In the Netherlands we have had this for years. You login with the tax agency and download a pre-filled tax form.
Wages and Income Tax is pre-filled, as are Bank savings and morgages. The pre-filled form is complete for over 90% of people.
The 10% for who it is not can add or correct things that our IRS may not know correctly (i.e. foreign holdings or bitcoins).
You then digitally sign and submit it. It's quite easy to do yourself and I think most people here do (couldn't find a percentage). I could find that 97% is submitted digitally, only 3% is on paper.
We do have commercial offerings, those are used for the more complex scenario's, mostly by accountants and tax professionals
Japan is like this, only most regular employees never have to do a thing. Our employers take care of everything and our December pay packets are adjusted so that the correct amount of tax for the year has been paid. Banks also take tax out before paying interest to account holders.
You can also go to a tax office sponsored by your city hall and have a preparer assist you at no extra charge.
It's mostly the same in Spain. Our IRS equivalent sends you a draft that you can approve digitally. If you have something to add or change, there is an online form that you can pre-load with the government data and then edit anything you need. You sing it digitally and you're done.
Before that, there was a market for tax advisors that filled taxes for ordinary people, but it's gone. Only rich people or people who own complex business or investments need an advisor to fill their taxes now.
Here in Norway i don't need to download anything, the tax authority website has all the tools I need and most of it is already filled out and ready to go. All I do is check that it is all correct things (rarely), add the bits that they can't get automatically (offshore bank accounts, stocks on the new York exchange, etc.), and hit the button to say submit it.
It immediately gives me an estimate showing how much I have overpaid or underpaid.
For people with simple tax affairs, nothing offshore and not self-employed, there is nothing at all to do.
Same goes for here in South Africa. And that's coming from a country whose government is well known for its inept service and corruption. Most tax-related things, generally "90%" of them, can be done fully online without ever having to set foot in an official office, or speak to someone on the phone.
Same for France, the taxes can be handled on Internet (it will become compulsory some day). Everything is filled in and it literally takes 2 minutes to have it done (the gig adverts about taxes show someone who does the taxes when leaving for dinner for instance)
I'm surprised the article and comments haven't mentioned CreditKarma's tax solution yet, which is (actually) free. [1] Presumably their strategy is to take the users and data they get from offering free tax filing and use them to advertise lending products. I think that's a sustainable and politically feasible way to get free tax filing, actually; I expect that in ~5 years Credit Karma will have eaten a big part of TurboTax and H&R Block's lunch.
I have not used CreditKarma's tax product, but I've heard folks say that it calculates some things incorrectly. I think that's understandable for a brand new product, but I'd be cautious about using it this year if you don't (1) have a very simple return, (2) check their work against the IRS forms/instructions and/or (3) check against another product.
(For those who don't want to give TurboTax or H&R money, I've been quite pleased with FreeTaxUSA, which is like $12 for federal and state. It's a bit less user friendly, but plenty good enough if you have some understanding of taxes, and there are way fewer upsells and overpriced crap.)
I haven't used CreditKarma's tax product either so I can't speak to its accuracy, but from my understanding they didn't build their own product, they acquired a company called AFJC which has been in the online tax space for a while.
Credit Karma missed some things in my NJ state return that would have cost me a couple hundred dollars. There didn't appear to be any way for me to manually include a correction, so I ended up filing with TurboTax (free version).
This wasn't even a particularly esoteric exemption, I expect it would have come up with anyone who worked for two different companies in the same year. Aside from that, I'm a very standard case.
So does TurboTax. Every time I've used that product, the IRS actually sent me a letter back saying "you calculated your taxes wrong, here's some extra money we owe you."
Never had that problem when using TaxAct, and I usually got a bigger refund too.
> I have not used CreditKarma's tax product, but I've heard folks say that it calculates some things incorrectly.
Can anyone else attest to this? I am going to start doing my taxes soon (for the first time in my life) and CreditKarma seems like a good solution for me.
>> You could enter your data on both sites, and if they match, file [... with the product that did the math correctly]
Square quotes mine. This should be standard practice for all tax filers using an online tool or downloadable application. In most cases you, as the taxed citizen, will be held liable for any mistakes on your return. Very few situations will find the tax software provider being legally at fault for an incorrect calculation. Protect your own ass(ets) by verifying your input with separate providers. If there any discrepancies, figure out why and file with the correct result. Do not try to "get away with" filing with the provider that is most in your favor without understanding the reason; from the point of view of your government, you might be filing a fraudulent tax return. Willful negligence of tax law is not a valid excuse in their eyes.
I did my tax return with CreditKarma and TaxAct. They came out almost identical. I filed with CreditKarma because it was free. They basically worked the same. It only took me about 10 extra minutes.
It also saved me about 1k since I had done my property taxes wrong. All in all I would say that CreditKarma was worth doing and I would use them again as long as they are free.
Side Note: I have used TurboTax and TaxAct in the past.
I tried to use their product but fell into a fringe case where I could claim my spouse as an exemption. It's literally one box and a calculation on a tax form, but their support told me I was basically SOL.
It's a nice product from a UX/UI standpoint (so usability issues to solve still), and I look forward to trying it again next year.
I used their software this year as some market research. It calculated the same return as turbo tax. I will say that the returns we used were pretty simple. While not the solution for everyone I was impressed with the usability of the software.
Edit: the state returns were for Illinois if that makes a difference.
TurboTax found several thousand dollars for me in a fairly complicated tax situation that I was completely not expecting and would never have realized on my own. Even some CPAs I've talked to have said "oh, really?" They've bought some tremendous goodwill from me with that. I'm probably sticking with them forever.
The idea is to make it easier for the average person. Those involved with subchapter S corporations are probably not amateurs and are not the target audience.
Taxes are easy for the average person. A basic 1040-A, and certainly 1040-EZ (these two cover most taxpayers), are not difficult to do on paper if you can read and have a little patience.
I'm not defending Intuit here, by the way. But most people don't need what they are selling.
True, you need the full 1040 return for that, but most people don't have enough deductions to itemize -- that was my point. The average tax return is a 1040A or 1040EZ with the standard deduction. Those are easy.
I wasn't arguing against that. Rather against the conceit that my tax situation must be the result of people conspiring to keep things complicated, when the big thing (that got me thousands of dollars) was probably something that cannot really be simplified much further. Yet TT found it for me when lots of CPAs just didn't understand it.
I have a moderately complicated tax situation. Own property. Some investments. Occasional AMT hit for options. TurboTax handles all of this well. I am happy to pay $100 where before I could easily spend ten times as much on a CPA. That said, they really should allow auto-file for people with simple returns.
You got me, developer2. I've been commenting with my real name on HN for 5 years just waiting for this moment, to get the $35 that Intuit will mail me for my comment.
I had issues with CreditKarma. The problem I faced was most likely an issue specific to me and my state. Having said that, their lack of response is a major put off. It's time like these when you need a response in a reasonable amount of time. (As a matter of fact, they are yet to respond - weeks after I figured I'll just file directly)
For others in CA, FTB's free tax filing tool works just fine.
Because of the complexity of tax regulations, I don't think coming up with a competing free/open-source/nonprofit tax preparation service is the right answer to this problem.
Let's consider the positions of all sides:
* The professional tax preparers are worried that they're going to lose business if the government assumes the bulk of the tax preparation work.
* We as taxpayers would prefer that the government pre-fills a return for us, since they already have the information, and lets us file the pre-filled form if we detect no errors. That saves us time and also lets us see what info the government has about our income.
* But we also recognize that it's in the government's interest to maximize the tax we pay, and (ideally) it's in the tax preparers' interest to minimize the tax we pay.
Given all that, if pre-filled returns are unlikely, for political reasons, then perhaps a step up from the current Free File program might work like this:
1) You go to a Free File partner.
2) You authorize the IRS to release all of your tax information to that partner, who pre-fills the forms.
3) The partner walks you through the pre-filled forms, so you can check for accuracy.
4) The partner then does its own checks to discover errors that you might not have picked up on.
5) The partner makes money by selling optional add-ons, such as audit protection services.
This would, at the very least, speed up the Free File process and let you see what info the IRS has. It also ensures (like it or not) that the partners keep getting business (or at least eyeballs to pitch extra services to), and it ensures that your interest in paying the least amount of tax possible is reasonably protected.
I think this is already going a bit in the wrong direction. How about:
1) You download the info from the IRS in a publicly documented unencumbered format. JSON with a well-specified schema, for example.
2) You import it into your favorite tax program.
3) When you're all done, you upload the forms in a publicly documented unencumbered format back to the IRS, thus saving them lots of money compared to scanning a mailed copy.
Another major improvement would be for the IRS to publish all of the formulas backing all of the tax forms in machine-readable format. I suspect that a large fraction of the work involved in maintaining programs like TurboTax is manually importing all the forms.
We (almost) have this in Canada. CRA (our version of IRS) has an Auto-fill [0] option allowing the tax preparation software to import most commonly-used data after authorization. There are some good free tax preparation software, my favourites being SimpleTax (online, web-based) and StudioTax (offline, with option to file digitally or print the completed forms for paper filing). It typically takes me less than 15 minutes to file my taxes.
Yes, the U.S. has free options, too. In fact, that's what the OP's article focuses on, and I referenced the Free File system in my comment. I didn't mean that no free options should exist.
I mean that coming up with a "disruptive" competitor to the big guys that essentially does what they do, but doesn't charge you, isn't as easy as it seems.
They want access to all that sweet financial data that appears on tax forms though (they make money marketing credit products), so I'd probably read the privacy policy pretty closely before using it.
At least in the software case it pretty much is that easy.
It's incredibly straight forward, no special user interface or IO, just basic UI and basic math, just a bit on the tedious side to get all the forms together and up to date.
>But we also recognize that it's in the government's interest to maximize the tax we pay, and (ideally) it's in the tax preparers' interest to minimize the tax we pay.
What don't you buy about it? If a tax preparer doesn't give me the return I'm expecting, you can bet I'm going somewhere else or using different software the next year.
And of course the government wants to maximize revenue - if they were given control over this they could easily do small UI tweaks that may result in significant increases in revenue.
Well, the article points out that tax preparers are lobbying in favour of taxes being complex and hard to file.
Given a choice between a simple tax system that gave you a $100 rebate for doing nothing; and a complex tax system that gave you a $90 rebate if you brought their software or a $30 rebate if you did nothing; the tax preparer would prefer the latter system even though doing so would increase the tax their customers pay.
> 5) The partner makes money by selling optional add-ons, such as audit protection services.
Oh there you go! An opportunity for someone to take advantage of people and sell products of actual dubious value. This is not a comment on your particular idea (audit protection services) as much as it is the general concept. But even with audit protections services this is a situation where the company will slant things to their benefit and take advantage of people who honestly don't know what they are buying.
While I am against Intuits efforts, what astounds me most is how LITTLE money is spent lobbying. A few million over a year is peanuts compared to the broader market opportunity. And the implication that Congresspeople are bought off by sums as low as "$32,000" since 2008 seems unlikely. Intuit and H&R may simply contribute to those they know already support their agenda.
You do occasionally hear the random news item about people who are willing to kill other people for what seems like paltry sums of money or people who spend years and years skimming money from the company they work for, but the total amount stolen is very small. It wouldn't surprise me if there are members of congress that would be willing to push some agenda for a 32,000 donation.
As recently as 2006, Duke Cunningham was offering 10s of millions of dollars in defense contracts in exchange for a boat and a couple hundred thousand in cash:
It's never wrong for businesses to lobby for their interests. It's wrong when our elected officials bend to those business interest when it goes against the public interest.
I completely disagree. It's absolutely wrong for a business to lobby for their interests when it harms others. This is little different from dumping toxic waste into the local reservoir. That would be wrong even if it were legal.
Obviously, a lot of business don't really care about right and wrong, and so they'll still do it. But we can condemn it.
Asking people to act against their own interests voluntarily never works in the long term. It is safer to assume that businesses will act in self serving ways. Where we currently fall down is with legislators completely failing their mission of protecting the public. Your congressmen shouldn't be representing corporate interests, in a capitalist society their interests will always be well represented. The congressmen should be protecting the people who don't have the money to represent their own interests. That's one of the most important jobs of government in a capitalist economy--to prevent the wealth from accumulating entirely at the top as will otherwise naturally happen. When government fails at its job you end up with times like the Guided Age, which can typically only be corrected with massive social upheaval or devastating war.
> Asking people to act against their own interests voluntarily never works in the long term. It is safer to assume that businesses will act in self serving ways.
Then it's also safe to assume that legislators will act in self serving ways. Sure, they should represent your interests but let's not be naive.
IMO people should be held accountable for acting immorally, full stop. Just because it's particularly bad when public servants fail in their job doesn't let others off the hook.
I never said we can't condemn the behavior of businesses.
The prime objective for a business is to make money. All the ethics, right/wrongs, etc are things that we expect from the people who run those businesses. But the business is there to make money.
It is up to the people in charge of making choices for society to make the right choices. It's not the responsibility of the business. They have every right to lobby for anything they want.
"The prime objective for a business is to make money."
A business is a way for people to organize and collaborate and it does not absolve those people of their moral and ethical obligations. Individuals are expected to prioritize family, community, country, religion, etc. We need to stop giving people a free pass just because they hide behind articles of incorporation.
Hold the people who have made you promises and then failed to follow through responsible. Aka, your politicians. They are your backstop. What makes Goldman, GSK, Haliburton, or any of the other shady, scummy businesses out there responsible to you? They are responsible to the law on the books.
Our politicians are supposed to prevent business from screwing our society. Stop giving them an out. They failed, time and time again.
I think it could work really well to put businesses "in jail." You can't physically put them in prison, but you can achieve the same ultimate effect by forcing them to cease operations for a period of time. If a crime would put a person in prison for five years, then maybe it should also force a business to cease operations for five years.
It was, because you can't put a business in actual jail... You gave an alternative punishment that you could actually levy on a business and I agree that that could work.
Everyone in a society has an obligation to that society. America seems to be forgetting this. A business doesn't change the obligations of the individuals so put the individuals in prison if needed. Did someone sign off on dumping toxic waste or robbing people's savings? Would have been illegal if a person did it without getting a paycheck? Why does a paycheck change anything? Let them answer for their actions.
> Everyone in a society has an obligation to that society.
You're right, every person does.
> A business doesn't change the obligations of the individuals so put the individuals in prison if needed. Did someone sign off on dumping toxic waste or robbing people's savings? Would have been illegal if a person did it without getting a paycheck? Why does a paycheck change anything? Let them answer for their actions.
What are you trying to say here? That we should hold people/businesses legally responsible? No one is arguing against that.
The charter granted to the business can contain clauses requiring the business to attend to more than just its own returns.
The state or the people grant that charter to the business, with the benefits its confers regarding liability and taxation, so we could decide to do so only if the business commits to the terms.
There's no inalienable right to incorporation in the US constitution - the corporation is a statutory fiction we've all agreed to use.
If Company A wanted to lobby for the killing of all blue eyes babies, they could. They can make signs, start campaigns, attempt to get a meeting with a member of Congress.
All of that lobbying would be useless though because we all know that that idea is disgusting and wrong (hopefully we all know... with this current climate, nothing is certain).
The act of killing the babies is wrong, and we can pretty much all agree on that. But that company has every right to lobby for that position. No matter how crazy.
> They may have the legal right to do so, but it's still wrong in some cases.
I fully understand the distinction, and I think you're the one conflating two different things. How exactly am I supposed to interpret "wrong" in your original comment? Without context, that usually refers to morality, not legality. Furthermore, you used the word "wrong" a second time to describe elected officials going against the public interest, which is legally right. I see no way to read your original comment other than saying it is not morally wrong for businesses to lobby in this way.
But then afterwards you concentrate entirely on legality. If you just wanted to say that it's legal for businesses to lobby like this, I don't disagree, but I don't see how that position is described in the original comment, nor do I even understand the point of making that comment, since I think we all already know that it's legal.
If you did indeed mean to say that it's legally allowed but morally reprehensible, then we are indeed in agreement and I don't think there's much to say here.
> The act of killing the babies is wrong, and we can pretty much all agree on that. But that company has every right to lobby for that position. No matter how crazy.
No one is saying they don't have that legal right; they're saying that "legal" doesn't imply "ethical".
Consider Company A's lobbying efforts succeed and people start killing blue-eyed babies. Even if Company A never kills a baby, they still did something unethical, since there's a causal relationship between their lobbying efforts and a thing we just agreed was wrong.
What's laughable? You can choose which businesses you want to interact with anytime you want, and if you don't like their policies, choose someone else.
While you can "choose" a politician, you get whoever the group chose for 2-6 years. Don't like your president or their morals? Deal with it until the next round of choice.
I think that imbalance in individual authority and power gives everyone the right to hold public and private individuals to different standards.
With all due respect, "the group" decides what I can buy just as much as they decide who represents me.
Remember the time when there was a single phone out that combined flagship performance with a size that fits comfortably in one hand? Or the time when laptop manufacturers included PgUp/PgDown/Home/End keys instead of hiding all of those behind a Fn key? Or the time when I could use the internet without being tracked by every single competitor? Good luck avoiding Facebook or Google Docs when your charity has bought into those for communication?
The businesses everyone's fawning about are also the businesses who have best figured out protection from customer choice by employing lock-in and network effects. That's not choice, that's rule by moat.
Customer choice is for suckers. When a flood of ads and convenience can lure the masses, who would even pay attention to the few idiots who vote with their wallets or think of long-term market implications?
My wallet has no more effect on product availability than my vote has on the politician who represents me and what policies they support.
>What's laughable? You can choose which businesses you want to interact with anytime you want, and if you don't like their policies, choose someone else.
You try to exercise your consumer rights next time you're in a hospital, or something unforeseen occurs, or you're subject to a telecom monopoly, etc... etc...
Your way of thinking only works in a perfect fiction that has never and will never exist, except as a sop to some egos.
Business aren't actually people, they are fictions. Your judgement doesn't appeal to their consciences or affect their senses of self-worth. They don't have hearts. Strategies appealing to their better natures are doomed to fail.
I'm sorry, but no. A business can have interests that are obviously and deeply evil, such as in a very extreme example, the production of Zyclon B for the Nazis. It is a myth that earning money somehow insulates you from being scum, and if you're acting against the interests of literally everyone except yourself and at their direct expense, you might be scum.
If you're saying that's right, I'd argue the point strenuously. It's also wrong when our elected officials, predictably, bend.
...And Enron, and Goldman, and all of the companies that tanked us in 2008. Right? Where is this right spelled out exactly, except in the fiction that corporations are people without the responsibilities?
Whether you believe in the Citizen's United decision or not, companies are still groups of people. People, alone or in groups, have the right to speak, and to petition the government.
For clarity, I think this particular attempt at lobbying is terrible and they ought to be blasted for it publicly. That doesn't mean it should be illegal for a group of people to talk to the government about their interests, just that if those interests are counter to the interests of the general public then we should judge that accordingly.
Lobbying is speech. You can't just censor people you disagree with. That's not the basis of our democratic society. The price of being able to speak what you think is good, is having to hear what you think is bad.
I think OP is moving the goalposts here. They also say "It's wrong when our elected officials bend to those business interest when it goes against the public interest", which is clearly a moral argument as opposed to a legal one.
Then is your position that businesses should not be expected to behave ethically, but politicians should? That's a pretty weird line to draw. There's no reason we shouldn't expect all members of society to adhere to a generally agreed-upon code of ethics, even if parts of that code shouldn't be made into law.
In a perfect society, everyone would act ethically. That isn't true sadly. We have to often force people to be ethical. We force businesses into ethics through law. We can't guilt trip a business. We can however expect ethics/morality from politicians because they are people. And really, they are elected into their positions because of their ethics.
Sure we can. We can complain to them, boycott them, post stories on HN so other people know they're unethical, etc.
> We can however expect ethics/morality from politicians because they are people.
Businesses are just groups of people. A business behaves ethically only if the people who make it up behave ethically. We don't lose the ability to criticize them just because they're acting as a group.
> Sure we can. We can complain to them, boycott them, post stories on HN so other people know they're unethical, etc.
Sure, we could do that, but unless any of those things affect profit, the business won't change. Morality doesn't motivate business, profit/money does.
> Businesses are just groups of people. A business behaves ethically only if the people who make it up behave ethically. We don't lose the ability to criticize them just because they're acting as a group.
Sure, and if people feel morally conflicted an leave the business, they are replaced. If there comes a time where so many people are morally conflicted that there are not enough people to run effectively run the business, then the business will change or cease to exist. Even in that situation, you have a moral issue for the workers that became a financial issue for the business.
Businesses have no morals. The people who run it do.
That would be the aforementioned fiction I was expecting you'd trot out. You really are just abandoning anything like a moral or intellectual dimension of responsibility in favor of pure legalism, up to and including IG Farben in Nazi Germany?!
It's fine for the companies to hire someone who talks to legislators and puts forth the company line on why proposed legislation is bad for the country or why other legislation would make it better.
But when they start pouring money into campaigns it's a different thing. That's just a legalized form of bribery. It may be legal, for the moment. It may even be necessary, both because competitors are doing the same thing and because legislators demand it (or else). But it's wrong.
This can be debatable, but I would say a strong democracy should decide that individuals, organizations, and corporations can only make their cases in public hearings and on the record. That way we see where everyone stands and what exactly the arguments are for or against something. So it may not be illegal for an entity to "talk" to a politician about an issue, but I would argue that it would be best if everything they say about a certain policy or bill should be on the record, not in the back stage. There are thousands of "little things" like these that could make the U.S. a better democracy.
2) How do you define "lobbying"?
Is it just talking to a politician or is it talking plus something like:
"Hey, we've just donated $50,000 to your campaign as well. No worries, we just did it because we liked you, right after our conversations on how it would be best for you to vote ;). Oh, and we're only doing the winking because it would be illegal for us to tell you that we're giving you this much money to vote how we want on that bill."
Yeah, I would say that should definitely be illegal - in the sense that no company or organization should be able to donate as much as $50,000 (or more) to a politician. I'm strictly in favor of sub-$500 donations a year to a politician.
The "money vote" that's represented by campaign donations is greatly skewing how a politician should vote, because he or she would then have to listen to those that donated the most by far, compared to the people that donated only $30. So the "money vote" should be as "equalized" and "universal" as the real vote is (as much as possible at least, but I think it should be under $1,000, because beyond $1,000 it still incetivizes politicians to hold fundraisers with rich people).
Why is it not wrong? These corporations are throwing around money to subvert the public interest. Surely corporations have some level of duty to the public which allows them to exist.
We have written our laws to allow corporations to exist because this system is supposed to be better for the public at large. I'll yell at H&R Block and Intuit because they are subverting the public interest. (I'll yell at politicians too)
You have every right to express dissatisfaction with their actions. I agree with you that their actions are scummy, but they have a right to lobby for their interests. Express enough dissatisfaction at your politicians so that they aren't bending to business.
Sure but your answer seems to be excusing their action. You said that it was never wrong for them to lobby. I'd say that this case is a perfect example of when lobbying is "wrong."
Your problem is with the actions that they're lobbying for, not the lobbying itself. If H&R Block instead lobbied for clean water for all US citizens, you wouldn't have an issue with that.
It is ok to think that the cause (complicating the tax code) is wrong, but the methods (lobbying) are ok.
I'm not sure how you can seperate the two. You say that lobbying is never wrong but if "the actions that they're lobbying for" are wrong it would seem to me that the lobbying in that instance is wrong as well.
We have more transparency than we've ever had. Transparency isn't the magic bullet. Many people are aware of the problem. We know who they special interests are and how much they contribute to each representative.
What's the plan on censuring representatives that don't represent us? This information isn't helping us change our behavior.
The problem is our representatives have developed a sixth sense that is fine tuned to be aware how their vote affects their donors. Special interests are outspending and out-strategizing us. They are organized and disciplined and we are divided and hopelessly emotional. They have full-time policy wonks that understand the issues, and most of us don't even understand the premises behind the issues.
Even with full transparency, most of us drown in the amount of information we have to process. Something has to come after transparency and most of us are clueless as to what we really need to do.
Filing is always free. Online filing costs money, but you can always mail in a paper form. If everyone did that, the IRS would pretty quickly want to make sure people can file online easily and cheaply.
Stop using HR Block and Turbo Tax. For most people, taxes are not very complicated. The IRS publishes detailed instructions that literally explain what every box means and what should go in it for every form. Just read it, fill it out, mail it in.
> Filing is always free. Online filing costs money, but you can always mail in a paper form. If everyone did that, the IRS would pretty quickly want to make sure people can file online easily and cheaply.
Nobody at the IRS cares one way or the other. Until a few years ago that was the only way to file, and their machines handled the load just fine. If there's a lot of paper files, and it takes an extra week for somebody to get their return, it's not going to bother the IRS one bit.
The AMT calculation is tedious as hell. Considering that the yearly cost for H&R Block is something like 20$, it's well worth the money just to avoid needing to do that by hand, and that's not even taking into account all of the other time savings features of it. And the cost for the software itself is tax deductible as tax prep costs.
Nope! You'd be surprised who it might affect. Families with a few kids (lots of tax credits rather than deductions) that own their own home and have a decent salary could potentially owe the AMT.
If you make more than the exemption amount for your category (between 40-85K or so depending on your situation and tax year), then you should be calculating the AMT to determine whether or not you owe. It affects more people than you might think, even if it just requires the calculation to occur to see if you owe it or not.
I've been using https://www.freetax.com/ for the last few years. It's free to efile state and federal, no gimmicks like the ones pushed on the IRS website.
I actually did mine in HR block as well one year, they messed up the state portion badly, I would have been overpaid on my refund and had to pay it back.
A lot of what H&R Block sells is experience in filing taxes, not just knowledge of how to do it.
I have complex multi-country taxes to file (Canadian living in Canada, but with some income the IRS says is American income). H&R Block have a guy who has handled this exact kind of tax filing hundreds of times before. If I make any mis-steps in filing, the IRS is going to demand I give them thousands of dollars.
I'm not paying H&R Block $600 (CAD) to fill out a piece of paper, I'm paying for the time and experience of someone who won't screw it up and knows how to fight back if the IRS has a problem with it.
The root cause is that our tax system is overly complex and it doesn't need to be. We need to address that rather than build software to help make the complexity continue.
Yes but you wouldn't benefit much by this simplified filing system anyway.
The point is there are millions of people that just have 1 or 2 W-2 incomes and don't itemize, and can file a straight up 1040 which is what H&R block is fighting.
In addition to you, people like me (S-corp owner) have complicated taxes and that's fine. We'll always pay. But doesn't mean there isn't a class of people who wouldn't benefit from this.
After two years at two different H&R Blocks I'm not convinced in their expertise. Got an IRS letter demanding payment for some income the first guy said I didn't have to report, I paid to make it go away and it wasn't high enough that I felt like I needed to cause a ruckus with H&R Block. (Besides they'd probably just say I was the one who forgot to include it, not their fault.) The second time the lady assigned to me tried to shoo me away for the evening (because they charge on the final amount of forms they have to file, not the time) rather than wait (I waited) for someone else at the location who wasn't confused by the concept of RSUs to become available. It'll be TurboTax for me this year though I am tempted to do it manually and use the H&R Block forms prior as a template.
Still, my taxes were complicated for 2014 so I was glad for the help. I agree that's ultimately what their value is, along with their promise of assistance should things really go wrong, it's just not usually top-expert help and if it can be replaced by cheap software it should be, even if overall simplification is still the best outcome.
Yes. Taxes are complex enough in many situations that it incentivizes paying someone to take that complexity load. The simplest and most sure way to do this is to simplify taxes, but assuming the IRS will be able to to just do it all correctly for you seems naive to me. Depending on your tax situation, there's lots of information the IRS doesn't have (such as almost all deductions you might try). Having the IRS auto-fill forms for you seems like it's putting effort in the wrong place. If they can auto-fill forms for you, your taxes are probably pretty simple, but even then the forms may be complex enough that checking them may require most people use a tax preparer/checker of some sort. The real gains are from simplifying the taxes themselves, not just automating the form entry in the already simple cases. Making taxes simpler reduced the incentives for using a tax preparer, which is the right way to go about this.
But a lot of the folks who work for those big accounting firms like H&R are just seasonal data entry folks who just input all the data info their program.
I think to fight this, we need a good robust open source solution that could possibly be made automated. Only cost I assume would be for the user to e-file.
It was RSUs granted in 2012, while I lived in the US, that vested over 4 years (the last of which was 2016). That counts as 'American income'. After this year, I don't have to do this ever again and plan to start doing my own taxes.
There are more than one change per day in the tax code [1]. This implies that at least every day, a tax specialist would need to evaluate, describe requirements, a developer would need to translate that into code, including testing, regression test, etc. The code base also only increases, which makes it increasingly difficult to change if not designed carefully. It's technically feasible, but such endeavor would require a substantial effort. This non-profit would need a lot of donations to support that.
I'm as cynical as the next person, but seriously, how successful could they be approaching legislators with the idea "Make the tax code even more needlessly complicated to support our business"? Short of outright bribery I don't see any benefit to a politician for supporting something like that.
There are a lot of complications in the tax code because with 300 million people there are a lot of special cases to account for. Adding additional complexity just for the sake of complexity seems like a non-starter.
At scale a non profit could be advertising supported on the login page. Jumping from 1,000 users to 100 million does not have massive cost increases.
As soon as that non profit hit's critical mass the for profits are going to be stuck and thus stop lobbying for more complex rules. At which point the IRS can just automate the process for 95% of people.
Up in Canada this little company made SimpleTax. Our family + friends used to use other paid solutions, but this was actually free. Great to see people helping other people =D
For anyone who can program (including spreadsheets!), it's not all that hard to file your own taxes the old-fashioned way. To do it digitally, just use https://www.freefilefillableforms.com/ and start with a 1040. Read each line carefully and go from there.
The IRS has tons of great resources, and you can even call them up. Each form has a companion instruction booklet (online PDF), and sometimes those instructions refer to an IRS publication with additional clarification. If you can read a technical blog post and follow a clear procedure, you can file your own taxes.
I've been filing taxes the (new) old-fashioned way for my wife and I for the last 3 years. That includes 330+ days abroad (Federal Earned Income Exclusion), a sole proprietorship, an LLC, an ISO exercise (AMT), 3 separate states, and 5 separate cities.
Each time, it has taken me a full 12-16 hours (a solid day or two on a weekend) for federal, multiple states, and multiple cities. It's not the most fun, but by the end of it, I understand our taxes and finances a lot better. We can arrange our situation better going forward. We can keep more appropriate records to make the next year's filings easier. And most of all, I have the satisfaction of not funding an industry that lobbies against my interests.
> it's not all that hard to file your own taxes the old-fashioned way
> Each time, it has taken me a full 12-16 hours
You have a strange definition of "not that hard".
This is exactly my experience trying to do it the old fashioned way. The IRS's documentation is written in accountant speak so deciphering what each means is an effort and all of the time it takes adds up. Who else uses the word "schedule" to mean "form"? And then there are so many places where it talks about "qualifying" this or that without telling you how you know if something qualifies.
And that's before you get to the nightmare if you own stocks. My wife inherited some telecom stocks from her grandmother. Her grandmother got them as part of her paycheck when she worked at AT&T. Unfortunately she didn't keep any of the original documentation for them (my wife had to track down the stock management companies and get them to reprint the certificates). These stocks were then of course split across all of the baby bells and merged and split a ton of different ways over the years. Then one of the companies merges and we get a payout for a fractional amount of a share and have to calculate the strike price of the stock for the sale.
As an average person this seems like an impossible task. We just enter 0 and pay a ton of extra tax because how in the hell are we supposed to do that calculation? As far as I can tell we can never sell these stocks.
> You have a strange definition of "not that hard".
That's fair, but by-far the hardest thing about filing taxes for us has been prorating our income based on how long we lived in each part-year municipality. Adding to that, some cities/states give you a credit on the taxes, some deduct from the income, and yet others multiply by the number of business days you were a resident. If it was just a matter of filing a 1040, itemizing deductions, and transferring that same info to state/city taxes, it would probably take me 3-4 hours.
I agree that your situation sounds difficult, but I doubt that TurboTax is really making that easier. You likely need to seek out a true tax preparer/accountant. My comment was specifically targeted at those who are using DIY online software... It's just honestly not that much harder to use forms. (I could have been clearer about who my comment applied to.)
Both excel at finding ways to gouge customers too. Doing standardized deductions, but happen to sell one stock? Nope. Gotta upgrade to Premier for $30 more.
I mean, I feel like we should've seen this coming. They chunked off a significant portion of the market, and now they can try to make tax filing more expensive such that they can make more money. It's disappointing, because I love online tax filing, and I just hope their lobbying efforts don't pay off.
Every time I read that Intuit is lobbying against making Tax filing free and easy, I feel immensely grateful that Indian tax filing is simple and free. Yes, we might lack in 24x7 electricity or the first world infrastructure, but our tax filing mechanism is simple! I hope that the US makes this change to their tax process.
Good luck there is already hundreds of companies that offer free e filing, This is a losing proposition for them, competition has kept this free and there is no reason to use either H&R Block or Intuit. There is also no reason to pay a tax preparer or accountant to do your taxes, since you can easily do it yourself. I can understand for companies, and very wealthy people with tons of stocks, bonds, and IRAs etc. Then pay someone, but for the normal person who just works one job and doesn't do much trading or investing, then go onto the irs web site and choose one of the hundreds of free efile companies each year, they often have a limit of 62,000 anyway in gross income, so it's harder to find a free file if you make more money. They are going to try but this is a state by state issue.
I used taxslayer the last time I free filed, but I thought that I remember being more than only 13 companies. I don't want the government to fill anything in for me, however, because there's no way that they know everything about my deductions and credits and all the loopholes that many people want to use, if you just work a 9 to 5 job for one company then that sounds ok. I say keep it how it is now, and they've been lobbying for years, they probably think that they have a chance now because the Republican party is all about helping the private sector and having a small government.
I work for the Tax Foundation, a nonpartisan tax policy think tank. As a 501(c)3 we're not allowed to lobby, but we do work hard to show legislators the benefits of taxes that are simple, transparent, neutral, and stable.
Thank you for the work you do. I disagree with the principle of neutrality because I support Pigouvian taxation. But we could use a lot more of the other three.
Senator Warren has introduced bills in the past to simplify the tax filing process. I'll let you do the homework to figure out for which party you should vote to help this kind of legislation pass.
Work to elect people who believe that government is by the people and for the people? People being defined in the traditional sense rather than including corporations.
The only other hope is probably tax reform but good luck getting agreement on where the tax rate(s) should be if deductions and credits were eliminated.
I am not sure if it is true still, but I remember "regular" workers in Japan do not have to file tax. They are deducted from their pays and that's it. I think that will similarly apply to a very large number of population.
I also never liked really to use accountants, as they basically ask the same questions that I have to collect myself. Might as well use an online tool. Especially if most of the "W"s are already at IRS/FRB why do I even have to send the copies of them again. Why don't they just give me the partially filed XML/JSON to me to finish it off.
This is how it's done in Mexico, most people have no idea how to declare taxes any other way. You can still deduct some things in an itemization like manner if you want or are self employed but otherwise its automatically deducted from your payroll.
I file my taxes for free, easily, by printing out the forms at home and doing them by hand on paper. The only cost to me is for the envelopes and postage. I've done some pretty complex filings over the years, and have built up the knowledge I need to do it well. Also, if I make a mistake the government is usually pretty good about letting me know and I either cut them a check for the difference or they cut me a check. It's actually not that hard, as long as you go through it line by line and read the instructions.
I disagree that it's easy to do by hand, and I'm a relatively smart dude. It took me about 2.5 hours to do my and my wife's taxes last night including four W-2s and calculating an ACA penalty due to a gap. That was 2.5 hours longer than I would have preferred, especially considering the IRS already has this info.
But, I still prefer this to supporting Intuit & Co.
Not disagreeing, but what you are really doing is spending your time instead of money. It's a predatory industry for sure, but there are trade-offs. Sometimes they find deductions you didn't know you had.
Yeah absolutely. I'd love a free online solution from the government as it would make my life easier. So far, I haven't been willing to pay out to Intuit or HRBlock for a slight time/convenience savings.
Even without the lobbying the public choice aspects of this are bad. I'd like easier tax filing but I wouldn't vote for a politician who I disagreed with about immigration if they supported it. On the other hand I'd bet that most of employees of H&R Block, Intuit, etc would consider tax reform a huge threat to their livelihoods and would rank this as their top priority in choosing who to vote for.
They've been doing this for years. When I grumble about capitalism this is the sort of thing that annoys me. People say government is bad because it doesn't have competition and is a van intrinsically violent monopoly, but here we see an example of private actors spending money to make government unresponsive or outright antagonistic to people's needs so as to profit by serving those needs. The argument goes on that it's government's fault for allowing itself to be influenced, but that rests on an increasingly common fallacy of composition as if government were a monolithic entity, which (especially in the United States) is so far from being the truth as to be a lie. The fact is that many actors in government have been corrupted by campaign donations, and that the mechanistic application of an unlimited first-amendment concept of political speech Does Not Work.
A basic problem particular to the United States, in my view, if that while the Constitution treats of both law and equity, law has gained primacy and some parties are heavily invested in keeping it that way, arguing that the courts should be no more than mechanistic deciders rather than moral agents in their own right, most often summarized as 'we're a nation of laws!' - a curious statement from people who pledge allegiance to the idea of a Republic with liberty and justice for all, as if there could never be any such thing as unjust laws.
It would be interesting to see which members of Congress are most heavily influenced by lobbyists, and examine their public statements to see whether this correlates with hostility towards the judicial branch that checks their 'work.'
If it wasn't clear, I think the problem is capitalism because the would-be monopolist can simply rent a politician to antagonize whoever is in charge until either the policy or the policymakers are changed. Money is not all that talks in elections, but it's a huge factor.
I've been using TurboTax for years, and I think I'm ready to move on if they are going to continue lobbying. What are some other alternatives? I don't mind paying, but I want to make sure it's a service people trust.
For three years, one of the departments I worked in had to suffer through massive, monthly paper report distributions. Because the petty-tyrant manager would not let us convert to electronic reporting. Because it would shrink his personal turf.
From business and legal aspects through to recent news on scientific "protectionism", no matter the "professionalism" and "objectivity" attached to the domain, they remain run by humans. With all their human traits and foibles -- which tend to come before the "objective."
One reason -- a primary one -- I see for guaranteeing people a basic quality of life, e.g. health care and an at least tolerable retirement. So that they -- maybe -- don't fear change so much. Feel, even, that they get to take part in the change, even when it is not at their own initiative and patent.
> But the legislation would also permanently bar the IRS from offering its own free alternative.
Why should we as citizens of this great country be forced to give up the right to form a public option? Not quite 1:1 but the analogies to health care do come to mind.
Australia has their own tax software. It's not pretty, but it's pretty straight forward. In NZ you don't even have to file. You login to the IRD site and it shows you your earnings, similar to this proposal.
Jobs will disappear and some industry will go away if we had a unified federal run tax system. Most likely though, these two companies will turn into contractors for the government to make an maintain one standardized system. They'll earn less money, but the entire system overall would be better.
This is a good place where we can see capitalism break down; where the public good is done a disservice by those who would seek to retain their earnings from an inefficient system.
The IRS does provide free fillable forms[1] which do some of the math for you, but is otherwise about the same as just doing it on paper. I used them last night for the first time, because I no longer want to support the Tax Complication Lobby.
Republicans oppose having the IRS automate taxes for most citizens. Remember to vote very year.
If they can compete with a public option then I'm sure they'll have jobs. If not who's to stop a private competitor from eating their lunch?
FYI I'm not saying ban private tax preparation (though I do think it's unnecessary for 90+% of people as they're just filing a 1040EZ). Just that we shouldn't be restricted from allowing the Feds to provide a default option.
There is already more than enough bureaucracy involved in paying taxes, creating an ecosystem to make more of that bureaucracy... for a profit.... is not my idea of a good idea.
The government would actually love this. Most people are ignorant of tax laws and would just sign a piece of paper to get all of their taxes done. It would be an instant pay raise because most people would never even know if they could write something off. It would also allow them to easily remove the ability to write anything off, without too many people complaining.
What many people don't like to talk about is that yes, places like Sweden have much simpler tax code. But they also removed most ways to actually reduce your tax burden and grow your business (this applies to personal taxes too). You are also required to have a special black box on any credit card transactions, which sends everything straight to the government. This smacks of authoritarianism.
Simplicity might seem better, but it gives us less control over our own taxes.
It's also not really that difficult now. Everyone I know has been doing their own 1040-EZ form since they started to work. It's usually only one or two forms to fill out. If this is too complicated for our society, we truly have problems.
Have you ever actually done your taxes by hand? The 1040EZ is supposed to take 7 hours. Back when I did paper taxes and couldn't do the 1040EZ, the 1040 long form took me about 20 hours to do, slightly beating the IRS estimate of 22 hours.
The government has all the information about me. Why do I have to gather it all up and tell them again?
A friend in Finland tells me it takes him 10 minutes to approve the tax documents prepared for him on a Finnish government website. Why can't we do the same here?
How the hell can it take 7 hours to fill out the 1040EZ. The only people who can use that form are the ones with super-simple tax situations. Literally a W2 and maybe a 1099 from your bank. You fill in a couple dozen fields or so and punch some numbers into your calculator and you're done.
I can believe 7 hours for a 1040, because leafing through the 200 page instruction book is hugely time consuming and there is a lot of confusing stuff in there.
The IRS has to provide time estimates for every form they have. They even have to give you a notice that the paperwork complies with the "paperwork reduction act."
7 hours was the IRS estimate for the 1040EZ as of 2012. I understand it is down to 5 hours now. The 1040 long form is down to 18 hours. I don't do my taxes by hand anymore, though.
I've had my business for a few years, but I did my 1040EZ by hand many times. It took at most, 3 hours. Most people have one job and you basically just copy all of the info you have from your W2 (which is provided by your employer).
"The government has all the information about me. Why do I have to gather it all up and tell them again?"
So does the government also have all of the info about the gas you write off or anything else specific about your life? If so, the surveillance state is getting pretty bad.
If not, then I will have to fill out the longer forms anyway.
If they don't and you just fill out a form and send it in, you are giving them more money than you should. The end result will be that poor and uneducated people will give more money to the government and the people that actually pay attention will be giving less.
I'm only looking out for the best interest of everyone. You seem to be fighting for the right to be lazy because you don't want to have to think about it, which never leads to anything good.
If you have writeoffs you can't use the 1040EZ anyway.
Besides, it should be a fairly simple matter for the government to prefill the W2 and 1099/1098 sections and let you fill in the miscellaneous deductions yourself.
It's not like you couldn't still go to Intuit or H&R Block if you didn't trust the IRS. There's literally no downside to the government providing this service.
Like I said, the downside is that most people are lazy and will just fill out the form and send it in because they don't want to deal with it or think about it. You can't get most people to do simple math.
Isn't this a good thing? People shouldn't have to think about this stuff, there's no reason unless you are doing something special. If you have a simple tax return then why bother making everybody go through the motions of filling in the paperwork to calculate the same thing the government already knows?
If you do have a more complicated situation then the prefilled form at least gives you a starting point.
Right now, people are lazy and pay Intuit or H&R Block because they don't want to deal with it or think about it. How does allowing people to use a free tax return prefilled by the government make this worse?
In this alternative solution, the government does your taxes, so instead of paying a company/accountant to do it, our taxes / the deficit will pay for it. Someone has to do the work, and if it's not these companies, it will be the IRS. I'd be in favor of simplifying the tax code so everyone could file their own return with confidence!
The work is already being done. Try putting some incorrect numbers into your tax return this year. Sometime after you file, you'll probably get a letter informing you of the mistake, telling you how much your actual tax liability differs from what you filed, and either a check or a bill for the difference.
IRS checks your math and makes sure all the reports (your copy vs employer/bank/vendor copy) match. They won't tell you which deductions you are supposed to take.
> They won't tell you which deductions you are supposed to take.
They will for the most basic personal deductions. I have gotten a correction on a 1040EZ where my deduction was corrected upwards and the refund increased. It is impossible for the IRS or your tax preparer to know things like what kind of automobile deductions you can take for your sole-proprietorship business. This is an impossible problem to solve - every change to the deductions allowed is going to make some people pay taxes on what should be business expenses/losses and/or allow other people to claim legal-but-bogus or just plain fraudulent deductions.
I think this is a false equivalence. The IRS is already "doing taxes" for most people when they get their paystub and investment data electronically sent by those institutions and using that to compare against the self-willed returns. If anything for many individuals (not self-employed, minimal investments, basic mortgage) this plan would reduce overhead.
In theory, the goal of the government is to maximize your amount of tax paid while the goal of professional tax preparation is to minimize it. (In order to compete with other services.)
In practice, I don't know whether there ends up being a net benefit to taxpayers or not in the current setup.
Outside of extreme wealth cases it appears that many "bulk" prepares operate on a volume business where turnover and automation is the focus. Given sufficient transparency and a way to manually file a return if you disagree with the auto-return (like in the UK) then I believe the efficiency problem you point out would be addressed.
The IRS already has the infrastructure to do it. For simple returns they also have all the necessary information whether a return is filed or not.
So we can do both. Simplify the tax code and send a lot of people a post card summarizing their tax year. If the summary is wrong or not advantageous, they can file an amended return.
Simplifying the tax code is a great idea. But it is DIFFERENT than allowing the IRS to pre-fill tax forms for people. Many people (although, due to our current complex tax code, not everyone) would be able to use these pre-filled forms and file taxes free for no effort. We shouldn't miss out on THAT opportunity just to chase tax simplification: we should do both!
The IRS already does your taxes, in parallel. If you forget something that was reported to them or make a math error, they'll take it out of your return and send you a letter.
When you consider that your argument seems to be that we should ignore the efficiencies of scale and the removal of a pointless profit margin, because it won't be absolutely free.
Insinuations of shillage without evidence are not allowed here, so please don't do this. Someone expressing an opposing view does not count as evidence.
The 10% for who it is not can add or correct things that our IRS may not know correctly (i.e. foreign holdings or bitcoins).
You then digitally sign and submit it. It's quite easy to do yourself and I think most people here do (couldn't find a percentage). I could find that 97% is submitted digitally, only 3% is on paper.
We do have commercial offerings, those are used for the more complex scenario's, mostly by accountants and tax professionals