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I assume you’re referring to Intuit’s lobbying against proposals for automatic tax filing. Keep in mind that this would generally only apply to people who are

by cepth 8y ago

I assume you’re referring to Intuit’s lobbying against proposals for automatic tax filing. Keep in mind that this would generally only apply to people who are taking the standard deductions. The IRS may be able to pre-fill your returns with W-2 or investment related 1099 information. But if you’re a freelancer, or own rental properties, or donated to charity, or have a child in college etc., you’re going to want to itemize your deductions for maximum benefit. There is no conceivable way for the IRS to pre-populate the relevant information for all of these cases. For example, many major charities still give donors hand signed receipts for donations of physical items. Rental properties can have multiple owners, and the IRS may not be able to discern if they are spouses etc. If you actually have a simple tax situation, there are plenty of free filing options: https://freefilealliance.org/ https://freefilealliance.org/. TurboTax isn’t cheap, but if you have a complex tax situation, the fact that their software takes you through every possible deduction can lead to real savings. YMMV, but this has been the case for me.

p49k 8y ago
> Keep in mind that this would generally only apply to people who are taking the standard deductions. The IRS may be able to pre-fill your returns with W-2 or investment related 1099 information. That’s all anyone is asking for. This is exactly how taxes work in most of the modern world: you’re sent a prefilled form which is already completely filled for the majority of people, and you only need to confirm if it’s correct or edit if not. > If you actually have a simple tax situation, there are plenty of free filing options: https://freefilealliance.org https://freefilealliance.org Which is headed by Intuit and designed in a way to purposely make the options as difficult to understand and use as possible so that people buy Intuit products. Google to read any number of articles which go into this in detail.
- cepth 8y ago
  Back when my tax situation was a bit simpler, I used one of these providers (I forget which) to file a 1040EZ: https://www.irs.gov/filing/free-file-everyone-can-file-an-extension-for-free https://www.irs.gov/filing/free-file-everyone-can-file-an-ex.... If you are above the income threshold, you can mail in a paper return. I don’t remember the process taking very long? Maybe there’s disinformation out there, but it was my experience that once you’ve actually found a free filing option, the process involves entering maybe a dozen numbers.
  - Nullabillity 8y ago
    From the front page about a week ago: https://uxdesign.cc/turbotax-design-1a37356adc61 https://uxdesign.cc/turbotax-design-1a37356adc61 And "a dozen" fields for the common case is still absolutely ridiculous. Here the "common case" e-filing requires exactly three fields: your personal number, your password, and your password again after you've confirmed everything. Even the time they got it wrong (an employer was missing) it took.. two extra numbers: their org no. and the total pay.
    - cepth 8y ago
      I probably should’ve made clear that I support the idea of pre-filled taxes for most people. At the same time, I think there’s some tendency towards exaggeration on how hard someone who derived all their income from a single W-2 has to work to file taxes. Your W-2 alone has 20 boxes, albeit usually a dozen are actually used. When you file using a free online service, they have to ask you if you’re filing jointly, if you have dependents etc. A dozen fields is not a lot of work when you’re literally retyping information from a paper form. It’s tedious, but not particularly time consuming. It took me maybe an hour, part of which was just getting my pay stubs and W-2 out.
      - p49k 8y ago
        Not everyone is a well-educated HN reader like yourself. I know tons of people (genuinely good people who work hard and contribute significantly to our society) who get anxiety around tax time and end up paying for services they don't need because they buy into the dark patterns and scare tactics pushed by Intuit and H&R Block. They wouldn't have this problem if they received a pre-filled form in which they knew there would be basically zero chance of error if they were a regular W2 employee.
- darepublic 8y ago
  Seems like one political solution is to simplify the tax code
  - travmatt 8y ago
    There’s probably too much room for political gamesmanship in a complex tax base for that to get traction, sadly.
rando444 8y ago
You realize what you're talking about (pre-filling data).. is exactly how the majority of the industrialized world do taxes. You log on to a website, and if you're just taking a standard deduction, you can basically just next, next, finish your way through the whole thing, and just verify everything is correct. And of course, if your taxes are more complicated, the options for you to itemize or whatever you want are right in front of you. Most standard deduction people can have their taxes completed and filed in 1-2 minutes. I've never heard of a good argument not to try and make things easier on people, and "free options exist", is kind of a lame excuse because it requires that people know about these first, and second requires people to trust third parties with sensitive information, which not everyone is chomping at the bit to do.
- cepth 8y ago
  So I probably should've made clear that I support the IRS pre-filling taxes. This would make the lives of roughly 2/3 of tax filers, the ones who take the standard deduction, much easier. That's my bad for not making this clear. However, I think you're underselling the nuance on quite a few of your arguments. > You realize what you're talking about (pre-filling data).. is exactly how the majority of the industrialized world do taxes. If you're talking about "return-free" filing, sure, quite a few countries do this: http://www.taxpolicycenter.org/briefing-book/what-other-countries-use-return-free-tax-filing http://www.taxpolicycenter.org/briefing-book/what-other-coun.... Note that these countries operate under far simpler tax systems. "Britain’s Pay As You Earn (PAYE) system, which has incorporated exact withholding since the 1940s, has several features that facilitate return-free filing. One is that it treats the individual (rather than the family) as the unit of taxation. Another is that a large proportion of taxpayers (64 percent) are taxed at the same “basic” marginal rate." If you're referring to tax information being fully filled out, only 8 of the 35 OECD countries do so (https://www.theatlantic.com/business/archive/2016/03/the-10-second-tax-return/475899/ https://www.theatlantic.com/business/archive/2016/03/the-10-...). > You log on to a website, and if you're just taking a standard deduction, you can basically just next, next, finish your way through the whole thing, and just verify everything is correct. See this piece from the Tax Foundation, https://taxfoundation.org/pre-filled-forms-solution-tax-compliance-costs/ https://taxfoundation.org/pre-filled-forms-solution-tax-comp.... The Tax Foundation has a center-right political leaning, but I think point 1 is a valid one, point 3 may or may not be. One of the advantages to using tax preparation software is that you can compare scenarios. Does it make sense to claim your college student child as a dependent? Should I itemize? It's unclear to me what incentives the government has as the preparer of your taxes. Should they aim to collect the maximum amount of revenue? Or, should they guarantee the taxpayer the smallest possible tax burden? For grey areas, like whether your home office really qualifies as a place of business, should they pre-populate the return in a way to maximize your return? > And of course, if your taxes are more complicated, the options for you to itemize or whatever you want are right in front of you. You're basically suggesting that the government build online tax software with the same functionality as a TurboTax or other tax software. This is something that no government currently offers. Most OECD countries do not offer the litany of tax deductions that we have in the US. Most of these countries have no college tax credit, no mortgage interest deduction, no HSAs etc. Some 44 million households (30.1% of the total) choose to itemize their deductions (https://taxfoundation.org/who-itemizes-deductions/ https://taxfoundation.org/who-itemizes-deductions/). Particularly for anyone who's upper-middle class or richer, you're going to want to itemize your deductions. If you look at the sales numbers of tax software, we're looking at ~60 million copies of tax preparation software sold annually (https://www.vox.com/2016/3/29/11320386/turbotax-boycott-lobbying-tax-filing-season-tax-day-april-15 https://www.vox.com/2016/3/29/11320386/turbotax-boycott-lobb...). So sure, there's some number of people, say ~16 million households, who should be filing a free standard deduction, but aren't for one reason or another. The complexity of the US tax code makes what you're suggesting a complicated and difficult task. See for example, this comparison of US vs foreign tax codes (https://www.npr.org/2017/04/03/522440141/author-looks-to-other-countries-to-rethink-americas-complicated-tax-code https://www.npr.org/2017/04/03/522440141/author-looks-to-oth...). I think we agree on the basic goal of having a simpler filing option that works for the majority of people. But no other tax authority in the world has to contend with the maze of US tax law. Your own vision of an online system that lets people work through each deduction belies the fact that the US tax system is not particularly suited to the proverbial one postcard tax return.

by cepth 8y ago

p49k 8y ago

> Keep in mind that this would generally only apply to people who are taking the standard deductions. The IRS may be able to pre-fill your returns with W-2 or investment related 1099 information. That’s all anyone is asking for. This is exactly how taxes work in most of the modern world: you’re sent a prefilled form which is already completely filled for the majority of people, and you only need to confirm if it’s correct or edit if not. > If you actually have a simple tax situation, there are plenty of free filing options: https://freefilealliance.org https://freefilealliance.org Which is headed by Intuit and designed in a way to purposely make the options as difficult to understand and use as possible so that people buy Intuit products. Google to read any number of articles which go into this in detail.

cepth 8y ago
Back when my tax situation was a bit simpler, I used one of these providers (I forget which) to file a 1040EZ: https://www.irs.gov/filing/free-file-everyone-can-file-an-extension-for-free https://www.irs.gov/filing/free-file-everyone-can-file-an-ex.... If you are above the income threshold, you can mail in a paper return. I don’t remember the process taking very long? Maybe there’s disinformation out there, but it was my experience that once you’ve actually found a free filing option, the process involves entering maybe a dozen numbers.
- Nullabillity 8y ago
  From the front page about a week ago: https://uxdesign.cc/turbotax-design-1a37356adc61 https://uxdesign.cc/turbotax-design-1a37356adc61 And "a dozen" fields for the common case is still absolutely ridiculous. Here the "common case" e-filing requires exactly three fields: your personal number, your password, and your password again after you've confirmed everything. Even the time they got it wrong (an employer was missing) it took.. two extra numbers: their org no. and the total pay.
  - cepth 8y ago
    I probably should’ve made clear that I support the idea of pre-filled taxes for most people. At the same time, I think there’s some tendency towards exaggeration on how hard someone who derived all their income from a single W-2 has to work to file taxes. Your W-2 alone has 20 boxes, albeit usually a dozen are actually used. When you file using a free online service, they have to ask you if you’re filing jointly, if you have dependents etc. A dozen fields is not a lot of work when you’re literally retyping information from a paper form. It’s tedious, but not particularly time consuming. It took me maybe an hour, part of which was just getting my pay stubs and W-2 out.
    - p49k 8y ago
      Not everyone is a well-educated HN reader like yourself. I know tons of people (genuinely good people who work hard and contribute significantly to our society) who get anxiety around tax time and end up paying for services they don't need because they buy into the dark patterns and scare tactics pushed by Intuit and H&R Block. They wouldn't have this problem if they received a pre-filled form in which they knew there would be basically zero chance of error if they were a regular W2 employee.
darepublic 8y ago
Seems like one political solution is to simplify the tax code
- travmatt 8y ago
  There’s probably too much room for political gamesmanship in a complex tax base for that to get traction, sadly.

rando444 8y ago

You realize what you're talking about (pre-filling data).. is exactly how the majority of the industrialized world do taxes. You log on to a website, and if you're just taking a standard deduction, you can basically just next, next, finish your way through the whole thing, and just verify everything is correct. And of course, if your taxes are more complicated, the options for you to itemize or whatever you want are right in front of you. Most standard deduction people can have their taxes completed and filed in 1-2 minutes. I've never heard of a good argument not to try and make things easier on people, and "free options exist", is kind of a lame excuse because it requires that people know about these first, and second requires people to trust third parties with sensitive information, which not everyone is chomping at the bit to do.

cepth 8y ago
So I probably should've made clear that I support the IRS pre-filling taxes. This would make the lives of roughly 2/3 of tax filers, the ones who take the standard deduction, much easier. That's my bad for not making this clear. However, I think you're underselling the nuance on quite a few of your arguments. > You realize what you're talking about (pre-filling data).. is exactly how the majority of the industrialized world do taxes. If you're talking about "return-free" filing, sure, quite a few countries do this: http://www.taxpolicycenter.org/briefing-book/what-other-countries-use-return-free-tax-filing http://www.taxpolicycenter.org/briefing-book/what-other-coun.... Note that these countries operate under far simpler tax systems. "Britain’s Pay As You Earn (PAYE) system, which has incorporated exact withholding since the 1940s, has several features that facilitate return-free filing. One is that it treats the individual (rather than the family) as the unit of taxation. Another is that a large proportion of taxpayers (64 percent) are taxed at the same “basic” marginal rate." If you're referring to tax information being fully filled out, only 8 of the 35 OECD countries do so (https://www.theatlantic.com/business/archive/2016/03/the-10-second-tax-return/475899/ https://www.theatlantic.com/business/archive/2016/03/the-10-...). > You log on to a website, and if you're just taking a standard deduction, you can basically just next, next, finish your way through the whole thing, and just verify everything is correct. See this piece from the Tax Foundation, https://taxfoundation.org/pre-filled-forms-solution-tax-compliance-costs/ https://taxfoundation.org/pre-filled-forms-solution-tax-comp.... The Tax Foundation has a center-right political leaning, but I think point 1 is a valid one, point 3 may or may not be. One of the advantages to using tax preparation software is that you can compare scenarios. Does it make sense to claim your college student child as a dependent? Should I itemize? It's unclear to me what incentives the government has as the preparer of your taxes. Should they aim to collect the maximum amount of revenue? Or, should they guarantee the taxpayer the smallest possible tax burden? For grey areas, like whether your home office really qualifies as a place of business, should they pre-populate the return in a way to maximize your return? > And of course, if your taxes are more complicated, the options for you to itemize or whatever you want are right in front of you. You're basically suggesting that the government build online tax software with the same functionality as a TurboTax or other tax software. This is something that no government currently offers. Most OECD countries do not offer the litany of tax deductions that we have in the US. Most of these countries have no college tax credit, no mortgage interest deduction, no HSAs etc. Some 44 million households (30.1% of the total) choose to itemize their deductions (https://taxfoundation.org/who-itemizes-deductions/ https://taxfoundation.org/who-itemizes-deductions/). Particularly for anyone who's upper-middle class or richer, you're going to want to itemize your deductions. If you look at the sales numbers of tax software, we're looking at ~60 million copies of tax preparation software sold annually (https://www.vox.com/2016/3/29/11320386/turbotax-boycott-lobbying-tax-filing-season-tax-day-april-15 https://www.vox.com/2016/3/29/11320386/turbotax-boycott-lobb...). So sure, there's some number of people, say ~16 million households, who should be filing a free standard deduction, but aren't for one reason or another. The complexity of the US tax code makes what you're suggesting a complicated and difficult task. See for example, this comparison of US vs foreign tax codes (https://www.npr.org/2017/04/03/522440141/author-looks-to-other-countries-to-rethink-americas-complicated-tax-code https://www.npr.org/2017/04/03/522440141/author-looks-to-oth...). I think we agree on the basic goal of having a simpler filing option that works for the majority of people. But no other tax authority in the world has to contend with the maze of US tax law. Your own vision of an online system that lets people work through each deduction belies the fact that the US tax system is not particularly suited to the proverbial one postcard tax return.