about my life and my day to day affairs. That sounds like it would be a privacy nightmare.
That would be simple enough for most people (1 job, 1 home, maybe some kids) and it doesn’t require the government to know anything additional.
In that most common scenario no tax accounting service should be needed. Honestly a 1040 isn’t that complicated in that scenario either, but is still too difficult for a good number of people and it’s just unnecessary.
(Also it’s rather ironic that people who think like you have been voting for the party which is currently enabling Palantir to build Chinese-style surveillance in America. But as long as the data is owned by billionaires and they promise to only use it against the “others”, I guess it’s fine.)
(Did you know that most of the public transport in the UK is owned by German and Dutch companies? They can rack up prices with little consequence.)
The US has gotten more expensive to be sure, but IMO most of our high-cost problems stem from consolidated industries with regulatory capture (healthcare, farming+food+pesticide, tax prep, etc.) and low wages for the bottom 50%, not fees.
Culture
That said, the lobbying is really bad of course, probably also prevents cheaper or FOSS alternatives.
But if it's private enterprise, their incentive is to lower your taxes as much as they can, while you pay them a small fee.
Not saying that this mentality or assumptions are good / correct, but that's basically the rationale I've heard too many times.
There's this deeply, deeply ingrained idea that the government wants to rob you blind, no mater what.
Whereas a for-profit company's explicitly stated goal is to make as much money off you as they can.
> Why must every service and thing in the US must be a private profit making thing?
It isn't. There are roughly 2 million nonprofits. "Nonprofit organizations play a significant role in the US economy. In 2022, there were 1.97 million nonprofits operating in the US"
And there are endless government programs and millions of government employees. The federal government alone spends over $6 trillion of our money, and money we don't have, per year, and most of it is on mandatory social programs.
"About 60% of all federal spending is categorized as mandatory spending — which amounted to $3.8 trillion last year. This spending is essentially on autopilot because it funds programs whose eligibility rules and benefit formulas are set in law. This consists mostly of programs like Social Security, Medicare, Medicaid and Veterans care."
In the US, some believe that it's better to replace a government function that costs X with a private entity that charges X. The reasoning is that the efficient free market will drive down X, leading to better prices for everyone.
In reality, my city's parking meters now charge a $0.50 minimum with a service fee of $0.25 to the private company that now runs them. I've tried competing by setting up my own lower-priced meters, but that's not working out so well.
1. If the government is in charge of deciding the tax policy and collecting the taxes, it creates a potential conflict of interest if they are also in charge of telling you how much you owe. In theory, they could charge you more than they're legally allowed to, but how would you know unless you (or someone else) also calculated your taxes? A common suggestion to this is to have the government give a return that shows what they _think_ is owed, but this creates a conflict if the government accidentally underbills you, since you're not likely to correct the mistake. In order to ensure compliance on both sides, both the government and individual need to prepare the tax return. Otherwise, one party risks being overcharged/underpaid.
2. Tax evasion is an effective law enforcement tool for catching criminals, so by putting the burden on the individual to report taxes, you add another tool in the law enforcement toolkit. From the state's perspective, it is more compelling to tell a jury "this person owed $5 but only paid $1" than "this person owed $5, but only paid $1 because we told them they only owed $1." Tax evasion is how famous gangsters like Al Capone and other shady-characters have historically been caught[0]
The tax prep industry is lucrative largely because of lobbying and consumer ignorance. There are plenty of free-file options for folks below certain income thresholds, as well as non-profits who will do your taxes for free. There are also lots of free tax-prep sites, but they are being drowned out by the advertising and lobbying of the for-profit tax-prep industry.
To add my own 2-cents: if your income comes from investments, 1099, or W2, you likely can do your own taxes in about an hour. I personally use TaxHawk [1] since it's free for federal and $16 per state return, and has the same kind of interface as turbotax and the like. If you want to save on that $16, you could use TaxSlayer [2] instead -- I've used all of them, and personally prefer TaxHawk. Just remember to decline any of the upselling they do just before you submit your refund. You probably don't need the premium service, a dedicated tax pro, nor audit protection.
Source: am a CPA
[0] https://en.wikipedia.org/wiki/Al_Capone#Tax_evasion
#2 isn't a strong enough reason to justify the significant out-of-pocket costs and lost productivity of the US tax system. If the tax collector is regularly finding only $1 of $5 tax obligations, that seems better solved by improving the collector's record-keeping, not hanging civil and criminal penalties over the heads of 350 million citizens.
I'll posit a hypothesis: Scale and morality interpretation differences.
I've yet to have a > $1000 restaurant bill (not even close), and the experience I got and the reciprocity instincts in me compel me to correct it if say they were to forget to charge me for my guac or give me more change than i was owed.
Whereas in the Gov't there is scale that tempts people to choose immoral paths, and also there's a morality of efff the government in a lot of people's minds. It's an abstracted entity of which we mostly do not enjoy the experience and cannot treat humanely (it's not a person).
https://healthjournalism.org/blog/2024/09/report-u-s-spends-...
I can’t find it on mobile right now, but the associated graph is very illustrative
It is not cheaper to pay a private company.
In Germany tax-prep industry is huge, there is a huge network of tax consultants plus paid online services like taxfix and smartsteuer.
The only countries I lived which didn't require you to declare the taxes were Russia and Georgia, mostly because 13% and 20% flat tax rate respectively.
Any country which does have complicated progressive tax system would require you to declare taxes at least at some cases.
For me not worth to use it having extremely good tools like the offering from WISO.
In my opinion a complicated tax law is a direct attack from the State against low and middle income population. If you have low income and poor education you will not be able to make use of the tax law to increase your available income, something that high income citizens do daily.
In this case we have to thank the free market to provide really easy tools for less than €30 so middle and low income citizens can start at least to take advantage of the tax law.
I’ve lived in multiple countries and always did my tax report myself. And the German situation is so blatantly designed, compared to other countries, to benefit only a very small portion of the population.
Not only that, If the amount of man/hours that the whole country of Germany spends doing taxes would be spent on productivity gains or just normal work, the country would become immediately the richest country in the world. Instead, it’s just wasted effort and work.
In France you have to declare taxes, but everything known to the tax authorities is pre-filled, leaving you to add any special incomes/deductions that didn't come trough regular channels that get automatically reported.
You still have tax consultants to help you optimise if there are higher revenues, but it's a very niche service.
In other countries the regulation and culture is less business friendly so people don’t do it. Or they operate illegally,
I think that a lot of immigrants have to adjust to how seriously tax regulations are taken where they may have been able to ignore them before.
The short answer is central banks are not setup to offer services directly to the public.
This is different to the tax office in that people already need to interact directly with it! Anyone in the UK can fill out a Self Assessment, for example, however it's optional for almost everyone, because Pay As You Earn takes the tax off your employer instead.
Receiving government assistance? Some kinds are taxable, some aren’t.
Moved states? You have multiple state filings now.
Got married? divorced? Splitting custody or property? Special tax forms to fill.
Native American? Veteran with disability? Senior? Student with loans? Bankruptcy? Freelance income? Etc.
Normal life events turn into tax complexity consequences. And without expert help, it’s hard to know if you’re doing your taxes correctly, which adds stress and time.
One would think that the government should know what government assistance you're getting. In any case, taxable benefits get reported to the IRS automatically on form 1099-G.
> Moved states? You have multiple state filings now.
Arguably irrelevant. You can change how filings work federally without changing how state filings work. Perfect is the enemy of good, etc.
> Got married? divorced? Splitting custody or property? Special tax forms to fill.
Sure. Sometimes you have life events that happen where you'll need to make adjustments. Such possible events can be mentioned in the letter / email you get from the IRS, with details as to how to adjust the filing. This is typically how it's been done in other countries with automatic filing.
> Native American? Veteran with disability? Senior? Student with loans? Bankruptcy? Freelance income? Etc.
Income typically gets reported to the IRS on a 1099 or a W-2.
Loan interest gets reported to the IRS on 1098-E, so the deduction could be automatically calculated.
Presumably the IRS would know if you previously filed a tax exemption and could assume that hasn't changed if it's based on things like having registered membership in a federally recognized tribe. Even if you haven't filed that exemption before, presumably the government would know that you registered the membership.
The government knows your birth date so presumably they'd be able to calculate when you become a senior, where that's relevant.
Bankruptcy is one of those special cases that I'd expect would be an exception case where you'd need to adjust the filing (and your trustee would probably help with that).
Most people don't have special cases that require changes. The IRS already has a shockingly large amount of data on people. I encourage you to try getting your tax transcript some time[1], it should be illuminating.
Vs. public services and public servants? Not so much.
You can also just not file your taxes, if you don't owe anything (and as I said, jobs always err on the side of overpaying) they won't bother you, but most people end up eligible for the tax refund, so it is more beneficial to pay for that service.
The spreadsheet downloadable at https://sites.google.com/view/incometaxspreadsheet/home (no affiliation) is helpful to avoid math errors and get the entries from the various schedules into the proper place on the main forms.
From the IRS website:
>Who must file >Most U.S. citizens or permanent residents who work in the U.S. have to file a tax return. >Generally, you need to file if: > Your income is over the filing requirement > You have over $400 in net earnings from self-employment (side jobs or other independent work) > You had other situations that require you to file
Not sure if your intent was to discourage filing, but it read that way to me.
Even this is overselling it.
Most people have ZERO deductions to deal with. You put in your W2 pay, you take the standard deduction, and you file and get your money back.
Next time you use something like turbotax, download the forms it generates and look at them. There's zero complexity. Turbotax doesn't do anything. It's literally filling in 14 rows of numbers that come directly from your W2.
Hell, turbotax purposely runs fake animations and makes you waste a ton of time saying "Oh we are looking for all these deductions" but it's all a lie. None of the animations actually do anything. Most of the deductions it is supposedly checking for would Never apply to someone with a normal job. They want you to think it's complicated. They will ask you questions they know the answer to just to waste your time. Every single year, TurboTax asks me if I'm eligible for the earned income tax credit, and every single year, TurboTax knows from the previous questions that I cannot possibly be eligible. They ask me anyway, because it seems like a complicated credit so it makes taxes seem more complicated.
Taxes could take less than 15 minutes for nearly all Americans. Turbotax's bullshit, even disregarding the stupid tax they are charging the whole country just to copy some numbers from column a to column b literally wastes everyone's time every year.
People who insist that taxes are complicated are flat out wrong. If you run a small business, you absolutely have the choice to just file extremely simple taxes and pay a higher tax rate. It is a choice to attempt to take every possible deduction. Each and every one of those deductions is a handout to business owners. They bitch and moan about how bad taxes are, but their taxes are complicated so that they can make more profit.
Guess what? Nobody forces you to run a business, which again, is a handout to capital owners. A few hundred dollars in permits or registration every year is a perfectly valid cost to enable you to take advantage of the insane benefit of "you can literally cause hundreds of deaths but as long as you weren't obviously grossly negligent you are in the clear". Nobody forced you to attempt to take every single handout offered every single year. Nobody forced you to be your own boss, to own capital, to profit off of the labor of others.
Such entitlement. These same people will turn around and cry about "freeloaders" and "welfare queens" and "handouts"
And obviously the draft usually assumes that you will have to pay more tax, since there’s a perverse incentive given it’s the government who fills it for you.
When people say they are “paying their taxes”, really what they’re doing is checking whether the automatic tax deduction out of each paycheck was properly calculated over the whole year, and whether any special circumstances make them eligible for a refund (or whether they’ve had other income they need to pay tax on).
For other things, I can go to a "Virtual Tax Office" with my browser or my mobile banking application and pay with cash or credit card, sometimes with zero interest installments, even.
The reason this topic continually comes up is that people in the US are stupid and bad at math, and the IRS is very heavy-handed and issues penalties for minor tax errors, so people are afraid to interact with the process without a trusted intermediary.
The tax code is a behemoth. Plenty of loopholes to find to save money.
Also, most of the tax prep companies are thinly disguised payday loan companies.
It should be the case that all your basic taxes get calculated for you and taken at the point you're paid by your employer. Anything exceptional should be able to be claimed back via a web portal somewhere.
So it's not like 160m tax returns NEED to be filed. That's just how it is today.
In the 1950s the common person couldn't take advantage of most loopholes (I'm not old enough to remember, but I'd guess mortgage interest was the only useful one, the rest where $100 here and there but it never added up to much for the common person)
(This particular situation is an alliance between the tax preparers, who have the obvious interest, and republicans who are ideogically comitted to inefficient/ineffective governments)
This is a side-effect of the Protestant Work Ethic. Weber coined the term in 1905 as a way to explain why the Northern European countries (who were predominantly Protestants) were wealthy while the Southern European countries (who were predominantly Catholic) were poor. Prior to the election of JFK as US President, anti-Catholic sentiments were widespread throughout the US (which explains why Irish & Italians were not considered "white" until the early 20th Century). Even today, many Evangelicals do not consider Catholics to be Christians.
> Calvin taught that all men must work, even the rich, because to work was the will of God. It was the duty of men to serve as God's instruments here on earth, to reshape the world in the fashion of the Kingdom of God, and to become a part of the continuing process of His creation (Braude, 1975). Men were not to lust after wealth, possessions, or easy living, but were to reinvest the profits of their labor into financing further ventures. Earnings were thus to be reinvested over and over again, ad infinitum, or to the end of time (Lipset, 1990). Using profits to help others rise from a lessor level of subsistence violated God's will since persons could only demonstrate that they were among the Elect through their own labor (Lipset, 1990).
> Selection of an occupation and pursuing it to achieve the greatest profit possible was considered by Calvinists to be a religious duty. Not only condoning, but encouraging the pursuit of unlimited profit was a radical departure from the Christian beliefs of the middle ages. In addition, unlike Luther, Calvin considered it appropriate to seek an occupation which would provide the greatest earnings possible. If that meant abandoning the family trade or profession, the change was not only allowed, but it was considered to be one's religious duty (Tilgher, 1930).
These 2 paragraphs also explain why many in the US have such an utter hatred for any sort of social safety net for poor people - those people are damned in the Biblical sense and therefore it is a sin to give them any sort of money, food or healthcare.
[0] - https://en.wikipedia.org/wiki/Protestant_work_ethic
[1] - History of it: http://workethic.coe.uga.edu/hpro.html
[2] - https://en.wikipedia.org/wiki/Anti-Catholicism_in_the_United...
During the Cold War, one criticism of socialists/communists was that they were taking orders from Moscow. Likewise, Catholics were presumed to be taking orders from Rome.
> Supporters of the Know Nothing movement believed that an alleged "Romanist" conspiracy to subvert civil and religious liberty in the United States was being hatched by Catholics. Therefore, they sought to politically organize native-born Protestants in defense of their traditional religious and political values.
https://en.wikipedia.org/wiki/Know_Nothing
During the later 1800s, many "charity hospitals" would abduct children of Catholic women and then sell them as orphans that other people could adopt. The Klu Klux Klan would also attack Catholics - not just burning crosses and lynching black people.
https://en.wikipedia.org/wiki/Orphan_Train https://orphantraindepot.org/history/opposition-to-the-orpha...
https://en.wikipedia.org/wiki/Definitions_of_whiteness_in_th...
> Not only were Irish immigrants viewed as interlopers by many white Americans (an irony, considering the historical treatment of Native Americans), but these immigrants were Catholics in a primarily Protestant land. It was a religious difference that widened the divide, as did the fact that many Irish immigrants didn't speak English. As strange as may it may sound today, Irish immigrants were not considered "white" and were sometimes referred to "negroes turned inside out."
https://history.howstuffworks.com/historical-events/when-iri...
The history site covers how people perceive the value of work has changed over the centuries.
Index of the history of the ethics of work/labor: http://workethic.coe.uga.edu/history.htm
Home page of this mini-site: http://workethic.coe.uga.edu/index.html
The Wikipedia page has lots of links and references about PWE.
> In 1998, the International Sociological Association listed this work as the fourth most important sociological book of the 20th century, after Weber's Economy and Society, C. Wright Mills' The Sociological Imagination, and Robert K. Merton's Social Theory and Social Structure.[3] It is the eighth most cited book in the social sciences published before 1950.
https://en.wikipedia.org/wiki/The_Protestant_Ethic_and_the_S...
It also means its hard for Democrats to improve as well since removing any improvements in filing are some of the first things Republicans push to undo when the come into power.
If there’s one outcome I really hope from AI automating work, it’s taking away the advantage the monied class has in this regard. Then perhaps there’s less purpose for the complexity
Or maybe the free models will start responding with
""" It looks like you're asking for help with tax preparation. I recommend our designated AI tax service [link to service that asks you to upgrade your plan or pay a one-time fee]. """
They are operating free models at a loss now, but at some point they are going to have to turn a profit. At that point tax prep becomes a revenue stream for AI as well.
What else is an incentive for, but that the government wants you to use it?
Hell, Google got pre-approval from the IRS for their Dutch Sandwich tax structure.
Most poor people don't read the tax code. They should.
Agreed that the complexity is a feature but it's not for the rich ( though the rich will take advantage of it, and why not? ) . It's mostly for the powers that be. If there were a 'flat' tax ( and one could argue what constitutes a flat tax) the rich will be more willing to pay that flat tax.
I'd say complexity support a very large govt, keeping several people employed including accountants, tax software companies etc. It serves the parasite class.
Then again, most people here who have salary only income do not have to fill in a tax return at all - only if they have certain types of income (self-employment, capital gains or investment income) above a threshold.
Another large group will need that plus a small number of other forms, most of which will be easy to fill. For example if they are getting a tax credit to help with health insurance costs there is form for that. That one's easy to fill out because you will be mailed a report that contains the information needed for the form. The report is in a standard format, and the instructions will be of the form copy line X form the report to line Y of the form.
If your income is just salary plus some investment income from investments like mutual funds you don't have enough deductions to be worth itemizing [2], it generally is pretty straightforward.
[1] https://www.irs.gov/pub/irs-pdf/f1040.pdf
[2] In the US you have a choice between "itemizing" your deductions, which means you have to list all of them, or taking the "standard" deduction, which is around $15k for a single person and around $30k for a married couple. Around 90% of people take the standard deduction.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
Tax prep software exists for people with more complicated tax situations and people who are unwilling to add and subtract a couple of numbers. The 1040 form is not complicated and anyone can use it to file their taxes for free.
Why doesn't the US provide a free 10-minute online wizard for them, like plenty of other countries are already doing?
They are two different countries, and Switzerland is not a member of the EU.
When French bureaucracy is simpler and more efficient than your tax collection system, you have a problem.
The propaganda must be pretty special to have you so convinced though.
0: https://www.vox.com/future-perfect/24071005/irs-direct-file-...
1: https://www.investopedia.com/early-reaction-to-the-new-irs-f...
2: https://apnews.com/article/irs-direct-file-musk-18f-6a4dc35a...
3:https://www.cnbc.com/2025/07/30/irs-chief-says-agency-plans-...
Did you read the article? The TL;DR summary is that the US government has proposed doing this in the past, but has been lobbied against it by companies that seek to profit from software to help prepare tax returns.
Paying taxes doesn't mean just paying federal taxes. Users don't want free Federal taxes software if it means they'll have to re-renter all their information into different software for their State taxes -- especially when more than one state is involved, such as for people who cross state lines for work, or moved mid-year. A tax service is a massive value add.
The "free" software you get to do your federal taxes will be no threat to TurboTax until the states are required to publish their tax codes in the same machine readable format as the feds.
Laughing I suppose until they get their property tax bill, or pay incessant road tolls.
(Sorry, I clearly have an axe to grind.)
Higher sales tax tends to be regressive because it doesn’t tax money you don’t spend, nor does it tax things where sales tax doesn’t apply like buying assets.
Sales and property taxes are often higher, but this (which shifts the tax burden down the income distribution compared to progressive income taxes) usually does not fully offset the lack of income tax; the no income tax states are generally low average tax burden states (but may still have higher tax burden at low-to-moderate income.)
My state is 9%, and it kicks in at under $20K. No state has a high enough sales tax to offset that income tax.
Concrete numbers: Say you and spouse collectively make $300K. That's a bit under $30K in state income tax. On top of that you'd pay property taxes (admittedly low).
Sorry Texas, but your property + sales tax isn't that high.
you used to be able to do this yourself on the gov website for free
If you’re running a company you probably already have an accountant, and they’re probably already using one of those pieces of software. Or you’re using something like Xero, which is already on the list.
Edit: This is timely being on the homepage: https://news.ycombinator.com/item?id=45601230
I'm not convinced an AI will ever know how to distinguish a personal and business expense from a CSV dump of your credit card too.
If you're going to go down the rabbit hole of creating a CSV, you can already parse and categorize it pretty easily without AI. I've built and have been using https://github.com/nickjj/plutus for a bit now and I've gotten quarterly taxes down to less than 10 minutes.
On the other hand, there's a broader business model here: lobbying to obfuscate mandatory government paperwork so that a 3rd party service is practically a requirement. It's not difficult to see AI companies expanding into that industry.
We already have reliable systems that do these things in the rest of the world, not to mention TurboTax already does it in the US without LLMs.
Take corporate/dark/unlimited money out of politics and watch this problem (and many other) disappear.
Is it a matter of liability? Like I could definitely see a big issue with mistakes — even if it was just operator error.
Even the revision of yearly variables is a considerable task.
At least, some of the complications in these are not intentional, but result of centuries old evolution of these systems.
Maritime shipping uses centuries old systems to handle costs in shipping accidents for example. I forgot the exact name of the system, but while the method is extremely fair, it's equally complicated. The whole premise stems from "This ship has sailed because you wanted me to carry your cargo", and becomes something mind boggling.
I'm sure there are some steps taken to keep people busy, but chalking up everything to it is unfair and wrong.
https://opentaxsolver.sourceforge.net/
The UI leaves a lot to be desired, but it does work and I used it one year.
No, government builds all kinds of IT systems for a wide range of sensitive functions, and they certainly have the means to build or fund an open source tax filing system.
The reason they don’t is twofold: A) massive corporate interests lobby the government to ensure projects like this don’t happen, and B) building functional infrastructure for the people goes against certain political narratives that government is useless and wasteful. If you campaign on the idea that government is inept and wasteful, you’re not likely to support projects that undermine your platform.
"We’re reaching out to provide an update on TurboTax Desktop software for tax year 2025. After October 14, 2025, Microsoft will no longer provide software updates, technical assistance, or security fixes for Windows 10 operating system. Because security is a top priority for us, TurboTax Desktop software for tax year 2025 onwards will not be compatible with Windows 10 operating system.
To use TurboTax Desktop software for tax year 2025, your computer will need to run on Microsoft Windows 11 operating system. You can also consider switching to TurboTax Online, which will work on any supported browser (available December 2025)."
Some previous discussion:
TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free (2019) - https://news.ycombinator.com/item?id=34594832 - Jan 2023 (1 comment)
TurboTax Tricked You into Paying to File Your Taxes (2019) - https://news.ycombinator.com/item?id=26102695 - Feb 2021 (306 comments)
TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free (2019) - https://news.ycombinator.com/item?id=26060414 - Feb 2021 (199 comments)
FTC Is Investigating Intuit over TurboTax Practices - https://news.ycombinator.com/item?id=24409093 - Sept 2020 (194 comments)
IRS Reforms Free File Program, Drops Agreement Not to Compete with TurboTax - https://news.ycombinator.com/item?id=21923220 - Dec 2019 (448 comments)
TurboTax’s 20-Year Fight to Stop Americans from Filing Taxes for Free - https://news.ycombinator.com/item?id=21281411 - Oct 2019 (447 comments)
TurboTax to charge more lower-income customers - https://news.ycombinator.com/item?id=20461169 - July 2019 (81 comments)
TurboTax Uses a “Military Discount” to Trick Troops into Paying to File Taxes - https://news.ycombinator.com/item?id=19994118 - May 2019 (42 comments)
Listen to TurboTax Lie to Get Out of Refunding Overcharged Customers - https://news.ycombinator.com/item?id=19870242 - May 2019 (44 comments)
TurboTax and H&R Block Saw Free Tax Filing as a Threat - https://news.ycombinator.com/item?id=19810981 - May 2019 (143 comments)
Congress Is About to Ban the US Government from Offering Free Online Tax Filing - https://news.ycombinator.com/item?id=19613725 - April 2019 (696 comments)
TurboTax Hides Its Free File Page from Search Engines - https://news.ycombinator.com/item?id=19758126 - April 2019 (262 comments)
TurboTax Uses Dark Patterns to Trick You into Paying to File Your Taxes - https://news.ycombinator.com/item?id=19718284 - April 2019 (274 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=19392673 - March 2019 (253 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - https://news.ycombinator.com/item?id=13853150 - March 2017 (439 comments)
How the Maker of TurboTax Fought Free, Simple Tax Filing - https://news.ycombinator.com/item?id=5443203 - March 2013 (330 comments)
This entire story exemplifies everything wrong with the USA and its form of corporate run government. Socialize the risks, privatize the profits and foremost, let the foxes not only guard the henhouse, give it to them!
World, if you're listening. We need a pepperoni pizza.
If this is as big of a deal as people claim, surely a non-profit could have written a free tax filing app and just made it available to people?
Does TurboTax have any kind of regulatory moat / AT&T style monopoly?
It's all going to your new Gestapo and concentration camps anyways.
The Trump Administration is trying to get rid of it, but its been so successful and so well-rated that they're having trouble doing that.
But I just went through the eligibility steps and it requires id.me verification! Big nope. Mailing a paper form does not. Of course Uncle Sam figured a way to fuck it up.