5 ms·

Boy, do I have bad news for you. Edit: To be clear, as a sibling post said, the basic arithmetic is easy enough. It's the tax opinion stuff that is absolutely

Boy, do I have bad news for you. Edit: To be clear, as a sibling post said, the basic arithmetic is easy enough. It's the tax opinion stuff that is absolutely not deterministic. If your situation is even moderately complex, there's a vast number of ways to describe your deductions, each with different tax implications and multi-year requirements. I'm not talking about being Jeff Bezos, either. Is your spouse an independent contractor? Do you own a home? Do you have stock options? Do you have a home office? These alone are enough to make some pretty creative reporting situations.

BobbyTables2 5mo ago
I know my own taxes pretty well. I don’t follow the tax code changes but could fill out a 1040 form on my own. Even did for a short time. I use tax prep software because I do NOT want to worry whether I copied the amount from line C to line K correctly. The IRS forms are a nightmare! The postscript in PDF should allow something more sane than what we have today in IRS forms, but that’s just wishful thinking.
- Loudergood 5mo ago
  No, that's Intuit lobbying.
  - groundzeros2015 5mo ago
    Taxes are not objective. No software can reach into your life and classify your activies into legal categories.
- kstrauser 5mo ago
  I use to think that. I'm capable of putting numbers in a form correctly. A good tax preparer can point out things like "did you know that your specific commuting pattern entitles you to claim mileage?", or "the law says the way you have your working environment set up at home means you can deduct some of your utility bills", and so on ad infinitum. Basically, unless you get someone who has a deep knowledge of the law, if your tax situation is non-trivial (see my post above this) then you might be leaving money on the table. It's a terrible, idea to evade taxes. It's a fantastic idea to realize when you're paying more than you're legally required to so that you can fix it.
- LamaOfRuin 5mo ago
  The IRS's fillable forms do a perfectly fine job of copying values around and doing the basic arithmetic that they can automate.
crowcroft 5mo ago
I think it's a very common misconception among programmers that the law is a sort of natural language 'program' where you can consistently deduce that x input generate y output.
- kstrauser 5mo ago
  It sort of is, except that the entire law isn't defined in one place. "Hey, do I have a home office?" Well, "home" is defined over in this regulation, and "home office" is defined over there in that other regulation, and "having a home office" would normally mean this except for this case law that says it can also mean that when these other circumstances apply, and... These things are knowable, but unless you've spent some time studying it intensely, it's certain that you only know a fraction of the places where the program is written. If it's helpful, programmers should imagine that it's written in C. At a glance you can tell what something's doing, but once you study it you can find UB all over the place and suddenly it's hard to say what the right answer is until you know the intricacies of the compiler and the target platform. You can't really determine the exact behavior without all that information that lives outside the code. Now, once you have all that, you can surely reason through it all. But how many people actually know all that, or even realize which parts they don't know? "This is pretty straightforward" is a sure sign of someone who doesn't actually understand it well.
  - nerdsniper 5mo ago
    > except that the entire law isn't defined in one place > These things are knowable There are absolutely undefined, unknowable areas of law that are waiting on future SCOTUS decisions to be defined. Heck, we can’t even rely on past SCOTUS decisions. Even in extremely well-defined law like whether LEO’s have valid PC to search someone during a traffic stop, two different judges in the same district will disagree and appeals courts / state supreme courts can rule quite inconsistently. That’s by definition not just undefined behavior but also non-deterministic results.
    - kstrauser 5mo ago
      I agree. I just mean, you can pretty well know today's state, at least hypothetically. But you better be watching tomorrow's legal news to see if anything important changed.
groundzeros2015 5mo ago
That’s a true side fact, but that has nothing to do with how the software behaves once you input your answers.
mk12 5mo ago
And there are basic things that shouldn’t be subjective at all but that the IRS refuses to give a clear answer to, like if/how the SALT cap affects deduction for NIIT. There are at least 3 possible interpretations and no consensus.
- jmalicki 5mo ago
  That's because it's law, and the IRS doesn't get to decide that, courts do. There are parts of the tax code that mean different things in different parts of the US because of conflicting circuit court decisions that haven't made it to the Supreme Court.
gamblor956 5mo ago
Is your spouse an independent contractor? Do you own a home? Do you have stock options? Do you have a home office? These alone are enough to make some pretty creative reporting situations. Those questions all have discrete answers, including the much-misunderstood home office. The correct tax outcomes are very much deterministic, in the sense that the same inputs always result in the same outputs. It's simply that there are a lot of options to change the inputs (for example, choosing FIFO vs LIFO for stock sales, using an S-corp vs a sole proprietorship for a personal business). For example, the home office deduction is only available to individuals who have a home office that is used exclusively for their individual business, not as an employee for someone else's business (the only exception being for flow-through entities where the taxpayer is a shareholder/partner). The "exclusive use" is meant in the all-or-nothing sense. Use your office computer after hours for games? The home office deduction no longer applies. Uses the office space to store personal documents, or really any other activity except for the business activity? The HOD no longer applies. Don't have any income from that business activity you claim are doing in the home office? The HOD no longer applies. It's simply that enforcement is not deterministic, so people think they get away with a lot of positions that do not survive actual audits. Talk to an IRS agent that handles audits and you'll learn that a failed home office deduction claim is the #2 adjustment to the tax returns of white collar professionals.[1] At a relatively recent tax mixer, IRS agents from the Los Angeles branch office could only recall about a dozen cases in which the home office deduction actually survived an audit, out of thousands, and those taxpayers were extremely rigorous about following the rules to the letter (to the extent that all of them locked their home offices when they were not being used for work). [1] The #1 reason for adjustments to the tax returns of white collar professionals is attempting to claim business expense deductions without matching business income to deduct against. Technically, the home office deduction is one of these deductions, which is why it is #2 and not #1.
- s1artibartfast 5mo ago
  There are also a lot of non-deterministinc choices one can make. Things like carry forward losses or gains, that no algorithm could know. They depend on your personal plans for the future. You can make specific filing choices that have massive consequences on your future. There are choices like 83(b) elections that can save you tens of millions of dollars a decade in the future, contingent on the events after you file.

BobbyTables2 5mo ago

I know my own taxes pretty well. I don’t follow the tax code changes but could fill out a 1040 form on my own. Even did for a short time. I use tax prep software because I do NOT want to worry whether I copied the amount from line C to line K correctly. The IRS forms are a nightmare! The postscript in PDF should allow something more sane than what we have today in IRS forms, but that’s just wishful thinking.

Loudergood 5mo ago
No, that's Intuit lobbying.
- groundzeros2015 5mo ago
  Taxes are not objective. No software can reach into your life and classify your activies into legal categories.
kstrauser 5mo ago
I use to think that. I'm capable of putting numbers in a form correctly. A good tax preparer can point out things like "did you know that your specific commuting pattern entitles you to claim mileage?", or "the law says the way you have your working environment set up at home means you can deduct some of your utility bills", and so on ad infinitum. Basically, unless you get someone who has a deep knowledge of the law, if your tax situation is non-trivial (see my post above this) then you might be leaving money on the table. It's a terrible, idea to evade taxes. It's a fantastic idea to realize when you're paying more than you're legally required to so that you can fix it.
LamaOfRuin 5mo ago
The IRS's fillable forms do a perfectly fine job of copying values around and doing the basic arithmetic that they can automate.

crowcroft 5mo ago

I think it's a very common misconception among programmers that the law is a sort of natural language 'program' where you can consistently deduce that x input generate y output.

kstrauser 5mo ago
It sort of is, except that the entire law isn't defined in one place. "Hey, do I have a home office?" Well, "home" is defined over in this regulation, and "home office" is defined over there in that other regulation, and "having a home office" would normally mean this except for this case law that says it can also mean that when these other circumstances apply, and... These things are knowable, but unless you've spent some time studying it intensely, it's certain that you only know a fraction of the places where the program is written. If it's helpful, programmers should imagine that it's written in C. At a glance you can tell what something's doing, but once you study it you can find UB all over the place and suddenly it's hard to say what the right answer is until you know the intricacies of the compiler and the target platform. You can't really determine the exact behavior without all that information that lives outside the code. Now, once you have all that, you can surely reason through it all. But how many people actually know all that, or even realize which parts they don't know? "This is pretty straightforward" is a sure sign of someone who doesn't actually understand it well.
- nerdsniper 5mo ago
  > except that the entire law isn't defined in one place > These things are knowable There are absolutely undefined, unknowable areas of law that are waiting on future SCOTUS decisions to be defined. Heck, we can’t even rely on past SCOTUS decisions. Even in extremely well-defined law like whether LEO’s have valid PC to search someone during a traffic stop, two different judges in the same district will disagree and appeals courts / state supreme courts can rule quite inconsistently. That’s by definition not just undefined behavior but also non-deterministic results.
  - kstrauser 5mo ago
    I agree. I just mean, you can pretty well know today's state, at least hypothetically. But you better be watching tomorrow's legal news to see if anything important changed.

groundzeros2015 5mo ago

That’s a true side fact, but that has nothing to do with how the software behaves once you input your answers.

mk12 5mo ago

And there are basic things that shouldn’t be subjective at all but that the IRS refuses to give a clear answer to, like if/how the SALT cap affects deduction for NIIT. There are at least 3 possible interpretations and no consensus.

jmalicki 5mo ago
That's because it's law, and the IRS doesn't get to decide that, courts do. There are parts of the tax code that mean different things in different parts of the US because of conflicting circuit court decisions that haven't made it to the Supreme Court.

gamblor956 5mo ago

Is your spouse an independent contractor? Do you own a home? Do you have stock options? Do you have a home office? These alone are enough to make some pretty creative reporting situations. Those questions all have discrete answers, including the much-misunderstood home office. The correct tax outcomes are very much deterministic, in the sense that the same inputs always result in the same outputs. It's simply that there are a lot of options to change the inputs (for example, choosing FIFO vs LIFO for stock sales, using an S-corp vs a sole proprietorship for a personal business). For example, the home office deduction is only available to individuals who have a home office that is used exclusively for their individual business, not as an employee for someone else's business (the only exception being for flow-through entities where the taxpayer is a shareholder/partner). The "exclusive use" is meant in the all-or-nothing sense. Use your office computer after hours for games? The home office deduction no longer applies. Uses the office space to store personal documents, or really any other activity except for the business activity? The HOD no longer applies. Don't have any income from that business activity you claim are doing in the home office? The HOD no longer applies. It's simply that enforcement is not deterministic, so people think they get away with a lot of positions that do not survive actual audits. Talk to an IRS agent that handles audits and you'll learn that a failed home office deduction claim is the #2 adjustment to the tax returns of white collar professionals.[1] At a relatively recent tax mixer, IRS agents from the Los Angeles branch office could only recall about a dozen cases in which the home office deduction actually survived an audit, out of thousands, and those taxpayers were extremely rigorous about following the rules to the letter (to the extent that all of them locked their home offices when they were not being used for work). [1] The #1 reason for adjustments to the tax returns of white collar professionals is attempting to claim business expense deductions without matching business income to deduct against. Technically, the home office deduction is one of these deductions, which is why it is #2 and not #1.

s1artibartfast 5mo ago
There are also a lot of non-deterministinc choices one can make. Things like carry forward losses or gains, that no algorithm could know. They depend on your personal plans for the future. You can make specific filing choices that have massive consequences on your future. There are choices like 83(b) elections that can save you tens of millions of dollars a decade in the future, contingent on the events after you file.