I love the quote from the Intuit VP, which complained that it would end up “costing billions of dollars in taxpayer money.”
The current system costs billions of dollars in taxpayer money, it’s just that today those dollars flow to Intuit. The IRS one should end up costing less overall, even at govt contracting rates.
The IRS taking this on this way has incentive to automate and make taxes as easy as possible. Intuits incentive is to keep taxes complicated and as manual as possible.
Therefore, the most likely outcome is that the IRS taking this on will most assuredly result in saving tax payer money.
That’s just the classic anti public sector service line in general.
Whatever your feelings are about single payer healthcare, it’s incredibly disingenuous when politicians debate against it by bringing up the cost of such a system, without comparing it to the current cost of the private system it would replace.
In the 8 years since I lived in the United States my income taxes in other countries have been almost unbelievably easy. Typically I look at the calculated amount provided by a government website, compare it to what I think it should be if there is done discrepancy, upload some receipts or whatever for deductions, then click submit.
It is beyond me why the experience should be any how different in the United States. And don't tell me, oh but there's 50 States which makes it complicated. I've lived in 5 countries in those years, four of which I had to pay taxes and every one was this easy.
"And tax politics make strange bedfellows. Fighting alongside H&R Block and Intuit are anti-tax activist groups like Grover Norquist’s Americans for Tax Reform. H&R Block and Intuit love taxes—that’s how they make their money. Grover Norquist wants to cut taxes wherever possible. But on this issue, their interests are aligned. H&R Block and Intuit want to make it difficult for you to file on your own. The anti-tax activists think that if taxpaying is too easy, voters will be less likely to resist the federal government’s growth. Both want to make it as painful as possible for you to do your taxes yourself."
JW, how do these countries handle non-employement or self-reported income (e.g. capital gains of real estate, equity, or even selling products online)?
I think it is deliberately made difficult as a backdoor way to raise more money through penalties and interest fees. Additionally, since the odds are so high that the average person making above $200K has made an error, it can be used as blackmail.
On a global scale, complex taxes are actually not uncommon and the US fares well. I'd like to see a comparison of government corruption with tax complexity. For example, it seems that most South American countries are considered to have very complex taxes.
There is nobody in the developed world as opposed to the government raising revenue as Americans are. That part is bipartisan, which is why Biden hasn’t meaningfully raised taxes. But Republicans go a step further and want you to suffer once a year so you don’t get complacent about the tax rates.
In the x years I lived in the United States my income taxes in other countries have been almost unbelievably easy. They just didn't exist, as long as I didn't live there.
As a citizen of a country where tax is handled entirely by the government, schemes where for-profit corporations are part of the tax collection infrastructure seems absurd. As absurd as for-profit courts or for-profit election polling stations.
The article mentions that the tax software maker opposes the government doing this, but doesn't mention public opinion. What does the average American think about this?
Part of the problem is that both parties have ended up making our tax code so convoluted as sops to their own special interest groups. Group A needs a tax break for this! Group B for that! And so if you have a bog-standard boring return, fine, but if your financial situation ends up in certain buckets such as renting out property, getting RSUs, etc., then sometimes it's cheaper to hire an accountant than leave money on the table not understanding your deductions.
And then people in less-complicated situations get intimidated and think they need tax-prep software. Or they're lazy like me and use TurboTax so they can click through everything in an hour and be done with it.
> What does the average American think about this?
Like most problems, the average American has (for political purposes) ~zero mental engagement with this. Vs. those for-profit corporations (and a variety of other interest groups) are intensely engaged. And it's all-too-frequently reported that any politician who wants to be (re-)elected to America's Congress needs to be intensely engaged with wooing interest group support and campaign fundraising.
Depending on how straight forward the IRS makes it, considering they already know what most people owe and yet still force us to jump through hoops, then I’d be willing to give it a go instead of paying a company to help me with my taxes or using one of the various “free” websites that usually just try to sell you something else.
> What does the average American think about this?
That all depends on the government's execution. If they can deliver a system that is more convenient to use, cheaper (no, government services are not "free") and provides better results, then I'm all for it.
It’s very much a “who cares?” Issue. It’d be cool… but: taxes are still super easy to file for 90% of people. You’ve literally always been able to file your taxes by paper and not have to pay anyone anything to do so.
It does not have to be a digital system and the government should not chase technical solutions unless it genuinely benefits its operation and legal requirement.
If people want easy taxes then they can hire someone. That seems to be the market solution to most problems.
> Arizona, California, Massachusetts and New York have decided to work with the IRS to integrate their state taxes into the Direct File pilot for filing season 2024. Taxpayers in nine other states without an income tax – Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming -- may also be eligible to participate in the pilot. Washington has also chosen to join the integration effort for the state's application of the Working Families Tax Credit. All states were invited to join the pilot, but not all states were in a position to join the pilot at this time.
Since the article didn't bother to list the states, as far as I could see...
We have in France pre-filled taxes, you go to the tax site, click next a few times and you are done. Takes 30 seconds for 90% of the population. Usually people do not even check what they click if they have a standard job.
Is the system in the US much more complicated to require software purchases?
I get it that it is not prefilled, but is there a lot to actually input in the system?
You're expected to enter all of your income, sort out what portion of your income is taxable, determine the amount you can deduct from your taxable income, figure out what tax credits you're entitled to, calculate how much tax you already paid and what you still owe or should be refunded, and decide how you want to pay or be reimbursed.
The good news is, after all that, if you make a mistake the IRS will tell you what you actually owe and send you either a bill or a check for the difference.
> Is the system in the US much more complicated to require software purchases?
It's intensely more complicated.
My 2022 Federal tax filing was over 50 pages. I gave up trying to do it myself with TurboTax about 10 years ago and that was one of the best decisions I have ever made. I can sleep well at night knowing that as long as I provided the necessary information to my accountant, all the right forms will have all the right stuff on them.
IMO, nobody but the most trivial W-2 only taxpayer should be doing it themselves.
The state filing in my state is much simpler because it mostly piggybacks off the information in the Federal return and doesn't require dozens and dozens of additional forms.
It's not much more complicated for 90% of the population. You just need to wait for forms from your insurance, your employer, etc and then you copy some numbers from a form to another.
If you want to optimize to death yeah you start dealing with deductions and all.
I think people just use a software cause it gives them peace of mind and it helps them understand all the "life events" they could use to reduce their taxes.
Re: the cannabis situation - the closest European analogy would be Amsterdam or Christiania. Cannabis sales are not legal in those countries, but some sales are tolerated in specific areas.
California isnt too much different - it is illegal in the United States to sell cannabis, but the federal government mostly tolerates it in states that permit sales.
Even in Europe, countries have several levels of administration/government. Cities, regions, districts, whatever. The national government is not all powerful.
Non-USian here. How does federal income tax work for people with a normal, regular job? If someone just works full time in a shop or on a factory line, do they get yearly tax demand that they have to check and/or calculate themself?
It can be pretty easy. When I started my professional life in the US, taxes were relatively simple because I basically had two sources of income (job and interest investments). You enter 2 forms, ignore a lot of prompts in the tax software (do you do X? Do you do Y?) and go for it. You can even file your taxes for free - in theory - if you have a simple life like that. A lot of taxpayers do.
The problem that makes things a lot more complicated is that the US has many little mechanisms for reducing your tax liability that are very tempting to use (and oftentimes inevitable): 401k, HSAs, mortgage interest deduction, 529 accounts, long term capital gains, capital loss offsets etc. HN readers tend to be more educated than average and have a higher income than average. Also, a lot of math-inclined, optimizer types here who will absolutely want to take advantage of these features in the tax code.
When you start adding every little way to pay less taxes, or start doing more interesting things in your life such as setting up a small business or buying property, tax preparation can become a nightmare.
When you get a new job, you fill out some forms that tells the government how much money to withhold from your paycheck based on your expected earnings, deductions, etc.
Later, at the end of the year, you file your return of what you actually made, what your actual deductions were, etc. And then the government will either pay you if you paid too much or they will ask you to pay if you did not pay enough.
Does 'direct file' mean you won't have to post (by registered mail) your physical tax form to the IRS? That would be the biggest win surely (although huge loss for USPS)
According to the IRS, these are the states joining the pilot:
States with state income tax: Arizona, California, Massachusetts, and New York
States without state income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming
I think I will pass this trial for now. I knew a high-level programmer who worked at the IRS and he was very good. But the bureaucracy was overwhelming.
Given enough time then sure, but now, no thank you.
But if the IRS wants to use my returns as a test case, I say go for it.
[+] [-] gumby|2 years ago|reply
The current system costs billions of dollars in taxpayer money, it’s just that today those dollars flow to Intuit. The IRS one should end up costing less overall, even at govt contracting rates.
[+] [-] kristopolous|2 years ago|reply
[+] [-] toomuchtodo|2 years ago|reply
[+] [-] wredue|2 years ago|reply
Therefore, the most likely outcome is that the IRS taking this on will most assuredly result in saving tax payer money.
[+] [-] comte7092|2 years ago|reply
Whatever your feelings are about single payer healthcare, it’s incredibly disingenuous when politicians debate against it by bringing up the cost of such a system, without comparing it to the current cost of the private system it would replace.
[+] [-] mnky9800n|2 years ago|reply
It is beyond me why the experience should be any how different in the United States. And don't tell me, oh but there's 50 States which makes it complicated. I've lived in 5 countries in those years, four of which I had to pay taxes and every one was this easy.
[+] [-] sdenton4|2 years ago|reply
https://www.politico.com/agenda/story/2018/07/18/tax-filing-...
[+] [-] itake|2 years ago|reply
[+] [-] onetimeusename|2 years ago|reply
On a global scale, complex taxes are actually not uncommon and the US fares well. I'd like to see a comparison of government corruption with tax complexity. For example, it seems that most South American countries are considered to have very complex taxes.
[+] [-] DanielHB|2 years ago|reply
(it is a desktop Java application made ~20 years ago)
and from all I hear it is still MUCH better than doing your US taxes
(to be fair the application is actually decent, just using outdated tech)
[+] [-] rayiner|2 years ago|reply
[+] [-] EVa5I7bHFq9mnYK|2 years ago|reply
[+] [-] vonwoodson|2 years ago|reply
Because, Freedom. And, because America.
[+] [-] kvdveer|2 years ago|reply
The article mentions that the tax software maker opposes the government doing this, but doesn't mention public opinion. What does the average American think about this?
[+] [-] psunavy03|2 years ago|reply
And then people in less-complicated situations get intimidated and think they need tax-prep software. Or they're lazy like me and use TurboTax so they can click through everything in an hour and be done with it.
[+] [-] bell-cot|2 years ago|reply
Like most problems, the average American has (for political purposes) ~zero mental engagement with this. Vs. those for-profit corporations (and a variety of other interest groups) are intensely engaged. And it's all-too-frequently reported that any politician who wants to be (re-)elected to America's Congress needs to be intensely engaged with wooing interest group support and campaign fundraising.
[+] [-] jsaintmything|2 years ago|reply
[+] [-] knubie|2 years ago|reply
That all depends on the government's execution. If they can deliver a system that is more convenient to use, cheaper (no, government services are not "free") and provides better results, then I'm all for it.
[+] [-] vonwoodson|2 years ago|reply
If people want easy taxes then they can hire someone. That seems to be the market solution to most problems.
[+] [-] ryaneager|2 years ago|reply
[+] [-] AnimalMuppet|2 years ago|reply
Since the article didn't bother to list the states, as far as I could see...
From https://www.irs.gov/newsroom/irs-advances-innovative-direct-..., which is linked by the article.
[+] [-] BrandoElFollito|2 years ago|reply
Is the system in the US much more complicated to require software purchases?
I get it that it is not prefilled, but is there a lot to actually input in the system?
[+] [-] aimor|2 years ago|reply
You're expected to enter all of your income, sort out what portion of your income is taxable, determine the amount you can deduct from your taxable income, figure out what tax credits you're entitled to, calculate how much tax you already paid and what you still owe or should be refunded, and decide how you want to pay or be reimbursed.
In the simplest case it's straightforward.
But for anything other than the simplest case it quickly becomes a mess of additional forms (called schedules). Currently there's 3 main schedules (1, 2, 3) for Income Adjustment, Additional Taxes, and Additional Credits. And each of those references addition schedules and forms. Here's schedules 1, 2, 3: https://www.irs.gov/forms-pubs/about-form-1040 Here's a list of the other schedules: https://www.irs.gov/forms-pubs/schedules-for-form-1040 and a search for all the forms and instructions: https://www.irs.gov/forms-instructions-and-publications
The good news is, after all that, if you make a mistake the IRS will tell you what you actually owe and send you either a bill or a check for the difference.
[+] [-] hn8305823|2 years ago|reply
It's intensely more complicated.
My 2022 Federal tax filing was over 50 pages. I gave up trying to do it myself with TurboTax about 10 years ago and that was one of the best decisions I have ever made. I can sleep well at night knowing that as long as I provided the necessary information to my accountant, all the right forms will have all the right stuff on them.
IMO, nobody but the most trivial W-2 only taxpayer should be doing it themselves.
The state filing in my state is much simpler because it mostly piggybacks off the information in the Federal return and doesn't require dozens and dozens of additional forms.
[+] [-] flandish|2 years ago|reply
Forms are things like: main employment, side jobs over 600, bank interest, car/house loan and tax payments, stocks, and other things.
The forms are often not ready until late feb to mid march.
Mid april is the filing deadline.
Mind you - the gov already has copies of ALL the forms. They just want you to f it up.
[+] [-] tuwtuwtuwtuw|2 years ago|reply
[+] [-] dudul|2 years ago|reply
If you want to optimize to death yeah you start dealing with deductions and all.
I think people just use a software cause it gives them peace of mind and it helps them understand all the "life events" they could use to reduce their taxes.
[+] [-] INTPenis|2 years ago|reply
Like the federal government can come to California and shutdown a cannabis dispensary, but they can't make you use an easier way to file your taxes.
[+] [-] ac29|2 years ago|reply
California isnt too much different - it is illegal in the United States to sell cannabis, but the federal government mostly tolerates it in states that permit sales.
[+] [-] dudul|2 years ago|reply
[+] [-] Ographer|2 years ago|reply
That is pretty ironic because TurboTax is working to prolong the problem in order to profit from their own solution.
[+] [-] andyjohnson0|2 years ago|reply
[+] [-] glimshe|2 years ago|reply
The problem that makes things a lot more complicated is that the US has many little mechanisms for reducing your tax liability that are very tempting to use (and oftentimes inevitable): 401k, HSAs, mortgage interest deduction, 529 accounts, long term capital gains, capital loss offsets etc. HN readers tend to be more educated than average and have a higher income than average. Also, a lot of math-inclined, optimizer types here who will absolutely want to take advantage of these features in the tax code.
When you start adding every little way to pay less taxes, or start doing more interesting things in your life such as setting up a small business or buying property, tax preparation can become a nightmare.
[+] [-] ImPleadThe5th|2 years ago|reply
Later, at the end of the year, you file your return of what you actually made, what your actual deductions were, etc. And then the government will either pay you if you paid too much or they will ask you to pay if you did not pay enough.
[+] [-] somewhereoutth|2 years ago|reply
[+] [-] instagib|2 years ago|reply
States with state income tax: Arizona, California, Massachusetts, and New York States without state income tax: Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming
[+] [-] username3|2 years ago|reply
[+] [-] toomuchtodo|2 years ago|reply
[+] [-] shinjitsu|2 years ago|reply
[+] [-] unknown|2 years ago|reply
[deleted]
[+] [-] jmclnx|2 years ago|reply
Given enough time then sure, but now, no thank you.
But if the IRS wants to use my returns as a test case, I say go for it.
[+] [-] trident5000|2 years ago|reply
[+] [-] clubm8|2 years ago|reply
[deleted]
[+] [-] spandextwins|2 years ago|reply
Or just get rid of federal income taxes all together like they did around 100 years ago.