5 ms·

I Fought the IRS for Over $12K and won

50 points by LorenDB 2y ago

yapyap 2y ago
[flagged]
- hyperhello 2y ago
  We’re not supposed to complain about little things like that.
- fortran77 2y ago
  Suggestion: Find another article to read and comment on.
duxup 2y ago
The issue with TurboTax that the author ran into: >I’d entered my ISO info in two different forms in TurboTax – once after searching TurboTax Help for ISO and AMT, and again when TurboTax asked me about ISOs near the end. I’d originally assumed it was just validating or overwriting the numbers I’d already put in, but it was actually creating duplicates! (C’mon, how does software like TurboTax not validate against duplicate entry???) That's pretty astonishing and I guess their testing missed it too or assumed the usual ISO field and searching help about ISO were different ... but that maybe should have raised questions for them. You would think just a couple extra sets of human eyes would catch that one.
- throwway120385 2y ago
  That's actually very routine with TurboTax. This year when I filed through them they had duplicated a mortgage and also some charitable donations because I did the form and then they asked me again anyway as I clicked back through their interface.
  - duxup 2y ago
    That makes me wonder now. I had duplicates on mine on TurboTax once too ... but I assumed it was me ... maybe it wasn't.
- resoluteteeth 2y ago
  That's unfortunately basically the norm with TurboTax. If you haven't done a specific thing before in TurboTax you should always double check the actual forms, too. You really can't trust it.
- evanelias 2y ago
  Honestly it seems to have different new bugs every year. This year, it completely ignored income from a 1099-DIV imported from Vanguard. It shows the 1099-DIV as imported, and it shows the correct numbers on it, but just failed to add any of those numbers to the totals for dividends and distributions! Apparently the work-around is to manually edit the form and enter 0.00 on any line the import left blank. After doing that, the software accounts for everything properly. I found a forum post of TurboTax users discussing this exact issue with Vanguard 1099-DIVs back in January, and it still isn't fixed yet in April. Seems like this could affect a lot of people who just won't notice, because it isn't obvious unless you manually double-check the tax math.
Ozarkian 2y ago
I hear all kinds of complaints about the IRS. But my experience with them is that they are reasonable. I had a tax situation when I did a same-day sale of some nonqualified stock options. What happened is that my employer put the net gain as income on my W2. In addition, the stockbroker sent me a 1099 for the total value of the options sold. This wasn't quite correct, because the income was already reported on my W2 and the broker should have known that and not 1099'd me for it. I filed my tax return correctly, only including the W2 income and disregarding the 1099. The IRS added the 1099 back into my income on their end after I filed, and sent me a bill for around $190,000 for the tax on the 1099 income. I sent them letter with a clear and correct accounting for the difference. They agreed and sent me back a letter admitting that I was correct and that my tax due was now $0. It was a bit nerve-racking, but I'm glad they did the right thing in the end. The California Franchise Tax Board, on the other hand, is a whole different beast. Those people are a bunch of idiotic uncouth goons.
- jeffbee 2y ago
  I had the exact same thing happen w/ IRS. Also corrected their mistake with a brief letter. Honestly the whole 1099-without-basis thing should not be allowed.
- duxup 2y ago
  Yeah I've had similar encounters. Had several run ins with the IRS. All via mail, and the way the system worked and their responses were all very straightforward and professional. The IRS "you owe us this much" mail is kinda scary, but if you read the letter it explains how to dispute / communicate with them and I found they were more than willing to follow the facts.
- tekla 2y ago
  I've been audited twice by the IRS due to me being young and stupid, but yeah I just read the mail, followed the directions, and everything was perfectly professional and not scary at all.
- ak217 2y ago
  > the broker should have known that and not 1099'd me for it. The broker is obligated to 1099 you for it. The issue is that brokers who handle NSOs are not obligated to set the correct cost basis, so they set it to 0, making it seem like you owe tax on the entire NSO's value for cap gain, on top of the income recognized on the W2. Setting the correct cost basis after importing the 1099 is a tricky, manual, error-prone process, and companies that grant NSOs often don't warn you about it, either. Brokers should be required to set it (they seem to already know this information from your employer in most cases, but don't want to take responsibility for reporting that value to the IRS).
ezfe 2y ago
I just want to understand who sees a tax bill of $10,000 and doesn’t investigate even a little bit.
- ceejayoz 2y ago
  They're in a fairly rare situation that's expected to cause a higher than normal tax bill.
- schrodinger 2y ago
  He did? He investigated quite a bit actually and wrote up a long guide for others.
  - ezfe 2y ago
    But later on in the article he said that $10,000 was a lot higher than expected. I would think that if the overage was higher than they expected they would go through the PDFs that Turbotax/etc. generate and double check the math. I do this even without weird tax situations because I want to understand what the website is submitting on my behalf.
- duxup 2y ago
  Considering the ISO they likely weren't surprised they owed a lot.
- blitzar 2y ago
  A $10k tax bill (every year) is less than what the median worker owes.
  - icedchai 2y ago
    Not really. This is $10K on top of what was already paid through payroll deductions, etc. The median worker is not paying anything additional.
dmoy 2y ago
I've gotten 4 CP2000 over the years from RSU. Since they're non-covered shares, IRS gets data with a $0 basis. Some my fault (missed a page of 1099-B), some the broker's fault (missing one of two forms). In every case you just send a cover letter with a couple sentences of prose explaining the error and a corrected form (8949, schedule B, whatever). Maybe a check if you still owe something. Or not, they will calculate and rebill you too. Maybe a copy of your 1099-B (I sent it 3 out of 4 times but forgot once, didn't make a difference) It's slow as molasses, but the IRS is actually pretty damn reasonable about things.
- ghaff 2y ago
  The whole cost basis thing used to be a real mess especially with acquisitions, spinoffs, and so forth. At one point when I was selling shares for a very long ago company from employee stock purchase and maybe old style options as well, I just came up with a reasonable average and called it a day. It’s generally easier today.
  - dmoy 2y ago
    Yea it's definitely easier now If only they'd go one step farther and make RSU be covered shares...
vunderba 2y ago
There's this great bit I saw on Twitter a while ago: Government: You owe us money. It’s called taxes. Me: How much do I owe? Gov’t: You have to figure that out. Me: I just pay what I want? Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too. Me: What if I get it wrong? Gov’t: You go to prison I absolutely hate the US tax system. As I understand in some countries, they instead send you a "pre-filed" statement (Finland, Denmark, Sweden, etc.). If everything looks fine, you don't need to send anything back at all. It's only if there is a discrepancy that you need to get in touch with the country's tax agency.
- duxup 2y ago
  Considering the standard deduction is default for many people now it does seem like filing taxes should just be a quick form on the IRS website. For MOST people you take the standard deduction, and there's now only a handful of legit credits, maybe some small other types of income ... done. Granted lots of people do NOT want it to be that easy.
  - BorgHunter 2y ago
    The alternative minimum tax is certainly not the default for most people; you have to make quite a lot for that to be relevant. Do you mean the standard deduction?
    - duxup 2y ago
      Yes my bad.
  - BobaFloutist 2y ago
    Standard deduction is great but this is the first year I had enough cash to bother parking it in a Money Market Fund instead of my bank's savings account and whew boy does that have an irritating tax process.
- xandrius 2y ago
  Totally agree, I find it absolutely obnoxious that it is a crime to make a mistake in the tax return documentation. EDIT: Ok, I'm not from the US and for some reason I was under the impression that incorrect tax returns were punishable crimes. I guess some movie I watched as a kid impressed that notion and it was never challenged until now.
throwway120385 2y ago
I had a return check delayed by almost 6 months once because I had also amended a previous return and sent them a check. Apparently they were so confused by it that they just cashed the check and then waited patiently for us to repeatedly call their phone tree and wait 8 hours a day for a week before someone finally picked up and helped us. Good thing we just cut IRS staffing significantly so I can now wait a lot longer for the same thing.
- prepend 2y ago
  I think some problems are made worse with more money. For example, having enough staff to review messages manually and process things manually needs more funding to scale. Automating processes takes fewer people so there’s resistance to “automating away” jobs instead of just having the manual people focus on other things.
declan_roberts 2y ago
I don't know how anybody can read a story and think giving these jokesters (the IRS) MORE money is going to fix anything and not just pile it deeper and higher. These people terrorize the lives of law-abiding and tax-paying citizens. Something is so fundamentally wrong at that organization. Whatever DOGE is doing I doubt it's going far enough.
- beej71 2y ago
  DOGE is planning to ax Direct File, so that'll be less efficient. And they're cutting tons of jobs, so that'll less efficient. I'm sure there are plenty of things wrong with the IRS, but DOGE's approach seems to be to make them wronger.
- avgDev 2y ago
  Do you have some sources? Last time I read the IRS actually doesn't cost tax payers money. Additionally, every dollar increase in IRS spending will net the US govt. $12. Whatever DOGE is doing is illegal. https://budgetlab.yale.edu/research/revenue-and-distributional-effects-irs-funding https://budgetlab.yale.edu/research/revenue-and-distribution...
coldpie 2y ago
Towards the end of this article, the author recommends and links to another article about doing your own taxes[1]. I think this is a good suggestion. I've been doing my own taxes for years. In my experience, it is about the same level of effort as using the tax software. Instead of typing your numbers into tax software, you type the same numbers directly into the IRS's forms[2] and maybe use a calculator a couple of times. While there are some nooks & crannies that may take some time to figure out the first time you do them, the general approach is always the same: add up your incomes, subtract your deductions, apply tax to the difference, subtract your contributions. Done. Keep that algorithm in mind and it's quite easy to just follow the directions and see how each step is accomplishing each part of the algorithm. The first time you do it yourself, you can compare your final return against what the tax prep software did for you last year to sanity check your results. If I was running my own business or something, I'd probably hire an accountant, but for individuals who only have some W-2s and 1099s and stuff, it's just an hour or two of simple math and you're done. [1] Sadly has more AI generated slop at the top, but what're you gonna do. https://www.mikekasberg.com/blog/2024/03/15/i-did-my-own-taxes-by-hand-and-you-can-too.html https://www.mikekasberg.com/blog/2024/03/15/i-did-my-own-tax... [2] https://www.irs.gov/e-file-providers/free-file-fillable-forms https://www.irs.gov/e-file-providers/free-file-fillable-form...
- deleted 2y ago
  [deleted]
sjapps 2y ago
[dead]
Frieren 2y ago
> The government should make all this easier. The US is one of the only countries in the world where people have to report their own income to the government every year (and a big reason for that is the companies like TurboTax that make so much money from it). In almost all cases, the government already knows how much tax you owe before you tell them anything. If fixing this was a priority for our politicians, none of us would have to file taxes ever again! The conclusion makes a lot of sense. So many people wasting so much time is extremely expensive for the USA. And all of that waste is created because a couple of corporations bribe politicians to make public services worse. (And probably because the goverment can say that they "saved" money by not spending what is required to make it less wasteful).
comrade1234 2y ago
In the past I’ve been happy with the irs. One year I had to sell a domain to Sony because they trademarked it and so I could no longer use it for my initial purpose. I got a decent amount of money and included it as income. A few years later I got a letter from the irs saying it should have been classified in some other manner and here is your refund. But lately they’ve been terrible. With every correspondence i send I get a letter months later saying they got my letter/form/etc but haven’t had time to review it yet. This goes on for over a year before it’s resolved. They’re sitting on lots of refunds for me…
- synergy20 2y ago
  same here, one year after i got a similar letter, nothing occurred, it's really slow.
- newZWhoDis 2y ago
  Meanwhile my grandfather went through hell with them when they lost a $250k check they demanded since he had to pay quarterly. He eventually won but they were threatening him with huge penalties for nonpayment and he had to get a lawyer.
- SirFatty 2y ago
  Are you managing/filing your own taxes, or do you use an tax accountant?
- tfandango 2y ago
  2 years ago my eFile was rejected because one of my dependents was already claimed. I have 3 dependents, and they offered no way for me to figure out what happened. The internet told me to file a fraud claim with the government and send that to the IRS, which I did and received no response. I had to print and send my taxes that year. They cashed my check immediately, and about 9 months later I was able to log in and see that I owed 0. That was it. I suspect they did nothing, but future returns were eFiled just fine.
WaitWaitWha 2y ago
Most nations I lived in, I got a bill or refund for taxes. In general it is "here is your bill/refund. If you disagree you have to prove you are right and we are wrong" - the government-prepared tax return model. It is not this "we know how much you supposed to pay, but you tell us first, then we will charge you interest and penalty if you guess wrong, and you have to prove you are right and we are wrong" - the self-assessment model. The government-prepared tax return model does work well for most simple returns. As soon as it gets a bit more complex it becomes an issue. there is also a concern with separation of duties, missing deductions, and the fight to get correction remains. Finally, government math is about as safe as bathing with piranhas with a bloody nose. Maybe a hybrid solution?
simpaticoder 2y ago
I worry that practical tips to deal with an unjust system, and success stories that demonstrate their use, undermine the will to fix the unjust system.
nfRfqX5n 2y ago
Seems crazy to pay for a financial advisor but not an accountant. My accountant is easily some of the best money I spend.
RajT88 2y ago
One time, I sold a bunch of stock options because my company was being spun off into an independent entity. "Use it or lose it" kind of situation. As part of the spin-off the company was also renamed. So it created a slightly weird situation, which caused a lot of trouble for me and my colleagues. That trouble was a bill for $12k (which at the time, I absolutely could not afford). Basically, the mix-up was the IRS thinking I had sold RSU's and not options, so they had 0 cost basis and they thought I owed them the money. I contacted my former company's HR department, and they said lots of people had the same issue, and they shared the message I should send to the IRS in response. So I printed out my correspondence with the former company explaining the issue, along with all the documents showing the cost basis, with a cover page explaining the tl;dr of the situation. The IRS sent me a couple months later the same bill for 12k with late fees - now totaling 13k. So I printed out again the entire package I had sent them before, including a new cover page (on top of the old one) saying, "Find enclosed the documentation I sent you before which explains clearly I do not owe you money". At this point it was 15 pages of materials. A few months later, I got a letter back which said in legalese something along the lines of not admitting to any error, but also at the same time saying I didn't owe the money. Weird, but I took it as a win.
yojo 2y ago
My takeaway from this is you can use the IRS as a CD that pays 7% per year! Reading through the blog post it seems like you could overpay your taxes by $10k, immediately amend your return, and get your money back with 7% interest a year later! I’m not actually advocating for this - I’m pretty sure it’d count as some form of tax fraud. But crazy that the IRS might offer the best safe(ish) interest rate.
- xnx 2y ago
  This is astounding to me. That is a fantastic return if guaranteed.
iJohnDoe 2y ago
Cool blog/theme. Anyone know the blogging software of theme used? Thanks.

50 points by LorenDB 2y ago

yapyap 2y ago

[flagged]

hyperhello 2y ago
We’re not supposed to complain about little things like that.
fortran77 2y ago
Suggestion: Find another article to read and comment on.

duxup 2y ago

The issue with TurboTax that the author ran into: >I’d entered my ISO info in two different forms in TurboTax – once after searching TurboTax Help for ISO and AMT, and again when TurboTax asked me about ISOs near the end. I’d originally assumed it was just validating or overwriting the numbers I’d already put in, but it was actually creating duplicates! (C’mon, how does software like TurboTax not validate against duplicate entry???) That's pretty astonishing and I guess their testing missed it too or assumed the usual ISO field and searching help about ISO were different ... but that maybe should have raised questions for them. You would think just a couple extra sets of human eyes would catch that one.

throwway120385 2y ago
That's actually very routine with TurboTax. This year when I filed through them they had duplicated a mortgage and also some charitable donations because I did the form and then they asked me again anyway as I clicked back through their interface.
- duxup 2y ago
  That makes me wonder now. I had duplicates on mine on TurboTax once too ... but I assumed it was me ... maybe it wasn't.
resoluteteeth 2y ago
That's unfortunately basically the norm with TurboTax. If you haven't done a specific thing before in TurboTax you should always double check the actual forms, too. You really can't trust it.
evanelias 2y ago
Honestly it seems to have different new bugs every year. This year, it completely ignored income from a 1099-DIV imported from Vanguard. It shows the 1099-DIV as imported, and it shows the correct numbers on it, but just failed to add any of those numbers to the totals for dividends and distributions! Apparently the work-around is to manually edit the form and enter 0.00 on any line the import left blank. After doing that, the software accounts for everything properly. I found a forum post of TurboTax users discussing this exact issue with Vanguard 1099-DIVs back in January, and it still isn't fixed yet in April. Seems like this could affect a lot of people who just won't notice, because it isn't obvious unless you manually double-check the tax math.

Ozarkian 2y ago

I hear all kinds of complaints about the IRS. But my experience with them is that they are reasonable. I had a tax situation when I did a same-day sale of some nonqualified stock options. What happened is that my employer put the net gain as income on my W2. In addition, the stockbroker sent me a 1099 for the total value of the options sold. This wasn't quite correct, because the income was already reported on my W2 and the broker should have known that and not 1099'd me for it. I filed my tax return correctly, only including the W2 income and disregarding the 1099. The IRS added the 1099 back into my income on their end after I filed, and sent me a bill for around $190,000 for the tax on the 1099 income. I sent them letter with a clear and correct accounting for the difference. They agreed and sent me back a letter admitting that I was correct and that my tax due was now $0. It was a bit nerve-racking, but I'm glad they did the right thing in the end. The California Franchise Tax Board, on the other hand, is a whole different beast. Those people are a bunch of idiotic uncouth goons.

jeffbee 2y ago
I had the exact same thing happen w/ IRS. Also corrected their mistake with a brief letter. Honestly the whole 1099-without-basis thing should not be allowed.
duxup 2y ago
Yeah I've had similar encounters. Had several run ins with the IRS. All via mail, and the way the system worked and their responses were all very straightforward and professional. The IRS "you owe us this much" mail is kinda scary, but if you read the letter it explains how to dispute / communicate with them and I found they were more than willing to follow the facts.
tekla 2y ago
I've been audited twice by the IRS due to me being young and stupid, but yeah I just read the mail, followed the directions, and everything was perfectly professional and not scary at all.
ak217 2y ago
> the broker should have known that and not 1099'd me for it. The broker is obligated to 1099 you for it. The issue is that brokers who handle NSOs are not obligated to set the correct cost basis, so they set it to 0, making it seem like you owe tax on the entire NSO's value for cap gain, on top of the income recognized on the W2. Setting the correct cost basis after importing the 1099 is a tricky, manual, error-prone process, and companies that grant NSOs often don't warn you about it, either. Brokers should be required to set it (they seem to already know this information from your employer in most cases, but don't want to take responsibility for reporting that value to the IRS).

ezfe 2y ago

I just want to understand who sees a tax bill of $10,000 and doesn’t investigate even a little bit.

ceejayoz 2y ago
They're in a fairly rare situation that's expected to cause a higher than normal tax bill.
schrodinger 2y ago
He did? He investigated quite a bit actually and wrote up a long guide for others.
- ezfe 2y ago
  But later on in the article he said that $10,000 was a lot higher than expected. I would think that if the overage was higher than they expected they would go through the PDFs that Turbotax/etc. generate and double check the math. I do this even without weird tax situations because I want to understand what the website is submitting on my behalf.
duxup 2y ago
Considering the ISO they likely weren't surprised they owed a lot.
blitzar 2y ago
A $10k tax bill (every year) is less than what the median worker owes.
- icedchai 2y ago
  Not really. This is $10K on top of what was already paid through payroll deductions, etc. The median worker is not paying anything additional.

dmoy 2y ago

I've gotten 4 CP2000 over the years from RSU. Since they're non-covered shares, IRS gets data with a $0 basis. Some my fault (missed a page of 1099-B), some the broker's fault (missing one of two forms). In every case you just send a cover letter with a couple sentences of prose explaining the error and a corrected form (8949, schedule B, whatever). Maybe a check if you still owe something. Or not, they will calculate and rebill you too. Maybe a copy of your 1099-B (I sent it 3 out of 4 times but forgot once, didn't make a difference) It's slow as molasses, but the IRS is actually pretty damn reasonable about things.

ghaff 2y ago
The whole cost basis thing used to be a real mess especially with acquisitions, spinoffs, and so forth. At one point when I was selling shares for a very long ago company from employee stock purchase and maybe old style options as well, I just came up with a reasonable average and called it a day. It’s generally easier today.
- dmoy 2y ago
  Yea it's definitely easier now If only they'd go one step farther and make RSU be covered shares...

vunderba 2y ago

There's this great bit I saw on Twitter a while ago: Government: You owe us money. It’s called taxes. Me: How much do I owe? Gov’t: You have to figure that out. Me: I just pay what I want? Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too. Me: What if I get it wrong? Gov’t: You go to prison I absolutely hate the US tax system. As I understand in some countries, they instead send you a "pre-filed" statement (Finland, Denmark, Sweden, etc.). If everything looks fine, you don't need to send anything back at all. It's only if there is a discrepancy that you need to get in touch with the country's tax agency.

duxup 2y ago
Considering the standard deduction is default for many people now it does seem like filing taxes should just be a quick form on the IRS website. For MOST people you take the standard deduction, and there's now only a handful of legit credits, maybe some small other types of income ... done. Granted lots of people do NOT want it to be that easy.
- BorgHunter 2y ago
  The alternative minimum tax is certainly not the default for most people; you have to make quite a lot for that to be relevant. Do you mean the standard deduction?
  - duxup 2y ago
    Yes my bad.
- BobaFloutist 2y ago
  Standard deduction is great but this is the first year I had enough cash to bother parking it in a Money Market Fund instead of my bank's savings account and whew boy does that have an irritating tax process.
xandrius 2y ago
Totally agree, I find it absolutely obnoxious that it is a crime to make a mistake in the tax return documentation. EDIT: Ok, I'm not from the US and for some reason I was under the impression that incorrect tax returns were punishable crimes. I guess some movie I watched as a kid impressed that notion and it was never challenged until now.

throwway120385 2y ago

I had a return check delayed by almost 6 months once because I had also amended a previous return and sent them a check. Apparently they were so confused by it that they just cashed the check and then waited patiently for us to repeatedly call their phone tree and wait 8 hours a day for a week before someone finally picked up and helped us. Good thing we just cut IRS staffing significantly so I can now wait a lot longer for the same thing.

prepend 2y ago
I think some problems are made worse with more money. For example, having enough staff to review messages manually and process things manually needs more funding to scale. Automating processes takes fewer people so there’s resistance to “automating away” jobs instead of just having the manual people focus on other things.

declan_roberts 2y ago

I don't know how anybody can read a story and think giving these jokesters (the IRS) MORE money is going to fix anything and not just pile it deeper and higher. These people terrorize the lives of law-abiding and tax-paying citizens. Something is so fundamentally wrong at that organization. Whatever DOGE is doing I doubt it's going far enough.

beej71 2y ago
DOGE is planning to ax Direct File, so that'll be less efficient. And they're cutting tons of jobs, so that'll less efficient. I'm sure there are plenty of things wrong with the IRS, but DOGE's approach seems to be to make them wronger.
avgDev 2y ago
Do you have some sources? Last time I read the IRS actually doesn't cost tax payers money. Additionally, every dollar increase in IRS spending will net the US govt. $12. Whatever DOGE is doing is illegal. https://budgetlab.yale.edu/research/revenue-and-distributional-effects-irs-funding https://budgetlab.yale.edu/research/revenue-and-distribution...

coldpie 2y ago

Towards the end of this article, the author recommends and links to another article about doing your own taxes[1]. I think this is a good suggestion. I've been doing my own taxes for years. In my experience, it is about the same level of effort as using the tax software. Instead of typing your numbers into tax software, you type the same numbers directly into the IRS's forms[2] and maybe use a calculator a couple of times. While there are some nooks & crannies that may take some time to figure out the first time you do them, the general approach is always the same: add up your incomes, subtract your deductions, apply tax to the difference, subtract your contributions. Done. Keep that algorithm in mind and it's quite easy to just follow the directions and see how each step is accomplishing each part of the algorithm. The first time you do it yourself, you can compare your final return against what the tax prep software did for you last year to sanity check your results. If I was running my own business or something, I'd probably hire an accountant, but for individuals who only have some W-2s and 1099s and stuff, it's just an hour or two of simple math and you're done. [1] Sadly has more AI generated slop at the top, but what're you gonna do. https://www.mikekasberg.com/blog/2024/03/15/i-did-my-own-taxes-by-hand-and-you-can-too.html https://www.mikekasberg.com/blog/2024/03/15/i-did-my-own-tax... [2] https://www.irs.gov/e-file-providers/free-file-fillable-forms https://www.irs.gov/e-file-providers/free-file-fillable-form...

deleted 2y ago
[deleted]

sjapps 2y ago

[dead]

Frieren 2y ago

> The government should make all this easier. The US is one of the only countries in the world where people have to report their own income to the government every year (and a big reason for that is the companies like TurboTax that make so much money from it). In almost all cases, the government already knows how much tax you owe before you tell them anything. If fixing this was a priority for our politicians, none of us would have to file taxes ever again! The conclusion makes a lot of sense. So many people wasting so much time is extremely expensive for the USA. And all of that waste is created because a couple of corporations bribe politicians to make public services worse. (And probably because the goverment can say that they "saved" money by not spending what is required to make it less wasteful).

comrade1234 2y ago

In the past I’ve been happy with the irs. One year I had to sell a domain to Sony because they trademarked it and so I could no longer use it for my initial purpose. I got a decent amount of money and included it as income. A few years later I got a letter from the irs saying it should have been classified in some other manner and here is your refund. But lately they’ve been terrible. With every correspondence i send I get a letter months later saying they got my letter/form/etc but haven’t had time to review it yet. This goes on for over a year before it’s resolved. They’re sitting on lots of refunds for me…

synergy20 2y ago
same here, one year after i got a similar letter, nothing occurred, it's really slow.
newZWhoDis 2y ago
Meanwhile my grandfather went through hell with them when they lost a $250k check they demanded since he had to pay quarterly. He eventually won but they were threatening him with huge penalties for nonpayment and he had to get a lawyer.
SirFatty 2y ago
Are you managing/filing your own taxes, or do you use an tax accountant?
tfandango 2y ago
2 years ago my eFile was rejected because one of my dependents was already claimed. I have 3 dependents, and they offered no way for me to figure out what happened. The internet told me to file a fraud claim with the government and send that to the IRS, which I did and received no response. I had to print and send my taxes that year. They cashed my check immediately, and about 9 months later I was able to log in and see that I owed 0. That was it. I suspect they did nothing, but future returns were eFiled just fine.

WaitWaitWha 2y ago

Most nations I lived in, I got a bill or refund for taxes. In general it is "here is your bill/refund. If you disagree you have to prove you are right and we are wrong" - the government-prepared tax return model. It is not this "we know how much you supposed to pay, but you tell us first, then we will charge you interest and penalty if you guess wrong, and you have to prove you are right and we are wrong" - the self-assessment model. The government-prepared tax return model does work well for most simple returns. As soon as it gets a bit more complex it becomes an issue. there is also a concern with separation of duties, missing deductions, and the fight to get correction remains. Finally, government math is about as safe as bathing with piranhas with a bloody nose. Maybe a hybrid solution?

simpaticoder 2y ago

I worry that practical tips to deal with an unjust system, and success stories that demonstrate their use, undermine the will to fix the unjust system.

nfRfqX5n 2y ago

Seems crazy to pay for a financial advisor but not an accountant. My accountant is easily some of the best money I spend.

RajT88 2y ago

One time, I sold a bunch of stock options because my company was being spun off into an independent entity. "Use it or lose it" kind of situation. As part of the spin-off the company was also renamed. So it created a slightly weird situation, which caused a lot of trouble for me and my colleagues. That trouble was a bill for $12k (which at the time, I absolutely could not afford). Basically, the mix-up was the IRS thinking I had sold RSU's and not options, so they had 0 cost basis and they thought I owed them the money. I contacted my former company's HR department, and they said lots of people had the same issue, and they shared the message I should send to the IRS in response. So I printed out my correspondence with the former company explaining the issue, along with all the documents showing the cost basis, with a cover page explaining the tl;dr of the situation. The IRS sent me a couple months later the same bill for 12k with late fees - now totaling 13k. So I printed out again the entire package I had sent them before, including a new cover page (on top of the old one) saying, "Find enclosed the documentation I sent you before which explains clearly I do not owe you money". At this point it was 15 pages of materials. A few months later, I got a letter back which said in legalese something along the lines of not admitting to any error, but also at the same time saying I didn't owe the money. Weird, but I took it as a win.

yojo 2y ago

My takeaway from this is you can use the IRS as a CD that pays 7% per year! Reading through the blog post it seems like you could overpay your taxes by $10k, immediately amend your return, and get your money back with 7% interest a year later! I’m not actually advocating for this - I’m pretty sure it’d count as some form of tax fraud. But crazy that the IRS might offer the best safe(ish) interest rate.

xnx 2y ago
This is astounding to me. That is a fantastic return if guaranteed.

iJohnDoe 2y ago

Cool blog/theme. Anyone know the blogging software of theme used? Thanks.