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IRS Direct File to open to all 50 states and D.C. for 2025 tax season

yndoendo
59 replies
1d1h

I would argue that having to file taxes through a 3rd party accountant or service is not only forced commerce but also broken glass economics. Looks like it helps the economy by creating jobs but the job is redundant and does not create anything of value.

Where are crimes more likely to occur, a city with 10,000 or 1 million? Where are financial crimes more likely to occur, people that make $10,000 a year or people that make $1 million or more a year. I rather have these accounts move into forensic work and go after the wealthy tax evaders.

IRS is an enforcement agency that specializes in tax collection and fraud. People that are clamoring for reduced IRS staffing are ultimately support of defending the police. I rather have a well staff IRS going after those that evade paying their taxes, probability speaking the wealthy.

londons_explore
30 replies
1d

Conventional wisdom is that if one can fund the IRS with one extra dollar, and they use that dollar to collect two dollars more taxes (from evaders), than that was a good way to spend taxpayers money.

Many economists don't agree though. If you care about economic success of the country, the goal isn't 'collect as many taxes as possible'. The goal is to make the citizens wealthier in real terms.

Effort your citizens put into tax collection is 'dead weight', and doesn't contribute to exports etc. However, effort your citizens put into trade that (for various reasons) ends up under-taxed, usually does add to the economic wellbeing of citizens.

Therefore, it's only necessary to collect mostly-correct taxes from most citizens, if doing so let's you redirect labour from tax collection into other work.

Is it unfair? Yes. But it's still good economic policy.

vundercind
9 replies
1d

Very easy to draw extremely wrong conclusions from this line of thought without factoring in the long-term cost of declining trust in the rule of law.

latency-guy2
8 replies
1d

Only if you're under the false premise of the people serving the government rather than the government serves the people.

vundercind
7 replies
1d

I have no idea what connection you’re drawing there.

latency-guy2
6 replies
1d

What is the confusion? You're the one bringing up "rule of law" as if I live to be the government's personal slave along with millions of others.

vundercind
2 replies
1d

The confusion is that that doesn’t follow, at all.

[edit] it occurs to me that this is a term of art you may be unfamiliar with, so reading it in an unusual sense:

https://en.m.wikipedia.org/wiki/Rule_of_law

Basically, it’s a super-important thing to have if you want to live in a “developed” country that doesn’t have all kinds of very-bad problems, and isn’t some proxy for level-of-authoritarianism, which is how it seems you’ve read it. It’s about actual and perceived equal treatment under and efficacy of the law, not how much law (if you will) you have. A minarchist libertarian state would sensibly seek to have high rule-of-law, for instance.

latency-guy2
1 replies
22h14m

I'm not confused at all about the concept. Your stance is incomplete. "Rule of law" does not stand alone either, you've also mixed in a few concepts that frankly do not apply, but we'll ignore that for now.

"Rule of law" requires government (and it's officers) be above all, both in practice and in theory. Just on the basis of who can violate rights, perceived or otherwise, and who in turn pays for the consequences, it fails in the test of "equality". And in reality, it's enshrined in multiple jurisdictions varying levels of immunity.

Even if you think tax money, once assessed and collected, belongs to the government.

vundercind
0 replies
21h27m

Ah—you know the sense in which it was intended but, unusually (I intend this descriptively, not pejoratively), reject its definition as self-contradictory. That, I was not expecting.

I don’t think we’re gonna bridge that gap productively in a comment section. Have a nice weekend (sincerely).

nitwit005
1 replies
20h53m

No matter what society you live in, you will have to obey rules. There has never been a society where this is not the case, and there never will be one.

You can call that slavery if you want.

latency-guy2
0 replies
13h1m

You have to breath in mere seconds after you breath out, this action must continue until your bodily functions completely fail or otherwise.

plorkyeran
0 replies
23h43m

That's not what the phrase "Rule of law" means.

Drakim
4 replies
1d

If you care about economic success of the country, the goal isn't 'collect as many taxes as possible'. The goal is to make the citizens wealthier in real terms.

Just like how "collect as many taxes as possible" isn't actually a good goal, just "make the citizens wealthier" isn't actually a good goal either because it says nothing about the distribution of that wealth.

If we enacted a law that made 99.9% of all citizens absolutely destitute to the point where they must eat rotten food found in the trash to survive, but this law also multiplied the wealth of Bezos and Elon a millionfold, then that would successfully "make the citizens wealthier" in sum.

Taxes are used to run society, from it's roads, fire department, education, social services, and much more. A lot of people are pushing to cut down on those things, to decrease the bounty that society offers regular people who partake, because "we just can't afford it." and the reason we can't afford it is because there is an overly focus on "make the citizens wealthier" even at the cost of most citizens.

gottorf
3 replies
22h47m

Taxes are used to run society, from it's roads, fire department, education, social services, and much more

The "much more" is much, much, much more than anyone thinks. The federal budget is tremendous. People cannot conceive of trillions, yet the federal government alone spent over six of it a year, three years in a row.

Virtually nobody has a problem with tax funds being used to build roads and bridges, fire departments, and whatnot. It's everything else that's contentious. Public schools are visibly wasteful, with the number of students and teachers overall remaining largely constant, but the number of administrators having increased many-fold in the past decades; at this point it's a jobs scheme for adults, not an education scheme for children. Nonprofits received hundreds of millions of taxpayer dollars to support illegal immigration. Et cetera.

So many things in the federal budget appeal to a fringe minority of advocates, yet the money hose continues to flow. This is not the way that a federal government with clearly delineated limits should work. Something is wrong.

beart
1 replies
21h32m

Most public education funding at the K-12 level is from state and local taxes.

ceejayoz
0 replies
21h34m

It's everything else that's contentious.

In part, because of comments using wording like "hundreds of millions of taxpayer dollars" as if it were huge, when it describes a pretty miniscule part of the 6,000,000 millions in the budget. (It also misses those same immigrants paying billions in sales and other taxes here, including quite a bit of Medicare/Social Security funding they'll never get back.)

As a result, Americans have a massively skewed idea of where it all goes; they think NASA gets 6.4% of the budget when it gets 0.5%, for example. https://www.businessinsider.com/nasa-budget-estimates-opinio...

Defense, healthcare, and social security make up the vast majority of Federal expenses. Education is, comparatively, a pittance; nonprofits serving immigrants don't even show up on the chart as a full pixel.

https://commons.wikimedia.org/wiki/File:2023_US_Federal_Mand...

https://commons.wikimedia.org/wiki/File:2023_US_Federal_Disc...

crazygringo
3 replies
1d

If you care about economic success of the country, the goal isn't 'collect as many taxes as possible'. The goal is to make the citizens wealthier in real terms.

But the goal of taxation isn't to maximize the country's economic success or overall wealth.

It's to fund necessary government services (schools, courts, police, military, etc.) and to redistribute wealth (Social Security, Medicare, Medicaid, etc.).

We only want to maximize national wealth after we've funded government services fully and redistributed wealth (and sufficiently protect the environment, protect workers, etc.).

So if funding the IRS gets you back more money, that's always good, because it's by definition going to the things that we have democratically decided are a higher priority than maximizing national wealth. And if we democratically decide that we're spending too much on services or redistributing too much, then we cut those intentionally -- not "accidentally" by underfunding the IRS.

Even if under-collecting taxes is good economic policy by the extremely narrow measure of GDP, it's terrible national policy. It's like saying that accidentally redirecting an extra $500 per person to the military is good military policy. I mean, sure it might be. But that doesn't mean it's good national policy.

dpc050505
2 replies
1d

We only want to maximize national wealth after we've funded government services fully and redistributed wealth

There's a chicken or the egg issue here. If your country isn't rich enough to fund government services such as education, transport and healthcare you need some economic development first.

mjamesaustin
1 replies
22h34m

Except we are vastly more wealthy than needed to provide these services. Wealth inequality is so laughably bad that a tax on just a handful of mega rich billionaires could cover the cost of many important social services.

webninja
0 replies
4h16m

Are you sure? Have you ever tried to balance the federal budget?

ohashi
1 replies
23h56m

I would like to see the citations on this asinine idea.

willis936
0 replies
20h12m

Nobody needs a first principles argument to justify greed and tax evasion. It just feels right.

bloppe
1 replies
23h23m

Effort your citizens put into tax collection is 'dead weight', and doesn't contribute to exports etc.

Hot take: a lot of tax revenue does contribute to exports etc. The government is spending a lot of money re-digging that shipping channel in Baltimore after the bridge collapsed. Just one recent example, but pretty much every bridge and port and road in the world has a lot to do with taxes.

The government is also spending lots of money on social programs people like too much for even the Republicans to try to repeal, yet the government is not taxing enough to cover them. Letting rules slide for certain people means more debt for everyone else, and is what a lot of economists would call "arbitrary redistribution", which is bad.

londons_explore
0 replies
11h30m

I was referring to the effort of collecting taxes themselves - ie. The salaries of all the IRS workers who have to chase everyone up.

whimsicalism
0 replies
1d

it is not good policy to reward people who break the law to the detriment of people who abide by the law. if tax fraud occurred less, it would give us latitude to lower taxes which would give the broad based economic improvement you are discussing.

tantalor
0 replies
1d

Economics is not divorced from ethics. Fairness matters. If people think the system is rigged they won't participate, or they will try to find their own way to exploit the system.

rain_iwakura
0 replies
23h20m

It's good economic policy based on what? Did you run a counterfactual already? Comparing the US to other countries is meaningless, it's not the same set of init conditions and variables.

Do you realize that those taxes go to fund public services and help people stay afloat, which I don't need a study to show you, creates far more customers for all these tax evaders in the first place? Go back 50 years to see what this country used to be and how much shit it got done and compare it to today. There are measures of productivity engineered in math, and then there is common sense: majority of existing infrastructure was built decades ago and now it costs billions in overrun projects to build a single station in NYC.

The current system works just fine in terms of punishingly taxing everyone on this website and the poor, that's why it feels like I'm contributing half of my salary to the federal government. What it doesn't do is take its share from extremely wealthy, who in turn DO NOT SERVE the economy because they're effectively stateless agents, who can put their money into Seychelles or whatever. Nobody would bat an eye if those billionaires would contribute the billions to the economy. Instead you get people crying about how "the government is inefficient, it gets nothing done, I'd rather the titan spend it as they see fit." But if this ship called United States floods they will be the first to abandon it, just like a famous critter.

I'm sorry but posts like this are the exact definition of bootlicking.

jltsiren
0 replies
17h41m

One good way of measuring economic success is by ignoring the income and wealth of the top 10%. The exact percentage is not important. What matters is the idea that the success of the well-off only benefits the society to the extent it improves the lives of ordinary people.

Many government activities make sense from that perspective. By redistributing money from the top 10% to the bottom 90%, they increase the economic success of the country, though possibly at the expense of economic output.

And fairness is also important, because societies are built on trust. When people don't trust government institutions and each other, everything starts falling apart.

bradleyjg
0 replies
19h33m

I think you are only looking at a point in time and not considering the impact of incentives over time.

bbwbsb
0 replies
1h1m

The problem with the conventional wisdom is taxes don't fund government services. Fairness is a real asset. Deciding how to weight fairness as an asset against computers and food is political.

IncreasePosts
0 replies
1d

You need to ask yourself how the tax evader uses their $2, and how the government uses their $1. And you need to ask yourself about the perceived rule of law, and how many more tax evaders you would create by letting it be known that it is easy to get away with tax evasion. And you need to ask yourself if you want tax evaders to have a leg up on investments compared to full-tax-payers.

randerson
8 replies
1d

I keep hearing that its mostly the wealthy who evade tax, but I don't understand it. Service workers love being tipped in cash because its easy to not report. OTOH the wealthy have more to lose if they're caught, and can afford to pay their taxes and accountants.

tombert
4 replies
23h54m

Even if that's true, the number of dollars being evaded is substantially lower. Not reporting $2000 a year in tips isn't exactly going to have the same effect of a billionaire not reporting $100,000,000 of their income.

There are plenty of legal ways to evade (or at least not pay) taxes as well, though. An easy way, for example, is to store wealth in the form of stock; generally you don't pay taxes until you sell, so increased value is ignored until then, but once you have that many assets you can borrow money using the stock as collateral, and in some cases I believe you can even write off the interest. All of this is perfectly legal, and I'm not sure if it can or should be "fixed", but a lot of cash that might otherwise be taxed simply isn't.

For that matter, they could also buy a piece of art for a million dollars, a year later get it appraised as worth $40 million, donate it, and then write off $39 million. Again, as far as I know this isn't strictly illegal, but it can be used to evade taxes.

blackhawkC17
3 replies
19h2m

For that matter, they could also buy a piece of art for a million dollars, a year later get it appraised as worth $40 million, donate it, and then write off $39 million. Again, as far as I know this isn't strictly illegal, but it can be used to evade taxes.

This is so wrong it hurts my brain. The IRS requires using a qualified appraiser, and none of them will suddenly appraise an artwork for 40x its last sold value. The IRS aren't fools-- they'll quickly clamp down on such an anomaly.

Even if this amateur scheme were true, the individual wouldn't write off $39 million. They'll deduct the tax rate (%) of $39 million.

tombert
1 replies
17h43m

I doubt every "qualified appraiser" is above being bribed.

I thought it was implied that writing off $39 million didn't mean a $39 million dollar reduction in taxes.

fooker
0 replies
11h58m

Merely a ~20 million reduction, nothing to sneeze at.

quartesixte
0 replies
13h16m

Isn't this one of the reasons why most very expensive art pieces are sold in auctions? The auction acts as a qualified appraiser because of price discovery via competition makes the price very real (after all, what is price but supply and demand?)

Although I guess there is nothing stopping Soteby's from setting the base price absurdly high to begin with . . .

whimsicalism
1 replies
1d

not sure how you keep hearing this, the IRS is very clear that lower income filers commit much more tax fraud which is why they focus audits on filers in this income bracket because it generates the best returns

tombert
0 replies
23h36m

I do wonder if part of this is because lower-income people don't have the legal resources to fight this though. If a billionaire hides their wealth in an illegal way and they're caught, they'll hire a bunch of lawyers and fight against, potentially dragging a court case out for years, and costing the taxpayers millions of dollars.

fooker
0 replies
11h59m

There is not much 'getting caught' happening.

It's all layers of legalized scams. Business expenses, mortgage interests on investment properties, technically charitable donations, massive tax exempt funds, etc. And all these interacting in creative ways.

giantg2
6 replies
1d

"I would argue that having to file taxes through a 3rd party accountant or service is not only forced commerce but also broken glass economics"

Where are people being forced to use a 3rd party? My understanding is that direct file is optional, hiring someone is optional, and using tax software is optional. Isn't it still possible to file with paper on your own?

randerson
4 replies
1d

Anyone with company stock grants, investments, or unusual scenarios is going to find it difficult to file their tax correctly without an accountant or software. The US tax code is too complex for a regular person.

coffeecat
1 replies
21h24m

Filing a DIY tax return with investments is intimidating at first, but it's really not hard once you've done it the first time. Assuming you're not doing any esoteric cost basis adjustments, it's just a matter of knowing where to copy the numbers from your consolidated 1099. Interest and dividends go right onto your 1040. Realized capital gains go on Schedule D. If you hold any foreign stock, claim your foreign tax credit on Schedule 3. Investments in IRAs, HSAs, and 401(k) accounts are, of course, not reported at all.

saagarjha
0 replies
18h13m

Depends, some states (hello, California!) tax your HSA gains.

plorkyeran
0 replies
23h35m

I personally used TurboTax the first few years I had RSU and ESPP income to report (and ran the end result by an accountant) but eventually switched to filling out the forms manually because I found it easier than entering the same information into TurboTax. Tax prep software is great for when your taxable circumstances change and you don't even know which forms you need to fill out, but I didn't find that it let me skip understanding the relevant parts of the tax code and I got to the point where I was having to generate preview pdfs look over exactly what it was generating to make sure I'd entered numbers into the correct spot in the software.

giantg2
0 replies
23h56m

I choose to use software to make it easy. I don't feel like it's being forced since I could use paper if I wanted to. Indo understand that the tax prep lobby generally doesn't want simpler taxes or simpler filing, but it still feels way less coercive than many other areas of legal life.

gamblor956
0 replies
1d

Not only is it still possible to paper file, almost half of taxpayers still paper-file their returns, and a lot of them filled out the returns manually (by hand) on a paper copy of the return.

whimsicalism
5 replies
1d

I think this has been studied and low-to-medium income filers are more likely to actually commit tax fraud so you get better returns as the IRS by focusing on these filers

jerlam
1 replies
19h43m

Heard mostly it's the opposite:

By mapping audit costs and returns across the income spectrum, he continued, “We saw very clear evidence that the return from audits at the top of the income distribution really exceeded by quite a bit the returns at the bottom of the income distribution.” With the top 10 percent of earners, they found, audits have the potential to return more than $12 for each $1 spent.

https://www.news.harvard.edu/gazette/story/2023/07/turns-out...

whimsicalism
0 replies
19h12m

thank you for sharing! i'm having trouble finding it but the explanation i gave i believe was one given by the IRS commissioner in some hearing which i took at face value, but this seems like a much more thorough analysis

wredcoll
0 replies
22h47m

This is contrary to every article I've seen on the subject.

Are you perhaps thinking of when IRS said they couldn't afford to go after wealth tax evaders because they were underfunded?

vladgur
0 replies
21h6m

probably because high-wealth individuals have a lot more wealth preservation instruments available to them and paying a $300/hr to professionals that help them navigate these tax reduction techniques makes very little sense when youre income is less than $100k

refurb
0 replies
16h20m

That's exactly it. The earned income tax credit (EITC) is a direct transfer of money from the government to tax payers that only low income households are eligible for.

Most of the low income audits are related to the EITC, because people tend to fudge checking a box to get more money.

gottorf
2 replies
1d

Where are crimes more likely to occur, a city with 10,000 or 1 million?

A city of 10,000 may very well have a higher rate of crime. In terms of your analogy, consider my lawn man, who only takes cash for his services. I know he's not taking in millions of dollars a year (or even hundreds of thousands), but I also strongly suspect that he does not report all of his income.

Same goes for every cash-only business I know.

I rather have a well staff IRS going after those that evade paying their taxes, probability speaking the wealthy.

I'd rather the tax code be simplified so that nobody has access to loopholes, not just the wealthy. Not much you can do to hide, for example, a land value tax.

gottorf
0 replies
3h15m

I mean a Georgist land value tax, where you are only taxed on the value of the land underneath any improvements, and not on the improvements themselves. Of course, that doesn't prevent the kind of valuation mistakes that your article points out, but they are orthogonal.

dzhiurgis
1 replies
21h25m

Who steals more? 10,000 people evading 100k or 1million people evading 1k?

kevingadd
0 replies
21h7m

Rich tax evaders are evading way more than 100k

llamaimperative
0 replies
1d1h

Of course that's precisely why "people" (Republicans) want to defund the IRS.

Note that it's also totally incompatible with their idea that the government should be run more like a business... so you're going to strangle the one part of it that actually generates revenue?

macrael
52 replies
1d1h

It's SUCH a win that they managed to roll this out to a small set of tax situations and states to start. Every government project I've been on has required creativity in defining an MVP that doesn't include shipping to everyone. This was cited consistently as one of the great successes of this project, they were able to ship something that successfully filed 150k taxes b/c they were able to scope things down to something doable in 9 months.

dheera
51 replies
1d

sigh this is a baby step but

- Many if not most software engineers in California earn more than the $200K household limitation for using Direct File

- From my understanding there is no way auto-generate my state tax return from Direct File so I would have to do all the work twice even if I can use it

- Complicating my tax situation (legally) allows me to save more money, I would save far more than the price of TurboTax by using TurboTax instead of Direct File, as much as I hate it

dmd
29 replies
1d

94% of Americans make less than $200k a year. Not everything is meant for "software engineers in California".

dheera
16 replies
1d

I meat this is Y Combinator Hacker News, so I would expect "software engineers in California" to be a significant fraction of the user base here.

cududa
10 replies
23h30m

The problem is you're exposing yourself as someone extremely self-centered, and someone that assumes their lived experience is equivalent of everyone else's, and adjudicating the utility of this particular thing as if you are reflective of the larger population.

Saying the majority of engineers in California make at least $200k makes you even more out of touch. According to Glassdoor, over $200k for a SE in CA is 90th percentile. The average SE in CA makes $132,000

https://www.ziprecruiter.com/Salaries/Software-Engineer-Sala...

dzhiurgis
4 replies
21h53m

Which is ~$70 per hour - which you can earn from US firms while remoting across many timezones.

Jtsummers
3 replies
20h50m

$70/hour is about $145k/year. If you're meaning it's close to $200k/year, that'd be $95/hour assuming 2080 hours/year (52 weeks at 40 hours a week).

dzhiurgis
2 replies
16h58m

I always assume 48 weeks (1 month vacation per year as is normal in most places)

runako
0 replies
12h21m

Could you show your math? This is driving me crazy because I get:

48 x 40 x $70 = $138,240

Which is far from $200k. How are you computing?

Jtsummers
0 replies
16h30m

Then $70/hour is only $134k/year, still a far cry from $200k. $200k for 48 full weeks of work works out to around $105/hour.

runako
0 replies
12h16m

Use Levels, but change the location to the other big cities in California. The LA number is ~$80k lower than the SF number, while the Fresno average is $120k. The SF area is a wild outlier even in big California metros.

BeetleB
0 replies
23h0m

Sorry, but they're far more representative than levels.fyi. The latter has a very strong sampling bias - most of the companies in its DB are on the high end of the payscale.

noahtallen
0 replies
19h9m

True, but we’re talking household income which includes partner income. Eg $140k + $60k or $120k + $80k. Your main point is still fair, though.

Dalewyn
0 replies
19h51m

The problem is you're exposing yourself as someone extremely self-centered, and someone that assumes their lived experience is equivalent of everyone else's, and adjudicating the utility of this particular thing as if you are reflective of the larger population.

Most of Hacker News and indeed the tech community at large exhibit "I don't understand life outside of California cities." syndrome, this by itself is nothing new.

ohashi
1 replies
1d

Some people have a broader view of the world and care about things which might not directly impact them

nickpinkston
0 replies
23h17m

This 100% - thank you

schmidtleonard
0 replies
23h57m

Your suggestion that we don't / shouldn't care about anything other than ourselves is more than a little insulting, whether you intended that or not.

In any case, like the root of this comment tree says, the best way to make sure this program lives to reach us is to make sure it paces itself. If that means another year or two of TurboTax, that's A-OK!

elicksaur
0 replies
4h0m

We have internet everywhere else. They even measure it in gigabits!

PaulHoule
0 replies
23h9m

They are still a tiny minority. I mean HNers from everwhere from Wyoming to Germany and Brazil.

One of the best ideas the Reagan administration had was paperwork simplification, they introduced a 1040EZ for (roughly) the same kind of filer that Direct File works for.

My son put off paying his 2023 taxes to the last minute, I told him he should try Direct File (I'd believed the story that it would be easy) but when he tried it he had extreme difficulty authenticating himself, I think because they check you against consumer databases and they could not compare to past tax returns, credit history, etc. because this was his first tax return and he had no credit history.

We were forced to wait for a long time to talk to a human operator for him to verify his id. In that time I found out that there was no longer a 1040EZ, see

https://www.investopedia.com/terms/1/1040ez.asp

but I was able to fill out a complete 1040 and the New York equivalent of it before we got through to the operator. We just got the check from New York the other day after about 6 weeks, haven't heard from the IRS yet.

8note
11 replies
22h32m

I don't get why there's an income cap though. There's nothing that gets more complicated on income alone, only if you add extra stuff to track

CamperBob2
8 replies
22h23m

Anybody who makes more than about $200K-$300K/year is likely making a mistake if they don't have a CPA.

Sohcahtoa82
2 replies
22h4m

What makes you say that? I'm assuming you're adding other assumptions.

My wife and I combined make about $300K/year. We don't run a business, don't make charity contributions, only pay ~$5K in mortgage interest, and don't have kids. We don't even do retail stock investing (EDIT: And I haven't exercised any employer stock options), just a 401k, an IRA, and a 5.25% savings account.

We take the standard deduction. I can't imagine a CPA would be able to find so many possible deductions that it would be worth itemizing.

fooker
0 replies
12h5m

The IRS prays for citizens like you!

brianwawok
0 replies
21h19m

Yup totally silly. My CPA wouldn’t even take you on as a client, he would say go to HR block if you don’t want to do it,

dheera
1 replies
17h26m

I disagree. If there's a CPA who wants to give me money-back guarantee, be my guest.

I do my taxes first. You (CPA) look over it, if can save me any additional money, I'll give you 1/2 of the additional money saved as your compensation. Deal?

cqqxo4zV46cp
0 replies
9h46m

Part of their fee is for you to not go through doing it yourself, so, no.

silisili
0 replies
13h56m

Yeah no. I thought I'd hire a CPA one year to see what 'breaks' they might offer.

All they did was fill out Turbotax for me, and charge me an extra 150 for that.

m463
0 replies
16h48m

I kind of wonder if software engineers making this kind of money but no tax problems should be getting advice from folks who can look back and see what they should have done. (tax problems sometimes come from outlier behaviors that might be good)

PopAlongKid
0 replies
1h26m

if they don't have a CPA.

There are alternatives to CPAs, who are licensed by individual states and don't necessarily specialize in taxes. Several states, including California, require testing and registration for paid tax preparers who aren't CPAs or Enrolled Agents. EAs are the only federally-licensed tax professionals with unlimited practice rights before the IRS.

It's reasonable to assume that CPAs pass along the costs of their marketing and lobbying efforts to their clients, without any guarantee of higher quality compared to the other professionals available.

Sivart13
1 replies
22h2m

In an effort to keep the scope manageable for the pilot year, the Direct File team chose to have an upper income limit so they would not have to support Form 8959: Additional Medicare Tax (https://www.irs.gov/pub/irs-pdf/i8959.pdf) which only kicks in at that threshold.

Though it's also very likely at these high incomes that you would be disqualified for other reasons (investment income etc)

MarkSweep
0 replies
21h9m

8960 (net investment tax) is another form that only applies at 200k or more income.

gamblor956
12 replies
1d

DirectFile was created by the IRS, a federal agency, for preparing your federal income tax return, in a manner similar to the streamlined e-file options available in other countries (i.e., for the most common/basic situations).

There are 50 states, and every single one of them has their own idea of what an income tax return should look like, so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain.

The US also has significantly more tax planning/tax structuring opportunities than do other countries, and DirectFile doesn't even try to handle those...but neither do its foreign counterparts. If you have a more complicated tax situation, like most software engineers do, than DirectFile isn't for you, and never was intended for your use case.

dheera
8 replies
1d

There are 50 states, and every single one of them has their own idea

That's not my problem. The states are part of the country. This is as bad as restaurants charging tips instead of stating one number. Government dudes should meet and work it out between state/federal and give me one damn number.

All I want is one number.

galdosdi
5 replies
19h51m

Incorrect. You must not be a US citizen (or else went to a poor quality K12 school that failed to teach the basic civics)

States are NOT an administrative subdivision of the larger country. This is a common misconception. They are not at all like Japanese prefectures, not like Canadian provinces, nor like the counties or parishes that US states are subdivided into.

States are fully sovereign entities that retain to this day certain inalienable rights vis a vis the federal government.

A good analogy is that the US is more like a stronger version of the EU. States like New York and Texas within the US are more like Germany or France-- they've ceder some rights to the federation but retain many others. The US constitution, which is short and easy to read and required reading for the US Citizenship test, clearly outlines which powers are reserved for which part.

That's not my problem. The states are part of the country.
rockinghigh
1 replies
18h43m

No need for personal attacks. The states and the federal government could better coordinate tax filing, it would not be against the US constitution.

galdosdi
0 replies
14h8m

Not a personal attack. There is nothing wrong with being a foreigner or having grown up in a bad school district.

lttlrck
0 replies
13h44m

The US Constitution is not required reading for the citizenship test.

jltsiren
0 replies
18h9m

US states are not fully sovereign. There is a simple test for that: can a state secede unilaterally. If not, states are subordinate to the federal government.

The original idea of the US was a decentralized state. The Union is the sovereign entity, while power rests with the individual states, unless explicitly given to the federal government. Over time, it became clear that you can't run a country like that in the modern world. Slowly, with creative interpretations of the Constitution, the federal government gained more and more power over the states.

One of the distinctive features of the actual US system is that it's often unclear which level of government has the authority to regulate a particular matter. Much of the political debate is about the constitutionality of laws and regulations, which may have been in force for decades. And controversial legislation often ends up in the Supreme Court, which may then decide that the state or the federal government did not have the authority to regulate that.

galdosdi
0 replies
19h32m

While I'm at it, the very attitude of "that's not my problem" reveals your foreignness (or if you are from here and very young, perhaps the sad fact that civic culture is dying everywhere but maybe new england)

America has or has traditionally had a strong culture of self determination and citizen involvement in and ownership of politics and government policy.

Another word for this is democracy. Real, genuine, messy democracy. America is not a service provider to you. It is a union or coop you are a part of.

You are not a customer of your country. You are a member. A shareholder.

This attitude is I know very foreign to many people who come from elsewhere and only know authoritarian states or democracies in name only. Or very young people who have caught on that civic culture is dying in most of America.

But it's fundamentally diametrically opposed to what this country has always been intended to be at its best. it is very very much your problem

Jtsummers
0 replies
23h51m

The US is a federated system, the states' tax laws are independent of the federal tax laws (mostly, there are some interactions in there) and the responsibility for collecting state taxes falls on the state. The federal government cannot step in without authority which would have to be delegated by the states because it is their authority, not the fed's.

8note
0 replies
22h37m

From you early comment along the lines of "I make my taxes as complicated as possible so that I can save money on taxes"

You would never take the one number if you could save money by making it a thousand instead. Eg. if your state did that simplification, youd move to a different state that doesn't have the simplification so you can save a couple bucks on the taxes

Spivak
1 replies
1d

so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain

Or just contract one of the companies that already do it with a public-private partnership. HR Block or whatever gets paid say 2x their current tax prep revenue in exchange for being the white-label direct-file available for free to everyone.

Like these tax prep companies are crazy cheap for just being able to hit import next next next next next submit and never think about taxes ever. The work is already done, why duplicate it?

dessimus
0 replies
23h36m

Or just contract one of the companies that already do it with a public-private partnership.

The IRS tried that already and the 3rd parties just used dark patterns that tricked customers into paying for unnecessary services.

ethbr1
0 replies
22h1m

so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain.

The way to extend this, if the federal government wanted to push it, would be to define a standard export format from IRS DirectFile, containing all the information in it...

... then make some federal money contingent on states implementing a filing system with an import function (for the shared data).

Nice clean interface, and still states' choices on if they want to support.

whymauri
0 replies
1d

I'm confused, I used (what I thought was) DirectFile for Massachusetts via MassTaxConnect (totally free). I make more than that threshold.

Did I do something wrong?

Edit: I understand now. DirectFile is for Federal and MassTax is for State taxes.

tombert
0 replies
1d

I mean, I don't dispute anything that you said, but a baby step is still a step. As they onboard more people onto the platform, they're be able to suss out bugs and fix issues and be able to raise income thresholds and maybe start handling state returns as well.

macrael
0 replies
1d

Yes? That was the point of my comment? If they had tried to support everyone's tax situation on day one they likely would have failed, but instead they shipped something that works, got made permanent, and now we all get to look forward to using this tool sometime in the next few years as it graduates from MVP to entrenched software

ilyagr
0 replies
21h55m

In practice, for software engineers in CA, I'm guessing that https://www.freetaxusa.com/ will be superior to Direct File for a while. It also files federal taxes for free with no limits AFAIK.

In terms of societal and long-term impact of eliminating the middlemen, Direct File has much more potential. Hopefully, in a few years, states will integrate their tax systems with Direct File. Perhaps one day the government will finally send us a completed tax return as opposed to the other way around.

idiotsecant
0 replies
20h59m

You must be quite devastated that you have to take a few of those 200k dollars and hire a CPA. Try not to sigh so hard you run out of breath.

fragmede
0 replies
22h29m

Many if not most software engineers in California

have complicated taxes, due to how they're making that much money. I don't have a problem with them optimizing for the simpler case (eg the intention behind the 1040EZ) while software engineers, who can afford a CPA to deal with optimizing their tax burden off non W2 income, aren't initially able to use it.

cqqxo4zV46cp
0 replies
9h44m

This comment, specifically, makes me hate this website. I don’t specifically care about “engineers in California”. Tech bros deserve all the hate they get.

avgDev
0 replies
21h47m

This comment is why people hate tech bros.

Someone1234
50 replies
1d2h

How volatile is this to the political winds? As the article makes clear this was largely done with the support of the current incumbent, but what if the next one is more amenable to TurboTax's ideas?

That seems to be an ongoing headache in the US with executive branch created programs, courts can just immediately squish them or political winds can change, then they're suddenly gone.

Something like this, in order to be permanent, needs congressional approval.

MichaelNolan
43 replies
1d1h

How volatile is this to the political winds?

Very. Had the GOP won the senate in 2022, this would have probably been cut already. Depending on how this November goes the policy could definitely be reversed.

Something like this, in order to be permanent, needs congressional approval.

This program did come from Congress. It was apart of the inflation reduction act.

rqtwteye
40 replies
1d1h

It's a huge problem that when the opposition comes into power, they immediately try to revert and undermine what the previous party did. Not because of merit, but just because of partisanship. So you end up with a lot of programs that get started and after a while get repealed or maintained badly. This costs the country a lot of money.

The ACA is a classical example. Instead of improving it or proposing a real replacement, they campaign for repealing it and some incantations of "free market" without explaining how patients won't get screwed over even more than now.

llamaimperative
18 replies
1d1h

Please provide examples of Democrats undoing good policy/legislation just because it was passed by a prior Republican administration.

giantg2
6 replies
1d

"Please provide examples of Democrats undoing good policy/legislation just because it was passed by a prior Republican administration."

It's going to be hard to argue with people on the basis of what was "good". That's subjective, and the very basis for why there are separate parties.

JumpCrisscross
5 replies
1d

going to be hard to argue with people on the basis of what was "good"

I'd expand this to examples of either party undoing legislation the other championed and passed. It's exceedingly rare, in large part by design.

pooper
2 replies
1d

I still hope we can undo the "permanent" tax cuts of 2017 at some point.

giantg2
0 replies
1d

Which ones specifically? I haven't followed how the individual elements have played out. Many of the elements seem minor, but I don't remember if the CBO broke down which portions would create the deficit. I assume it's the corporate pieces, but don't know which ones.

GeekyBear
0 replies
21h26m

Why would you expect that?

We didn't even allow the 2001 Bush tax cuts to automatically expire at the end of 2010, despite control of the House, Senate, and White House passing from the Republicans to the Democrats during the intervening years.

troupo
0 replies
1d

That's not how the opposition is undoes something. The opposition reduces funding and scope and passes legislation that effectively nullifies previous laws.

The reason Republicans are mentioned above is that they have a well documented public history of endorsing and carrying out these kinds of shenanigans. Democrats, though cut from the same cloth, somehow manage to be one step above on an imaginary decency scale.

giantg2
0 replies
1d

I was mostly focused on the policy part of their comment. A lot of the changes come based on a level or two removed. You generally don't see laws fully flip flopping. Instead it's quite common for someone to get appointed and then their decisions are the ones that change policies (especially internal policies at various agencies). SCOTUS, both now and in the past is a good example of the external law/policies changing based on interpretation. But yeah, actual repeal of laws is very rare.

gottorf
5 replies
1d

The great increase in illegal entry into the country through the southern border is a good recent example. Though, I suppose this is predicated upon it being "good policy" that illegal immigration be slowed.

wredcoll
1 replies
22h45m

What increase? The numbers are very constant.

gottorf
0 replies
22h36m

I would love to see your sources; everything I've seen across the partisan spectrum shows a large increase from the 2010-2020 period to 2020 and onwards.

edflsafoiewq
1 replies
20h54m

What policy/legislation was undone to lead to that?

rqtwteye
0 replies
19h45m

I think a new policy wasn’t enacted because it would make the democrats look good.

nitwit005
0 replies
20h47m

That's not a policy. A policy would be reverting immigration laws.

GeekyBear
2 replies
1d

I would give the example of the 2001 Bush tax cuts.

Since the Republicans lacked 60 votes in the Senate and zero Democrats supported the Bush tax cuts, The law enacting them was passed using budget reconciliation rules.

Budget reconciliation is a special parliamentary procedure of the United States Congress set up to expedite the passage of certain federal budget legislation in the Senate. The procedure overrides the Senate's filibuster rules, which may otherwise require a 60-vote supermajority for passage. Bills described as reconciliation bills can pass the Senate by a simple majority of 51 votes or 50 votes plus the vice president's as the tie-breaker

https://www.wikipedia.org/wiki/Reconciliation_(United_States...

Using budget reconciliation rules automatically set a sunset date for the tax cuts, after which they would automatically expire.

When the tax cuts should have automatically expired at the end of 2010, the Democrats controlled the House, Senate and White House. Despite frequent claims over the decade that tax cuts for the rich were morally reprehensible, the Democrats did not allow the tax cuts to automatically expire, extending them for two years in the lame duck session of Congress, and then most were made permanent two years later before they should have expired again.

ohashi
0 replies
23h53m

Isn't this the opposite of what you're saying? Democrats didn't undue policy just because it was passed by the GOP

Goronmon
0 replies
23h54m

Despite frequent claims over the decade that tax cuts for the rich were morally reprehensible, the Democrats did not allow the tax cuts to automatically expire, extending them for two years in the lame duck session of Congress, and then most were made permanent two years later before they should have expired again.

Isn't that the opposite of "undoing legislation"?

dmitrygr
1 replies
21h39m

Our current border situation...?

anigbrowl
0 replies
20h43m

But the Democrats haven't made an¥ significant changes to immigration policy. In fact, they offered an bipartisan immigration bill that tilted significantly toward the Republicans' wishlist and the GOP rejected because Trump wants to run on immigration and giving Biden a political win in that area was unacceptable to thim (even though many on the left found the proposed legislation very disagreeable).

The main change at the border is a larger number of migrants. Migration trends are up globally, for a variety of reasons including climate change.

Alupis
11 replies
1d1h

Perhaps people should stop treating the president like a king, and you know, actually pass laws the way our government was designed to work...

thatguy0900
5 replies
1d1h

Congress honestly seems to have completely shut down as a body able to accomplish anything. The president is all we have

gottorf
4 replies
1d

This is a feature of the US constitutional system, not a bug. It's designed such that things move very, very slowly. If Congress isn't able to pass laws, it probably reflects a division in how the voting populace feels about the subject of such laws.

The president may be all we have, but he is constitutionally forbidden from acting like a king. Though, of course, that hasn't stopped presidents from trying.

Alupis
2 replies
1d

100% Correct. People all too often look at Congress and say "gee, they aren't passing all the things I want them to do, therefore Congress must be broken!"

This fails to realize Congress works entirely the way it was designed. As you said, inaction == lack of consensus.

Imaging running a country where significant ways of life (influenced by laws) change willy-nilly depending on the flavor of the day? The legal whiplash would be absurd.

So, people often look to the president as some sort of king analog, and demand action via Executive Order - then cry foul when the next president undoes the previous one's EO's... it's lunacy and not a good way to run a society.

iends
1 replies
21h21m

This fails to realize Congress works entirely the way it was designed.

Don't really think so.

The 1929 Permanent Apportionment Act subverted the intentions of the founders and clearly swayed the power balance back towards rural areas, even though they have equal representation in the senate.

quartesixte
0 replies
13h12m

Oh man this and the 17th Amendment I think created a serious flaw to the framers' original designs. But people look at me crazy when I say that the 17th Amendment probably was a mistake and the 1929 Permanent Apportionment Act a serious mistake to our democracy.

rqtwteye
0 replies
22h46m

“ it probably reflects a division in how the voting populace feels about the subject of such laws.”

I don’t think that’s correct. There is way too much propaganda coming from the parties to think that voters have made up their minds based on the facts. It’s actually quite hard to get the facts because the media is mostly reporting politics like they report a football match.

Alupis
3 replies
1d

Care to elaborate what this partisan propaganda has to do with anything???

Some people seem to enjoy whipping up a second pitcher of kool-aide before they've even finished the first...

llamaimperative
2 replies
1d

Sorry but the elected leader of a party openly stating his objectives is not "partisan propaganda." So free of Koolaid you think simply citing the actual words that a grown adult said of his own free will and cognizance is "partisan propaganda."

Alupis
1 replies
1d

Care to explain what happened during the Trump Administration then?

It's so easy for people to hyper-focus on "my side good" that they lose sight of the overall picture. Resisting an administration's agenda is pretty normal and expected... the people who voted for Mitch simply do not agree with the Biden agenda. Mitch (and other R's) are there to enact the agenda their constituents want. What a shocker...

Why is this surprising to you? Have you pondered, even for a few moments, what Democrats do when there's a Republican administration in office?

llamaimperative
0 replies
23h54m

Surely you can find examples of Schumer saying that his party is fully committed to obstructing the Trump administration, right? Or Harry Reid saying it during the Bush administration?

No, it's not normal. That's exactly my point. If it's normal, cite it.

Believing it's normal for one party to have as an explicit goal to simply obstruct everything the administration is doing is a symptom of drinking too much Koolaid.

KittenInABox
2 replies
1d1h

I'm actually curious on the reverse. What programs did the GOP start that were cancelled by the Dems? Note I'm a biased liberal, so potentially the reversals might've been propagandized to me as lifting restrictions or some other such political language and I might be unaware of the actual policies.

dripton
1 replies
1d

A couple of examples would be reduction of some of the Reagan-era defense spending under the Clinton administration, and partial rollback of some of the Reagan-era tax cuts under the Clinton administration.

Of course these were not complete elimination of programs, but adjustments. And you could argue that there were other reasons besides partisanship, like the end of the Cold War and budgetary issues.

favorited
0 replies
23h7m

reduction of some of the Reagan-era defense spending under the Clinton administration

...you mean when the USSR collapsed, and Cold War ended?

schmidtleonard
1 replies
1d1h

In 1991 the ACA was the conservative proposal, but in 2010 when it was passed under the Obama administration it suddenly became communist marxism. Sigh.

chuckadams
0 replies
1d1h

It's known as Cleek's Law: "Today's Conservatism is the opposite of whatever Liberals want today, updated daily."

JumpCrisscross
1 replies
1d

ACA is a classical example. Instead of improving it or proposing a real replacement, they campaign for repealing it

The GOP has controlled the government mulitple times since ACA passed. That nothing was done shows it's a talking point.

Legislation is hard to overturn. Executive actions, less so.

lesuorac
0 replies
1d

You have a pretty loose definition of talking point. It was pretty widely televised that McCain broke ranks with the party to prevent an ACA repeal [1] but ignoring that event there were many attempts over the course of 7 months [2] to replace it. That time could've been invested into literally anything else.

But yeah a lot of things end up being campaign talking points. Like Obama saying they'd enshrine abortion rights into law and uh didn't.

[1]: https://www.npr.org/2017/07/27/539907467/senate-careens-towa...

[2]: https://ballotpedia.org/Timeline_of_ACA_repeal_and_replace_e...

xp84
0 replies
1d1h

You're totally right that it's especially bad with e-branch stuff, but it's not necessarily limited to that. Most programs established by congress will be given an expiration date beyond which it would require another act of congress to reauthorize. I think it's mandatory for anything that costs money, basically. I can see the basic rationale that if something is not popular enough to be reauthorized, why keep doing it, but it sure does contribute to instability not knowing if you can depend on something important continuing to exist.

folkhack
0 replies
1d1h

In good faith, when have the Democrats have done this?

pavon
0 replies
22h46m

This program did come from Congress. It was apart of the inflation reduction act.

The inflation reduction act directed the IRS to perform a study on Direct eFile. Implementing an actual pilot and then expanding to a permanent tool was based solely on executive authority, so either congress or the president could choose to scrap the program in the future.

Inflation Reduction Act §10301(1)(B) TASK FORCE TO DESIGN AN IRS-RUN FREE ‘‘DIRECT EFILE’’ TAX RETURN SYSTEM.—For necessary expenses of the Internal Revenue Service to deliver to Congress, within nine months following the date of the enactment of this Act, a report on (I) the cost (including options for differen- tial coverage based on taxpayer adjusted gross income and return complexity) of developing and running a free direct efile tax return system, including costs to build and admin- ister each release, with a focus on multi-lingual and mobile- friendly features and safeguards for taxpayer data; (II) taxpayer opinions, expectations, and level of trust, based on surveys, for such a free direct efile system; and (III) the opinions of an independent third-party on the overall feasibility, approach, schedule, cost, organizational design, and Internal Revenue Service capacity to deliver such a direct efile tax return system, $15,000,000, to remain avail- able until September 30, 2023: Provided, That these amounts shall be in addition to amounts otherwise avail- able for such purposes
Covzire
3 replies
1d1h

Not very, absolutely everyone hates doing their taxes and the whole shady process behind it all. The IRS should have to declare what they think you owe before you pay or submit any paperwork, I don't know if that'll ever happen but any baby or big steps towards that reality will win bipartisan support, easily. Just have to get past the conflicted-out members of congress who are truly being controlled by Turbo Tax and other industry lobbyists.

kindatrue
1 replies
1d1h

"Not very, absolutely everyone hates doing their taxes and the whole shady process behind it all"

That's the Grover Norquist (and Republican) argument for not having IRS Direct File to begin with: if filing taxes becomes easy, people might not hate the IRS and hate taxes.

https://www.propublica.org/article/how-the-maker-of-turbotax...

MisterBastahrd
0 replies
1d

And it's really because they don't know any poor people.

Because if they did, they'd know that filing taxes for low income people with kids is a HUGE bonanza, and they'd work like hell to implement a system where all tax credits were applied to individual paychecks, not lump sums during tax season. It's the one time of the year when their pockets are flush with cash.

nomagicbullet
0 replies
3h28m

absolutely everyone hates doing their taxes and the whole shady process behind it all.

I like preparing and paying my taxes.

The IRS should have to declare what they think you owe before you pay or submit any paperwork

Agree.

foota
1 replies
1d1h

I think once it's been in place for a year it will be very hard for them to take it away.

jandrese
0 replies
1d1h

Virginia had a dead simple and free e-File system for years. It cost the state almost nothing to maintain and worked wonderfully. The tax companies were able to bribe a few members of the legislature to have it killed with relatively little fuss, and now Virginians pay some of the highest rates for e-filing at the state level.

nly
32 replies
1d1h

As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.

swozey
15 replies
1d1h

The tax system here (usa) is an absolute joke. I owed $5k this year and I literally did nothing different except receive a small 5% raise last year. I have the most basic taxes you can, single, no kids, no house. Literally just a salary paycheck every 2 weeks. Had no idea I would owe anything, much less that much money until I filed 2 weeks prior to our tax date in April and you're expected to pay everything you owe to them on that date.

I sold a house in 2019, I walked away with only about $15k profit after paying everyone. Bought the house for $335, sold for $370ish. I think my principal was around $310k at the sale. I got a letter in 2022 that I owed the IRS something like $150k or so, some shocking amount of money. Freaked me the hell out. I had to dig out all of my paperwork from the sale and send it to them. All of it but, I forget, maybe $100-1k was dropped. I have no idea what their deal with that was. I had a mortgage, paid the mortgage to my mortgage broker, and when I sold it paid the mortgage off to that mortgage broker. Don't they handle that? I don't know, it was my first house sale.

I'm 40, I've never had the IRS annoy the hell out of me until the last 5 years and now I get a letter from them and my heart stops.. Like, what is it now, masters of my w2? Where I have erred today? It feels like they're practically targeting me at this point. I get letters from them and wonder if they're even legitimate so I call in to verify. When I go to the irs.gov site that tells you what you owe, it doesn't even match what any of my letters say. Right now it says I owe money from I think 2016 that was sent to collections and I've never received a letter for that. Collections! For my taxes? That you pull out of my paycheck?? I don't have ANYTHING about that on my credit report. I also have no way to pay it because it's "In collections."

Seeing all of the rich assholes skate by with tax evasion and all of the loop hole work they do, then knowing they're on my ass when I'm just a dude getting a salary just pisses me off so much.

phone8675309
10 replies
1d1h

Your company fucked up by not taking withholding from the bonus.

swozey
9 replies
1d1h

I do get a 20% bonus at this company and I think it is attributed to that. It was my first time getting that bonus. What do I even do here? Talk to HR? I don't think I can do anything and just suck it up and pay it and expect it next year? I dunno.

whimsicalism
3 replies
1d1h

so you made 25% more than you usually do and are wondering why you have to pay more in tax?

swozey
2 replies
1d

Yep, here we go, the condescension of Hn. The point is they know my exact income and should be able to handle it, not make me figure it out at the end of the year. I have no idea why I got a random $5k bill. It could be something else. And that's the annoyance.

wredcoll
0 replies
21h51m

Keep in mind that they could handle it if they weren't deliberately hamstrung by republicans like grover norquist.

gamblor956
0 replies
23h58m

The problem is that you are blaming the IRS for something that your employer messed up during the year.

The IRS doesn't know about your income until the end of the year, when it gets reported to them by your employer.

tcmart14
2 replies
1d

It might be worth a conversation with HR and reveiwing your tax withholdings just to make sure there is not an error and misunderstanding as to how your company or the HR software is handling it. I ran into a somewhat similar situation early on at my current job, but we were able to find an issue and correct before I got hit with a nasty surprise at tax time.

My issue was that my with-holdings and everything looked fine. But I was not having any federal taxes taken out on my paychecks for federal with-holdings. Turned out to be a software issue that the company who makes it was able to correct.

swozey
1 replies
1d

Thanks! I'll speak with them. I know everything is through Bamboo/whatever software nowadays so I wasn't sure if they really had any control/input on these things.

danans
0 replies
16h20m

I know everything is through Bamboo/whatever software nowadays so I wasn't sure if they really had any control/input on these things.

You have control, they don't.

Withholdings are calculated based on elections you make on an IRS form called a W4 (which could be electronic or paper). Neither your employer nor the IRS "control" that, but there are some common case defaults.

It's on each taxpayer to understand their actual tax liability situation and adjust withholdings accordingly.

tekla
1 replies
1d1h

Yes, you got a big bonus and it wasn't taxed when you got it. I don't know why you would be confused as to why your liability went up?

swozey
0 replies
1d1h

It absolutely was taxed. I also have never received a paycheck that wasn't pre-taxed. It was something like a $30k bonus and I received about $17kish of it.

Be more condescending though, that's helpful, wise one.

I didn't say I KNEW it was the issue, I said it was potentially that. The IRS doesn't say "Hey you messed up here, fix this, that's the problem." They just send you a bill, which sucks. I had NO information on my $150k house sale tax and had NO idea what information they needed to rectify it.

frutiger
1 replies
1d1h

I owed $5k this year and I literally did nothing different except receive a small 5% raise last year.

This is a common gripe I hear from US tax filers, and I fall into the same psychological trap myself. After all, it always feels bad to have to pay a 4 or 5 figure sum to anyone.

Instead, you should see this as a benefit -- you had the opportunity to extract gains from the stock market (or other investment) on money you rightfully owed to the government; they only came to collect it at the end of the year instead of with each paycheck. Conversely, a tax refund should be seen as a disadvantage, as the government withheld more money from you than it was entitled to.

lesuorac
0 replies
1d

I don't remember what all the limits are but the first time you underpay beyond a certain amount the government looks the other way but the second+ time you have to pay penalties. Penalties for a situation wholly in control of the government. They wrote the withholding tables your employer is abiding by to withhold _not enough_ to avoid you having a penalty at the end of the year.

Although I suspect this only matters to FANG where the changes to withholding from the Tax Cuts & Jobs Act meant you had to modify the supplemental withholding rates so you wouldn't get penalized.

junar
0 replies
1d

Default federal income tax withholding on bonuses is 22%. If your marginal federal tax rate is higher than that, then you underwithheld, meaning you owe more in taxes than you paid over the year.

https://pburgoscpa.com/managing-your-bonus-in-nyc-a-high-inc...

For your home sale, the person responsible for closing the transaction files Form 1099-S with the IRS, reporting the sale amount (which they're responsible for) but not how much you paid for it (because you're responsible for that). You should have gotten a copy of the 1099-S, which was your clue that you needed to report it on your return.

gamblor956
0 replies
23h53m

Millions of people manage to properly report the sale of their home every year. Don't blame the IRS for this mistake; this was entirely on you.

jimbob45
7 replies
23h8m

US government services are bad almost across the board. Most of us would pay a premium to use a private version over a government version of almost anything.

I’m guessing you would find it equally confusing if I told you we’d pay a premium to use a private DMV or private post office. Here in the US, that statement wouldn’t be controversial at all.

op00to
3 replies
22h34m

I recently renewed my global entry, and it was a piece of cake. I occasionally interact with the FCC because of my amateur radio license, and the FRS is super easy to use. I recently got passports for my kids, and that was super easy to do as well and the passports came much faster than expected.

lotsoweiners
2 replies
21h10m

I recently got passports for my kids, and that was super easy to do as well and the passports came much faster than expected.

Interesting. I am currently renewing my and my spouse’s passports while also trying to get first time passports for my children and I couldn’t find the process more outdated and borderline kafkaesque. If you told me the website was built in 2003 and hasn’t been updated since then I would believe you. I can only renew my passport by snail mailing everything including my existing passport. I can only get my kids a passport by physically taking them to an approved location for processing. I could not get an appointment for about a month at any location near me. As a bureaucrat myself, I just find this level of hoop jumping to be ridiculous.

saratogacx
0 replies
19h15m

For a short time (maybe 6 months or so) the state department was testing out fully digital passport renewal. I was able to slip in and it was great, digital phone photo, fill in some forms and I had a new passport in the mail after a couple of weeks (I didn't pay for rush processing).

It was taken down after the pilot for them to adjust and fix the process but there are improvements in the works.

https://travel.state.gov/content/travel/en/passports/have-pa...

op00to
0 replies
1h8m

I got an appointment within a week. The post office took the pictures and submitted everything for me. Couldn’t have been easier. Sounds like experience varies based on location.

I did a digital renewal for my passport and it was fine also. It’s a once in many year event, so it doesn’t bother me that I need to go to a special place to submit documents.

wredcoll
1 replies
21h54m

I'm in the US and I find your statement confusing. With the exception of the irs which was deliberately made hard to use by the republicans, most government services are fine. I certainly doubt a corporation would do any better.

amanaplanacanal
0 replies
6h33m

DMV varies quite a bit state by state. Where I live it’s quick and easy, but in some places you go early in the morning, and you should probably pack a lunch.

fooker
0 replies
11h47m

I'm from a third world country and have lived in a few European countries.

Switzerland was the only one with better govt service. Everywhere else it was significantly worse than the US.

Surprisingly France and Germany were worse than India in terms of obscure things needed for getting anything done and no exceptions for anything. The US on the other hand, if you can go talk to someone in person they'll make it happen.

whimsicalism
3 replies
1d1h

the tax difficulty in the US is overstated, we have plenty of services that will let you do it for 20 minutes for free. the most popular one is obnoxious and tries to upsell you often, but there are alternatives and you don't need to pay

demosthanos
0 replies
1d

I finally tried FreeTaxUSA this past year based on recommendations on HN and it was a huge breath of fresh air compared to TurboTax! They treat you like a person and not a wallet, and it was also just way smoother and easier to understand than TurboTax's nightmarish interface.

cool_dude85
0 replies
1d1h

This is true, but up until recently, tax filing companies would also do all kinds of underhanded tricks to make free filing difficult. For example, Turbotax had two different tiers of free tax filing software, one with a much lower income threshold than the federal mandate. You only find out you're in that tier when it comes time to file. Guess which one they bought tons of google ads for?

BeetleB
0 replies
22h6m

I can't speak for the UK, but in many other countries, the tax forms are already filled out and you simply need to verify the numbers. You don't get that in the US.

resource_waste
1 replies
1d1h

In the US, its basically that simple if you arent a business owner. Might even be simpler.

You type in like 14 numbers, each very clearly delineated.

But... if you are a business owner, it takes like 2-3 weekends. (I say weekends, because we work all day during the week)

BeetleB
0 replies
22h4m

There's a big gap between the two, with many individuals in between.

Do you participate in SPP? Then the form you get will have an incorrect cost basis and you need to manually correct them. I guarantee it.

Do you trade individual stocks (e.g. RSUs)? A bit more work.

Got a K-1 form from an investment? Could be straightforward, or if it's real estate, a major pain to fill out those tax forms.

tekla
0 replies
1d1h

Taxes are simple if you have a single W2. People just don't like reading the piece of paper in front of them.

mrinterweb
0 replies
21h57m

Turbotax and other like companies lobby for more complex tax law and to restrict access to government services that would assist citizens with filing taxes. The more complex the tax code is, the more people need Turbotax. It is not a healthy dynamic. https://abcnews.go.com/Business/turbotax-lobbies-lawmakers-t...

CharlieDigital
23 replies
1d2h

    > Rep. Brad Sherman (D-Calif.), an accountant and senior member of the House Financial Services Committee, told Axios in April that he wants to go "way beyond Direct File," calling for a "self-populating form."
    > 
    > "Why in the heck should you have to fill out your return when the government has all the information. They know what's on your W-2 form before you do. They know what's on your 1099 … Do you know how many mistakes people make?"
Yes. Please.

Now fix Workday, too.

spiderice
14 replies
1d2h

This works against the governments interest, as they'll lose revenue from all the fines they give to people who accidentally fuck up their tax return.

bombcar
3 replies
1d1h

It does work against the government's stated interest, but not in the way you think.

Tax policy is the government's strongest tool to change personal behavior, and if the system is simple and automated it doesn't do that at all.

op00to
1 replies
22h36m

Tax policy is the government's strongest tool to change personal behavior, and if the system is simple and automated it doesn't do that at all.

I'm not sure I agree. For example, I used to pay city wage tax to one municipality, and I decided I did not want to pay that city tax anymore so I took a job in another area that no longer had the city wage tax. I would be due the wage tax no matter what, and I was aware of exactly how much the wage tax was by looking at my pay stub every two weeks. Having my taxes prepared for me doesn't really change that.

bombcar
0 replies
21h9m

It's all the various deductions you can take, both above and below the line.

It is possible to do the same societal effect in other ways, but the US does a done at the federal level via taxes.

Go look sometimes at the list of things you can claim in various cases.

It's even more explicit when you look at business tax returns and schedules.

vundercind
0 replies
1d1h

Why… not?

If anything it’s a great opportunity to put personalized suggestions for how to reduce one’s taxes (=change behavior) directly in front of the eyeballs you want to see it. Put it directly on the page where you click “looks good to me” on the automatically-filled-in tax form.

“Looks like you’ve never used your one-off solar panel federal tax credit. Click here for information on how to save up to $xx,xxx on next year’s taxes, while also reducing your energy bill!”

mminer237
2 replies
1d1h

1. It surely costs way more in employee expenses to monitor, correct, and collect such small fines. Plenty of times they'll just let a $200 fine go because it's not worth the effort to collect.

2. Taxes are a means to an end, as is the government. There's no benefit to fining people for clerical mistakes besides encouraging them to not make them. There's no value created by fines. There's no shareholder greedily pocketing the revenue. If they can avoid mistakes for people, that benefits government employees by having to waste less time on stupid stuff, the taxpayers by not having to waste time on stupid stuff and avoiding fines, and the people at large by not having to waste public money on paying people to fix stupid stuff on people's returns.

spiderice
1 replies
1d1h

1. citation needed

2. In an ideal world, yes. In practice, citation needed.

kbolino
1 replies
1d1h

That revenue isn't even a drop in the bucket. The issue is and always has been parasitic jobs: you wouldn't need anywhere near as many IRS employees and tax accountants.

spiderice
0 replies
1d1h

Agree. I love the idea.

CharlieDigital
1 replies
1d1h

The point of the government isn't to make a profit; it's to serve the people.

spiderice
0 replies
1d1h

Ideally, yes. What is your point?

xp84
0 replies
1d

Most returns are not audited, and most screw-ups don't result in fines. The kind of thing that (sometimes) gets big fines is sophisticated shenanigans done by rich people, and completely preparing such a complex return is (imho) way out of scope for the 'tax automation' we are speaking about here, where a basic 1040A or 1040EZ (simple forms which a massive plurality of Americans are eligible to use) can be populated entirely from IRS-known data.

barbazoo
0 replies
1d1h

What about on the other hand saving all that effort associated with auditing, re-filing/amending a return, etc.

Sohcahtoa82
0 replies
21h40m

all the fines they give to people who accidentally fuck up their tax return.

You only get fined if you deliberately (and fraudulently) fuck up.

If you make a mistake, they give you a chance to correct it before fining you.

I forgot a W-2 once (I switched jobs 4 weeks into the year and the first employer gave me my W-2 late) and filed without it. My return was rejected and I got a letter telling me why and requested an amended return. I amended, re-filed, got accepted, and got my refund. No fines.

And certainly no jail time like a lot of memes like to suggest.

jjcm
2 replies
1d2h

This was one of my favorite things about living in Australia as an American. Taxes were clicking a checkbox and saying, "I agree".

It was incredible how simple it was.

codegeek
0 replies
1d

I lived in HongKong for about 2 years a while ago. It was the same there. They calculate everything and you just have to sign it.

barbazoo
0 replies
1d1h

Pretty much the same in Canada at this point for many people. Your tax software, and there are lots of free ones, pull the data from CRA and populate your whole return.

Laaas
2 replies
1d1h

I’d rather have them not know than automatic taxes.

tills13
1 replies
1d1h

Why

jandrese
0 replies
1d1h

Obviously so he can lie and avoid paying taxes.

rqtwteye
1 replies
1d1h

That's the way it should be. Even the anti-tax people should be for this because it allows people to see what the IRS already knows. That would allow them to request changes as needed. I know people where the IRS had wrong 1099s and it was hard for them to figure out the problem and correct it.

kindatrue
0 replies
1d1h

Anti-tax people like Grover Norquist and Republicans who have made his pledge have long been concerned that if paying taxes were easy, then the American people might not despise taxes anymore. So making paying taxes painful is part of the plan.

https://www.propublica.org/article/how-the-maker-of-turbotax...

jawns
21 replies
1d1h

The Taxpayers Protection Alliance spokesperson quoted at the bottom says:

Private tax services "have every incentive to find the deductions that will yield them the best return," Zupkus said, adding that the IRS wants "to extract as much as possible from the taxpayer."

I think it's worthwhile to acknowledge that there are indeed slightly different incentives involved when it comes to the private sector handling tax prep versus the government.

But it's laughable to argue that the private sector is not in it to extract as much as possible from its customers.

ProPublica's series on the nasty ways TurboTax fooled its customers to extract more money from them is a clear example: https://www.propublica.org/series/the-turbotax-trap

Edit: I think some commenters are missing my point here. I'm not agreeing with this spokesperson. I'm saying that it's disingenuous to argue that the government is trying to fleece consumers when it's clear that the private sector has been doing so for some time.

bombcar
12 replies
1d1h

It's not even correct - the IRS wants to follow their rules as closely as they can.

I have had the IRS unprompted send me an additional refund because of a mistake I made on my forms, and they caught.

(They also included a letter saying that if I thought my mistake was right, I could fight the refund, or file a new amended form and go for a bigger one.)

kbolino
7 replies
1d1h

I have had the IRS charge me tax and accuse me of lying to them over a UTMA withdrawal used to pay for tuition even though the fund running the account refused to send me the paperwork because the account is in my parent's name first instead of mine.

It is a massive organization filled with uncoordinated people doing their level best to produce Brownian motion.

gamblor956
3 replies
23h45m

UTMA withdrawals by the child are not taxable, however UTMA income is taxable to the child...

What exactly are you railing against? It sounds like the IRS is following the rules here.

kbolino
2 replies
22h39m

If the income is taxable for me, but I get no form in the mail and can't even request one (because it's not my account), then how was I supposed to file a correct tax return in the first place?

iends
1 replies
21h6m

Isn't that an issue with who provides the UTMA account?

kbolino
0 replies
19h6m

Maybe? I would think this would be a legal requirement and not something they have discretion over.

Zooming out though, I think Direct File or something like it is actually the right way to go. This would never have happened if the IRS just told me what it expected of me instead of playing this weird entrapment game where I was expected to tell them what they already know.

larkost
2 replies
1d1h

That sounds like you are agreeing with the post you are replying to: the IRS is trying very hard to stick to their rules. You have a deduction that neither you nor the IRS have paperwork for (since the fund is not acknowledging it as a covered expense), so they are following the rules.

I can understand how you are frustrated about the situation, but this does not seem to me to be random behavior, but rather straightforward rule following.

kbolino
1 replies
1d1h

If following the rules looks like there are no rules, what is the purpose of the rules?

selimthegrim
0 replies
18h29m

No Country For Old Men: IRS edition

lcnPylGDnU4H9OF
1 replies
1d1h

To be fair, that's also the kind of thing Intuit would love to catch since it will make them look good (as they bill people for the privilege of filing taxes, of course).

bombcar
0 replies
1d1h

The taxes had been filed via TurboTax - I had fatfingered some data entry (so it's not really Intuit's fault they didn't catch it). The IRS had the data from other sources.

downut
0 replies
1d1h

I have done[1] my own taxes most years over the last 4 decades, but only in the last few years has the Federal IRS fixed my errors for me and sent me more money[2] than I expected. Pretty cool.

I moved house from AZ to GA in 2022 and both State revenue departments refunded me more than what I expected from filling out the partial year forms. GA was almost double[3]. The move included a corporate 6 figure relocation package, with all the fraught income tax issues with that. A lot of anxiety... just dissipated.

[1] I download the pdf forms and instructions and just fill them out, and if I have to I print 'em out and mail 'em in.

[2] I try hard to keep refunds to a minimum, certainly less than $1K.

[3] My partner and I puzzled over the GA instructions for quite some time, which are impressively ambiguous. I could make an argument for 3 different scenarios given the instructions, and we decided to go conservative and use the middle strategy. However the refunded amount did not match any of the scenarios I myself calculated!

adrianmonk
0 replies
1d1h

Similar story here. I had quit my job to return to college full time, but I worked for a few months that year. Turns out that qualified me for the Earned Income Tax Credit.

This credit is supposed to encourage poor people to work instead of living off government assistance. I would have never thought to claim the credit because I didn't think of myself as low income. On a monthly basis, I wasn't. But because of working for part of the year, on an annual basis, for that tax year, I was.

One day I got a letter from the IRS saying essentially, "Hey dummy, why didn't you claim this credit on your return? We fixed it for you. Here's a check."

danans
4 replies
1d1h

Zupkus said, adding that the IRS wants "to extract as much as possible from the taxpayer."

The IRS doesn't want your tax dollars, they are just the mechanism by which the federal government enforces tax collection according to the law.

I've gotten refunded by the IRS for taxes they found that I overpaid years ago. Neither I nor my accountant did anything to initiate that. I'm not alone in getting an unprompted refund.

kindatrue
3 replies
1d1h

I've met people who thought that the IRS makes money from collecting taxes - like that employees there get a cut.

skirmish
2 replies
14h43m

Maybe they were talking about the program where you report tax evasion and then once the missing money is collected you get up to 30% of it? That exists.

skirmish
0 replies
11h36m

Sure. But during a casual chat maybe somebody mentioned that reporting tax fraud can earn you money, and then somebody else assumed that they were talking about IRS employees even though they were not.

quickthrowman
0 replies
1d1h

The IRS has no incentive to collect more than what you owe. If you overpay and the IRS discovers it, they will send you a refund.

causal
0 replies
1d1h

Yeah, private H&R Block and Intuit have built empires on upselling their products to taxpayers.

axus
0 replies
1d

It would be a real problem if IRS employees were promoted / rewarded based on extra dollars collected. As far as I know it's all political & unionized.

whimsicalism
16 replies
1d1h

It's pretty dumb that this has an upper income limit that covers plenty of regular W2 wage workers

g15jv2dp
6 replies
1d

$200k puts you in the top 5% of earning, FYI.

pessimizer
1 replies
22h37m

So 20 million people then.

g15jv2dp
0 replies
22h24m

No, it's probably closer to about 12 million people (children don't usually declare income).

bagels
1 replies
21h51m

Why does that mean they should be excluded?

g15jv2dp
0 replies
13h49m

There are special taxation concerns for high income individual. Dealing with these would have certainly delayed the launch of the service. I'd rather have the service launch now for 95% of people and have coverage improve over the years, than have it launch in several years (or possibly never) for 100% of people. Besides, if you're in the top 5% of income, you can afford a CPA.

surajrmal
0 replies
2h54m

17% in California though,and probably even lower if you look at specific counties near cities. Income is relative.

INTPenis
0 replies
23h25m

Interesting because in Sweden there is a turnover limit of around 284k USD/year for using their simplified tool for financial statements.

Which covers most sole-proprietors who have 1-2 contracts, like myself.

demosthanos
5 replies
1d1h

What is the income limit? The IRS's publication describing the program for 2023 lists a 1099-INT income limit but no W-2 income limit:

https://www.irs.gov/pub/irs-pdf/p5917.pdf

whimsicalism
4 replies
1d1h

"You can’t use Direct File if your wages are more than $200,000 ($160,200 if you had more than one employer)." from https://directfile.irs.gov/income

khuey
1 replies
1d

Based on those numbers it sounds like the limitation is more "Direct File can't handle the Additional Medicare Tax or overwithheld FICA yet" than a baseless exclusion of higher income taxpayers.

whimsicalism
0 replies
1d

good to know, thank you! totally support excluding features if it helped them get to an earlier release for most taxpayers - but hopefully they go to it eventually

demosthanos
1 replies
1d1h

Thanks! It's also weird that that's buried on a webpage that they really don't want you to find anymore and not prominently displayed on the flyer they put out.

whimsicalism
0 replies
1d1h

it might have been this limit only existed for last years pilot (but i guess still should have been in the flier)? i was also surprised i was having trouble finding reference to it but it's definitely a thing

stalfosknight
1 replies
21h11m

Nice complainbrag.

whimsicalism
0 replies
20h56m

thank you, had to draft a few times to make sure it was appropriately subtle so only you could pick up on it

MarkSweep
0 replies
20h59m

Some forms like 8959 and 8960 kick in at $200k. So I assume limiting to below that was to limit the scope of their MVP.

t3rabytes
6 replies
1d2h

It seemed like the initial Direct File rollout was limited to states that didn't have a state-level income tax, or directly cooperated with the IRS. Are they forcing all states to play ball, or will Direct File not cover state tax submissions?

larkost
3 replies
1d1h

From the second sentence of the article:

"will be made permanent for the 2025 tax season with all 50 states and Washington D.C. invited to participate"

It seems very much that this is an opt-in thing, state by state. I would suspect that the results of this will be most Democratic-leaning states at least trying to opt-in for next year, and many Republican-leaning states refusing loudly during this election year, then quietly starting to opt in in a few years.

svggrfgovgf
2 replies
1d1h

States part of the pilot program (i.e., 2023 tax year): Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington (state), Wyoming as per https://www.irs.gov/about-irs/strategic-plan/irs-direct-file....

Looks like exactly half and half, Democratic/Republican to me ...

But, who knows maybe next year ...

delecti
1 replies
1d

If you look at the tax situation across the states, the party split makes a bit more sense. Of the states involved in the pilot program, Florida, Nevada, South Dakota, Tennessee, Texas, and (to some extent) Washington do not have individual income tax. Also, Arizona and New Hampshire both have a flat rate income tax, which I readily admit knowing nothing about, but which I presume simplifies them being part of the pilot. So California, Massachusetts, and New York are the only states which have a variable tax rate and also opted in, and are also all about as Democrat leaning as it gets.

https://taxfoundation.org/data/all/state/state-income-tax-ra...

Sivart13
0 replies
21h33m

I can speak to Arizona and New York: they both have state taxes but didn't have any existing web portal that could be integrated with Direct File.

They were in the pilot because the organization I worked for, Code for America, offered to build them one: https://codeforamerica.org/programs/tax-benefits/state-tax-f...

We reached out to other states as well, but those were the two that ended up being most impactful + most cooperative + easiest to implement :)

xeromal
0 replies
1d1h

I doubt this will do anything for a state tax form. It's not their responsibility.

jprete
0 replies
1d1h

Quoting the IRS (https://www.irs.gov/about-irs/strategic-plan/irs-direct-file...):

The Direct File pilot doesn't prepare state returns. However, if you live in Arizona, California, Massachusetts or New York, the Direct File pilot guides you to a state-supported tool you can use to prepare and file your state tax return.

If you live in Washington state, Direct File guides you to a state site where you can apply for the Working Families Tax Credit when you file your federal return with the Direct File pilot.
giantg2
6 replies
1d

I'll still be using 3rd party software. The main benefit is the guarantee of audit support and legal representation. For such a small fee, that's decent insurance. You'll get no such benefit working directly with the IRS.

NickC25
3 replies
1d

You're probably in the minority, or you make a significant amount of income.

If you are single or married without a family, a 1099 contractor or just inputting in a W2 or two, and have a single form from your healthcare company, chances are this really, really helps.

The IRS isn't going to audit someone who just files a single W2 and claims maybe 1-2 deductions and a small stock portfolio appreciation.

giantg2
2 replies
23h59m

I'm not saying it's a bad service. I'm saying for $30 some audit and legal representation is cheap insurance. The IRS can audit anyone they want. My finances are not exceedingly complicated, nor am I a high earner. It's an extremely low risk but still can happen.

g15jv2dp
1 replies
22h37m

I'm sorry but paying $30 for legal insurance sounds like a red flag. Either they know for absolutely sure that they will never have to pay out on the insurance, or they don't intend to pay out if/when you need it. Have you read the fine print to make sure there isn't an exclusion that will void the insurance as soon as there is any kind of problem? E.g., if the user made any kind of mistake in declaring stuff to the filing company (even a trivial one), then the insurance is voided?

giantg2
0 replies
18h18m

Yeah, they'll provide support if it was a mistake. It's not they they never pay out, it's just that it's exceeding rare. Group life costs me like $200/yr and pays out over $300k. Insurance can be cheap if the frequency is low.

BeetleB
1 replies
22h57m

The main benefit is the guarantee of audit support and legal representation.

I strongly urge you to read the fine print. The support is usually quite limited.

giantg2
0 replies
18h14m

Yeah, it's not like they give you a high priced litigator. What you do get is someone to work through the return with you to verify things and a consultation on what the options are. The details vary by which company you go with.

kylecazar
5 replies
1d1h

"Intuit doesn't see a success story here, arguing that the Direct File program is costly for taxpayers"

Good Lord

ashconnor
3 replies
18h4m

It cost me $490.00 to file my taxes with H&R Block this year. I can't use free software.

ThunderSizzle
2 replies
15h31m

Why can't you use freetaxusa?

itake
1 replies
11h35m

I didn’t check last year but free tax USA didn’t support importing stock trades. I didn’t wanna have to input every single trade I made.

glii
0 replies
4h37m

If cost basis was reported to the IRS by your brokerage, you can typically just report the summary total, since the IRS already knows about the individual trades.

protastus
0 replies
18h3m

"It is difficult to get a man to understand something, when his salary depends on his not understanding it." -Upton Sinclair

gnicholas
2 replies
22h8m

Is it going to be open to itemizers? IIRC this year it wasn’t, which means a lot of people weren’t eligible (and basically had to pay an itemization penalty to a tax preparer/company).

iends
1 replies
21h14m

Isn't itemization extremely rare post Trump tax cuts?

gnicholas
0 replies
20h29m

In CA it’s still 15%, which is millions of people. There are other states with a higher percent. You’re right that the number dropped due to the SALT cap. But the SALT cap is set to expire in 2025 (who knows what will happen, though).

enraged_camel
2 replies
1d1h

Is this only for people who have “simple” taxes? Does it support Schedule K-1 for example?

burkaman
0 replies
22h42m

The pilot didn't support that, but there isn't any detailed information about what the expanded version will support yet. I would guess K-1 will not be supported for a while, here's what the announcement says:

The IRS is also exploring ways to gradually expand the scope of tax situations supported by Direct File. Over the coming years, the agency’s goal is to expand Direct File to support most common tax situations, with a particular focus on those situations that impact working families. Announcements about new state partners and expanded eligibility are expected in the coming months.
MichaelNolan
0 replies
22h45m

The IRS is taking an agile / minimal viable product approach. So for now it only supports very basic W2 only tax filers. My guess is that K-1 is low on their priority list for now.

404mm
1 replies
23h12m

Taxpayers Protection Alliance spokesperson Kara Zupkus said in a statement that expanding the program will "radically increase the IRS's authority and scope" and "have devastating consequences."

Sounds like something Turbo/Block would say.

I don’t understand how more competition in this area could hurt the customers. All the “file federal taxes for free” offers usually cost me around $70 since I have more than just W2.

anigbrowl
0 replies
20h34m

Taxpayers Protection Alliance spokesperson Kara Zupkus said in a statement that expanding the program will "radically increase the IRS's authority and scope" and "have devastating consequences."

'For you.'

throw7
0 replies
18h19m

I realize "baby steps" and I should be happy for the incremental improvements. But somehow I just can't help feeling this will stall. freetaxusa was already "free" for federal and I don't see a seamless transition to filing for states anytime soon. The cost will just shift to that value point.

syngrog66
0 replies
20h52m

I'm aware of a much more efficient solution. Don't believe will ever be adopted, not at scale. Because threatens livelihoods of too many grifters with political power, haha.

sizzle
0 replies
5h44m

Wonder what the lovely folks at Intuit think about this…

mavsman
0 replies
18h13m

One can only hope that this would put Intuit out of business but that's likely a pipedream.

doctoboggan
0 replies
1d

I am a big fan of this, however since it doesn't do state taxes I will be forced to continue using freetaxusa since they do federal for free and charge a modest fee for your state filing. I hope that more states will follow the federal governments example and start allowing free filing online.

colinb
0 replies
1d1h

Anyone know if this covers foreign earned income etc? I.e. can I, who hasn't lived in the US for many years, make use of the service?

PaulHoule
0 replies
1d1h

My son tried Direct File in New York and had trouble signing up for it I think because he was filing for the first time and has no credit history. They make the process arduous because it’s a common scam to fill out a fake return — I had an uncle who worked for the IRS in the 1990s and he told me they were overwhelmed with this even then.

We were put in line for 40 minutes to talk to someone to validate his id. Maybe it would not have been so bad if we had not procrastinated but we managed to print out the 1040 form and the corresponding New York form and file on paper before we got to the end of the line. I think he would have struggled to fill it out on his own but I have filled out easy and hard 1040s many times and I found it easy.

1oooqooq
0 replies
12h50m

in this thread: people clueless to the political process giving excuses for the wins of lobbyists.

no, the irs is not "avoiding code complexity" by those limits. the limits are purely chosen by intuit and irs "goals".

first, irs already have how to calculate all of your tax. period. they do that since the 50s and let you guess if you got it right.

then the limits exclude everyone who is the market for intuit, not some complex to code form. have a job were paying $200 is nothing? keep payinh intuit. have some stocks in your retirement plan? keep paying intuit. are too poor that you would rather no bother paying taxes? heres free file from the irs!