6 ms·

Which is really the main issue. Offering a more accessible free version to file taxes is great, but the real problem is the need to file taxes at all for a lot

Which is really the main issue. Offering a more accessible free version to file taxes is great, but the real problem is the need to file taxes at all for a lot of people. The IRS already knows the relevant info: Your employer sends W-2 information, your bank and broker are sending the various 1099 forms for interest, dividends, stock sale gains/losses, etc. Same for your spouse and kids/dependents. Don't even need to itemize in a lot of cases, since the standard deduction is preferable in many years. Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible.

Klinky 3y ago
This is a good first step. Ideally it turns into a "verify this all looks correct & add anything we're missing" kinda thing.
- 0cf8612b2e1e 3y ago
  Great way to look at it. It is a significantly smaller jump once the Federal system is in place and already handling returns for millions/years.
- whakim 3y ago
  The article says that "in one possible scenario included in the agency’s report to Congress, the I.R.S. could fill out tax returns with information it already has." We can only hope :)
bmoxb 3y ago
That is how it works in many (most?) countries already - the US is an outlier in requiring every citizen to handle their own taxes.
- toomuchtodo 3y ago
  A lot of US GDP is Rube Goldberg machines to skim off the economy. Intuit, Visa/Mastercard, private health insurance industry, etc. Lots of pushback to be expected as government fixes this (FedNow for payments, IRS improvements for taxes, healthcare reform, and so on). Onward.
- graemep 3y ago
  It is how it works for most people in both the countries (on different continents ) I have worked in. Only people with high incomes or investment income or who are self employed or similar need to file their own taxes. There are also cheap systems even for business returns - mine cost £12 for the company and I will use the free HMRC system for my personal return. It might be easier to use more sophisticated software, especially if your finances are complex.
usaar333 3y ago
> Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible. I imagine there are heavy software development costs, on par with what it might take to build Turbotax itself. For instance, someone is going to have to figure out wash sales. Right now your broker does it, but you can wash sale across accounts, which requires you (or more reasonably tax software) to both detect this and track the adjusted basis in perpetuity. More complex events, like straddles, further exist, and even consumer-grade tax software won't handle it correctly. Even implementing the tax code correctly for regular income is difficult. Examples of calculating Net investment income tax correctly due to ambiguous tax code changes (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=271074&p=4440653#p4440653 https://www.bogleheads.org/forum/viewtopic.php?f=2&t=271074&...)
- unyttigfjelltol 3y ago
  Note the proviso, taxes should be automatic "for a lot of people." Will taxes be automatic for Warren Buffet? No. For GE? No. For Suzie Q. Public? Yes.
- CrendKing 3y ago
  I have no idea what "wash sale" is. I only heard that term when I was reading the help page in TurboTax, which I'm effectively forced to use. Seriously, I doubt there is more than 100k people in US that have this "wash sale" any year. I'm so tired of every time someone suggests automatic tax filling, there is always one guy bring up some tax term that 99.99% people never heard of. Sure, if auto tax filling doesn't solve your wash sale calculation, feel free to go back to TurboTax. Let the other 99% people who have one job and no other complicated tax situation skip this yearly nonsense.
  - geraldwhen 3y ago
    Literally anyone that owns stock could generate a wash sale.
worik 3y ago
> but the real problem is the need to file taxes at all for a lot of people. Yes In New Zealand where I live most people do not file at all. Tax is all "payroll tax" and sales tax I have just joined that system myself (after several unpleasant years of not being on a payroll. Whew!

Klinky 3y ago

This is a good first step. Ideally it turns into a "verify this all looks correct & add anything we're missing" kinda thing.

0cf8612b2e1e 3y ago
Great way to look at it. It is a significantly smaller jump once the Federal system is in place and already handling returns for millions/years.
whakim 3y ago
The article says that "in one possible scenario included in the agency’s report to Congress, the I.R.S. could fill out tax returns with information it already has." We can only hope :)

bmoxb 3y ago

That is how it works in many (most?) countries already - the US is an outlier in requiring every citizen to handle their own taxes.

toomuchtodo 3y ago
A lot of US GDP is Rube Goldberg machines to skim off the economy. Intuit, Visa/Mastercard, private health insurance industry, etc. Lots of pushback to be expected as government fixes this (FedNow for payments, IRS improvements for taxes, healthcare reform, and so on). Onward.
graemep 3y ago
It is how it works for most people in both the countries (on different continents ) I have worked in. Only people with high incomes or investment income or who are self employed or similar need to file their own taxes. There are also cheap systems even for business returns - mine cost £12 for the company and I will use the free HMRC system for my personal return. It might be easier to use more sophisticated software, especially if your finances are complex.

usaar333 3y ago

> Unless you're dealing with foreign income, are a business, or do a lot of contract work for cash, I don't see much reason why the IRS can't just handle all the taxes automatically - apart from the fact that some company wants to charge me $150 a year to file my taxes and making sure that my tax situation (which would fit on a beer coaster otherwise) is as complicated as possible. I imagine there are heavy software development costs, on par with what it might take to build Turbotax itself. For instance, someone is going to have to figure out wash sales. Right now your broker does it, but you can wash sale across accounts, which requires you (or more reasonably tax software) to both detect this and track the adjusted basis in perpetuity. More complex events, like straddles, further exist, and even consumer-grade tax software won't handle it correctly. Even implementing the tax code correctly for regular income is difficult. Examples of calculating Net investment income tax correctly due to ambiguous tax code changes (https://www.bogleheads.org/forum/viewtopic.php?f=2&t=271074&p=4440653#p4440653 https://www.bogleheads.org/forum/viewtopic.php?f=2&t=271074&...)

unyttigfjelltol 3y ago
Note the proviso, taxes should be automatic "for a lot of people." Will taxes be automatic for Warren Buffet? No. For GE? No. For Suzie Q. Public? Yes.
CrendKing 3y ago
I have no idea what "wash sale" is. I only heard that term when I was reading the help page in TurboTax, which I'm effectively forced to use. Seriously, I doubt there is more than 100k people in US that have this "wash sale" any year. I'm so tired of every time someone suggests automatic tax filling, there is always one guy bring up some tax term that 99.99% people never heard of. Sure, if auto tax filling doesn't solve your wash sale calculation, feel free to go back to TurboTax. Let the other 99% people who have one job and no other complicated tax situation skip this yearly nonsense.
- geraldwhen 3y ago
  Literally anyone that owns stock could generate a wash sale.

worik 3y ago

> but the real problem is the need to file taxes at all for a lot of people. Yes In New Zealand where I live most people do not file at all. Tax is all "payroll tax" and sales tax I have just joined that system myself (after several unpleasant years of not being on a payroll. Whew!