4 ms·

Exactly this. Amount of income is actually quite a crappy measure for what should be free to file. If it’s flat W2 income with nothing else to consider then sur

Exactly this. Amount of income is actually quite a crappy measure for what should be free to file. If it’s flat W2 income with nothing else to consider then sure... When you start adding in all these other little side cases you’ve blown your argument. They literally take more effort (either on your part deciphering and completing, the CPA’s part deciphering and completing, or Turbotax’s part developing and validating). Yes you made practically nothing this year but it was in incredibly uncommon ways and that makes it more complex than a simple 1040EZ.

jakelazaroff 8y ago
Funding an IRA is "incredibly uncommon"?
- chrismeller 8y ago
  If you’ve got only W2 income then a 401k would be much more common. A normal IRA is “common” as well, but not nearly as much so I’d argue. As another comment pointed out it could have been a Roth IRA, which has different rules. It could also have simply been some other oddity or quirk of the tax software at the time. None of the specifics negate anything related to complexity vs cost.
  - jakelazaroff 8y ago
    Unless you change jobs, in which case you might roll over your 401k into an IRA. I agree, though, that this is a digression from the broader argument, which is that the lack of an easy and unqualified free option (or automatic filing) by the IRS is a particularly egregious case of regulatory capture by the tax prep industry.
  - Raugharr 8y ago
    My company doesn't offer a 401K, does this mean I shouldn't be allowed to file taxes for free?
  - astura 8y ago
    You can have both an IRA and a 401(k) and contribute to both in any given tax year (up to limits set by the IRS for each individual account). In fact, you SHOULD have both since 401(k)s are hugely inflexible compared to IRAs so it makes sense to fund an IRA before a 401(k) unless you're getting a match on the 401(k) contributions. So if you want to save 10% for retirement and you get a 5% match on your 401(k) then it usually makes most sense to put 5% in the 401(k) to get the match and 5% in the IRA for control and flexibly. If you then want to bump up your your retirement contribution to 15% then 5% should go in the 401(k) and 10% into the IRA, staying within the legal IRA contribution limits. Once your IRA is maxed out, then the remaining should go into the 401(k) (until your 401(k) is maxed out, of course). 401(k) can also be rolled over to IRAs when you leave your employer, so even someone who only contributes to a 401(k) will usually end up with an IRA.
    - ryandrake 8y ago
      > In fact, you SHOULD have both since 401(k)s are hugely inflexible compared to IRAs so it makes sense to fund an IRA before a 401(k) unless you're getting a match on the 401(k) contributions. This really depends on how good your 401(k) is and what kind of investments you want to make. If you just want the standard (and very good) low-cost three-fund portfolio, all 401(k) programs I’ve seen offer these kinds of index funds. If you really want more exotic investments, then an IRA might be better. The advise to have both is sound though, but the best reason is you want to maximize your tax-advantaged savings. “Flexibility” is a benefit not important to everyone.
      - astura 8y ago
        >This really depends on how good your 401(k) is and what kind of investments you want to make. I disagree because 401(k)s can change on a whim though... My company decided to change literally all of our fund options overnight, and we couldn't keep what we already invested in the old funds, we just had to buy into the new funds. So even if your 401k is awesome today, it might not be awesome tomorrow. If your IRA provider decides to change their fund offerings, you can just move to a different one. Luckily our new funds had perfectly fine choices, but that might not have been the case. >If you just want the standard (and very good) low-cost three-fund portfolio, all 401(k) programs I’ve seen offer these kinds of index funds. Honestly, both our original and current 401(k) options didn't/don't have a good international fund, the ones they had had very high expenses (over 1%) There's also no low cost REIT index on my 401(k) (however, REIT isn't part of the 3-fund profolio)
- ummonk 8y ago
  The poster miswrote. It wasn't an IRA, but a regular investment account that generated taxable dividends. Much less common.
behringer 8y ago
A 1098 caused me to have to pay turbotax 70 bucks. Instead of doing that, I just switched to H&R block which remained free shrug

jakelazaroff 8y ago

Funding an IRA is "incredibly uncommon"?

chrismeller 8y ago
If you’ve got only W2 income then a 401k would be much more common. A normal IRA is “common” as well, but not nearly as much so I’d argue. As another comment pointed out it could have been a Roth IRA, which has different rules. It could also have simply been some other oddity or quirk of the tax software at the time. None of the specifics negate anything related to complexity vs cost.
- jakelazaroff 8y ago
  Unless you change jobs, in which case you might roll over your 401k into an IRA. I agree, though, that this is a digression from the broader argument, which is that the lack of an easy and unqualified free option (or automatic filing) by the IRS is a particularly egregious case of regulatory capture by the tax prep industry.
- Raugharr 8y ago
  My company doesn't offer a 401K, does this mean I shouldn't be allowed to file taxes for free?
- astura 8y ago
  You can have both an IRA and a 401(k) and contribute to both in any given tax year (up to limits set by the IRS for each individual account). In fact, you SHOULD have both since 401(k)s are hugely inflexible compared to IRAs so it makes sense to fund an IRA before a 401(k) unless you're getting a match on the 401(k) contributions. So if you want to save 10% for retirement and you get a 5% match on your 401(k) then it usually makes most sense to put 5% in the 401(k) to get the match and 5% in the IRA for control and flexibly. If you then want to bump up your your retirement contribution to 15% then 5% should go in the 401(k) and 10% into the IRA, staying within the legal IRA contribution limits. Once your IRA is maxed out, then the remaining should go into the 401(k) (until your 401(k) is maxed out, of course). 401(k) can also be rolled over to IRAs when you leave your employer, so even someone who only contributes to a 401(k) will usually end up with an IRA.
  - ryandrake 8y ago
    > In fact, you SHOULD have both since 401(k)s are hugely inflexible compared to IRAs so it makes sense to fund an IRA before a 401(k) unless you're getting a match on the 401(k) contributions. This really depends on how good your 401(k) is and what kind of investments you want to make. If you just want the standard (and very good) low-cost three-fund portfolio, all 401(k) programs I’ve seen offer these kinds of index funds. If you really want more exotic investments, then an IRA might be better. The advise to have both is sound though, but the best reason is you want to maximize your tax-advantaged savings. “Flexibility” is a benefit not important to everyone.
    - astura 8y ago
      >This really depends on how good your 401(k) is and what kind of investments you want to make. I disagree because 401(k)s can change on a whim though... My company decided to change literally all of our fund options overnight, and we couldn't keep what we already invested in the old funds, we just had to buy into the new funds. So even if your 401k is awesome today, it might not be awesome tomorrow. If your IRA provider decides to change their fund offerings, you can just move to a different one. Luckily our new funds had perfectly fine choices, but that might not have been the case. >If you just want the standard (and very good) low-cost three-fund portfolio, all 401(k) programs I’ve seen offer these kinds of index funds. Honestly, both our original and current 401(k) options didn't/don't have a good international fund, the ones they had had very high expenses (over 1%) There's also no low cost REIT index on my 401(k) (however, REIT isn't part of the 3-fund profolio)
ummonk 8y ago
The poster miswrote. It wasn't an IRA, but a regular investment account that generated taxable dividends. Much less common.

behringer 8y ago

A 1098 caused me to have to pay turbotax 70 bucks. Instead of doing that, I just switched to H&R block which remained free shrug