[HN Gopher] TurboTax's 20-year fight to stop Americans from fili...
___________________________________________________________________
TurboTax's 20-year fight to stop Americans from filing taxes for
free (2019)
Author : lelandfe
Score : 759 points
Date : 2025-10-16 05:31 UTC (17 hours ago)
(HTM) web link (www.propublica.org)
(TXT) w3m dump (www.propublica.org)
| ChrisArchitect wrote:
| (2019)
|
| Some previous discussion:
|
| 2021 https://news.ycombinator.com/item?id=26060414
|
| 2019 https://news.ycombinator.com/item?id=21281411
| tomhow wrote:
| And some others, macroexpanded.
|
| _TurboTax's 20-Year Fight to Stop Americans from Filing Taxes
| for Free (2019)_ -
| https://news.ycombinator.com/item?id=34594832 - Jan 2023 (1
| comment)
|
| _TurboTax Tricked You into Paying to File Your Taxes (2019)_ -
| https://news.ycombinator.com/item?id=26102695 - Feb 2021 (306
| comments)
|
| _TurboTax's 20-Year Fight to Stop Americans from Filing Taxes
| for Free (2019)_ -
| https://news.ycombinator.com/item?id=26060414 - Feb 2021 (199
| comments)
|
| _FTC Is Investigating Intuit over TurboTax Practices_ -
| https://news.ycombinator.com/item?id=24409093 - Sept 2020 (194
| comments)
|
| _IRS Reforms Free File Program, Drops Agreement Not to Compete
| with TurboTax_ - https://news.ycombinator.com/item?id=21923220
| - Dec 2019 (448 comments)
|
| _TurboTax's 20-Year Fight to Stop Americans from Filing Taxes
| for Free_ - https://news.ycombinator.com/item?id=21281411 - Oct
| 2019 (447 comments)
|
| _TurboTax to charge more lower-income customers_ -
| https://news.ycombinator.com/item?id=20461169 - July 2019 (81
| comments)
|
| _TurboTax Uses a "Military Discount" to Trick Troops into
| Paying to File Taxes_ -
| https://news.ycombinator.com/item?id=19994118 - May 2019 (42
| comments)
|
| _Listen to TurboTax Lie to Get Out of Refunding Overcharged
| Customers_ - https://news.ycombinator.com/item?id=19870242 -
| May 2019 (44 comments)
|
| _TurboTax and H &R Block Saw Free Tax Filing as a Threat_ -
| https://news.ycombinator.com/item?id=19810981 - May 2019 (143
| comments)
|
| _Congress Is About to Ban the US Government from Offering Free
| Online Tax Filing_ -
| https://news.ycombinator.com/item?id=19613725 - April 2019 (696
| comments)
|
| _TurboTax Hides Its Free File Page from Search Engines_ -
| https://news.ycombinator.com/item?id=19758126 - April 2019 (262
| comments)
|
| _TurboTax Uses Dark Patterns to Trick You into Paying to File
| Your Taxes_ - https://news.ycombinator.com/item?id=19718284 -
| April 2019 (274 comments)
|
| _How the Maker of TurboTax Fought Free, Simple Tax Filing
| (2013)_ - https://news.ycombinator.com/item?id=19392673 - March
| 2019 (253 comments)
|
| _How the Maker of TurboTax Fought Free, Simple Tax Filing
| (2013)_ - https://news.ycombinator.com/item?id=13853150 - March
| 2017 (439 comments)
|
| _How the Maker of TurboTax Fought Free, Simple Tax Filing_ -
| https://news.ycombinator.com/item?id=5443203 - March 2013 (330
| comments)
| porridgeraisin wrote:
| Jeez, 13 years of history.
| Pikamander2 wrote:
| Yeah, there's been a lot of talk about it for years.
|
| What's especially sad is that some major progress was made
| toward having a free official system just a few years ago,
| but now it's being torn apart.
|
| https://www.pbs.org/newshour/politics/irs-moves-forward-
| with...
|
| https://home.treasury.gov/news/press-releases/jy2629
|
| https://apnews.com/article/irs-direct-file-tax-returns-
| free-...
| jameslk wrote:
| It seems their business model is more existentially challenged by
| LLMs these days. I'm waiting for the regulations preventing AI
| being used for taxes and legal counsel
|
| Edit: This is timely being on the homepage:
| https://news.ycombinator.com/item?id=45601230
| f33d5173 wrote:
| There are many things I would trust an AI with, but my taxes
| are not one of them.
| tempestn wrote:
| Certainly not to do your taxes, but they're useful for tax
| questions, as long as your verify the responses.
| Ferret7446 wrote:
| Taxes are actually not a bad problem for AI, because a lot of
| the final calculations can be easily verified/sanity checked.
| The AI won't be able to get away with any math errors, the
| issues you'll likely see are incorrect categorisation of
| income or suboptimal deductions. The substeps like
| categorisation shouldn't be too difficult to manually verify
| eloisant wrote:
| Don't use AI for tasks where you don't have the
| qualifications to verify that the result is correct.
| nickjj wrote:
| The problem is if you need to verify everything you might
| as well do it yourself.
|
| I'm not convinced an AI will ever know how to distinguish a
| personal and business expense from a CSV dump of your
| credit card too.
|
| If you're going to go down the rabbit hole of creating a
| CSV, you can already parse and categorize it pretty easily
| without AI. I've built and have been using
| https://github.com/nickjj/plutus for a bit now and I've
| gotten quarterly taxes down to less than 10 minutes.
| adestefan wrote:
| We've taken the one task that computers are inherently good
| at and somehow made it worse.
| dguest wrote:
| I agree, tax prep will probably be done by AI soon, for better
| or worse.
|
| On the other hand, there's a broader business model here:
| lobbying to obfuscate mandatory government paperwork so that a
| 3rd party service is practically a requirement. It's not
| difficult to see AI companies expanding into that industry.
| sfn42 wrote:
| Literally the only reason to use "AI" (it's not actually AI
| so we should stop calling it that) is to inflate the profits
| of LLM companies.
|
| We already have reliable systems that do these things in the
| rest of the world, not to mention TurboTax already does it in
| the US without LLMs.
| itake wrote:
| this seems to fall into the category of Intuit offering AI
| (RAG/MCP + tuned base model) and not people directly going to
| chatgpt for half-baked advice (and still needing to fill out
| all the forms and perform hand calculations themselves)?
| zkmon wrote:
| I never understood why the Revenue can't provide a set of simple
| online forms for tax returns like India does. Heck, India
| provided Excel sheets with VBA script for many years, that
| produced an XML which can be submitted as tax filing. Tax filing
| is now a 15-minute affair for a salary-only income in India.
| jameslk wrote:
| The complexity is a feature not a bug. If you have more
| complexity, you have more opportunities for loopholes. Those
| loopholes are currently used by those wealthy enough to hire
| creative firms to help them get through them and minimize owed
| taxes
|
| If there's one outcome I really hope from AI automating work,
| it's taking away the advantage the monied class has in this
| regard. Then perhaps there's less purpose for the complexity
| dennis_jeeves2 wrote:
| >The complexity is a feature not a bug. If you have more
| complexity, you have more opportunities for loopholes. Those
| loopholes are currently used by those wealthy enough to hire
| creative firms to help you get through them
|
| Agreed that the complexity is a feature but it's not for the
| rich ( though the rich will take advantage of it, and why
| not? ) . It's mostly for the powers that be. If there were a
| 'flat' tax ( and one could argue what constitutes a flat tax)
| the rich will be more willing to pay that flat tax.
|
| I'd say complexity support a very large govt, keeping several
| people employed including accountants, tax software companies
| etc. It serves the parasite class.
| DiogenesKynikos wrote:
| The tax brackets are not what make taxes complicated.
| Knowing how to categorize different types of income is what
| makes taxes complicated.
|
| The flat tax would not make tax preparation any bit easier.
| They only thing it would do would be to eliminate
| progressive taxation. In other words, the rich would pay
| less. The poor would pay more.
| smcl wrote:
| This is exactly correct. That said, I'm quite surprised
| how many people struggle to understand how progressive
| tax bands/brackets work. It maybe doesn't help that the
| (right wing) media often portray them dishonestly (i.e.
| claiming that a 50% tax band starting at $100k/year means
| you would pay $50k/year in tax if you earn $100k/year)
| Terr_ wrote:
| > portray them dishonestly
|
| Tangentially, the same motivated-disinformation occurs
| with Social Security.
|
| It's best-understood as an insurance-policy (OASDI is
| literally named that way) against dying poor and
| old/orphaned/disabled. With an insurance policy, it's
| _normal_ for my month 's premium to be spent on somebody
| else's current tragedy, it's _normal_ for me to expect no
| cash if the Bad Thing never actually happens to me, and
| it 's _normal_ that there 's no asset for me to pass on
| to my heirs.
|
| However wall-street bankers can't make tons of profits
| competing under that model, so instead they try to trick
| citizens into misunderstanding what the model is. They
| want people to think it's a government-managed investment
| account instead, where every person is filling an
| individual bucket of "their" money that will someday be
| tipped back out for them.
|
| With this deception, their job is much easier: They just
| need to say that they'll be a nicer manager of the
| accounts than the government is, because they'll give you
| more choices for managing "your" money. It's dishonest
| because the two things are fundamentally different in how
| they work and what they're good for.
| fn-mote wrote:
| > The flat tax would not make tax preparation any bit
| easier.
|
| This is absolutely not true in the USA. Income from
| different sources is taxed differently.
|
| Example: The forms distinguish between short term capital
| gains, long term capital gains, and e.g., income from
| government bonds is taxed differently at lower levels of
| government.
| dennis_jeeves2 wrote:
| >The flat tax would not make tax preparation any bit
| easier.
|
| there are many way to 'define' a 'flat' tax. My way would
| be a fixed sum. Not a fixed rate. ( yes the rich pay the
| same as poor) This would ofcourse have it's own if/buts
| but it would eliminate 90%+ complexity.
|
| The ideal situation would be be no income tax and many
| other forms of taxation.
| DiogenesKynikos wrote:
| A fixed sum is impossible. It would have to be so low
| that everyone could pay it, no matter how poor. It's
| basically a proposal to eliminate government (meaning
| anarchy, chaos, and inevitably the rise of some new order
| that will, of necessity, go back to a more rational
| system of taxation).
| Terr_ wrote:
| > If there were a 'flat' tax [...] the rich will be more
| willing to pay
|
| That's just because moving from progressive-taxation to a
| flat-tax _reduces how much they pay_!
|
| The "simplicity" of the math done by their usual accounting
| firm that does their taxes for them is irrelevant by
| comparison.
|
| _________
|
| To illustrate why the burden shifts, suppose the nation of
| Elbonia needs a constant $540 to operate, and it moves from
| a progressive tax to a flat tax. This
| year, progressive taxation, rising %: 90
| peasants each earn $10 and are taxed 20% -> $2 per peasant.
| 10 nobles each earn $90 and are taxed 40% -> $36 per noble.
| Total collection is $540. Next year, flat tax,
| same % for all: 90 peasants each earn $10 and
| are taxed 30% -> $3 per peasant. 10 nobles each
| earn $90 and are taxed 30% -> $27 per noble.
| Total collection is $540.
|
| It should be no surprise that most of the Elbonian nobles
| are "willing" to see that change happen. Meanwhile, the
| peasants that are already living paycheck-to-paycheck have
| to plan how to cut back on luxuries like keeping their
| teeth.
| themafia wrote:
| It's worth pointing out that the Treasury takes in tax
| revenues throughout the year. The sources of that income
| are:
|
| 50% Payroll Income Tax. 35% Social Security Taxes. 7%
| Business Taxes. 7% Excise Taxes.
|
| 70 years ago they were:
|
| 25% Payroll Income Tax. 25% Social Security Taxes. 25%
| Business Taxes. 25% Excise Taxes.
|
| I think the priority is fixing this distribution to
| levels which were historically perceived as being more
| fair. The wealthy are one problem. The oversized
| corporations are the everlasting machine which drives
| them.
| AnthonyMouse wrote:
| Excise taxes are effectively sales tax but only on
| specific products. This is less economically efficient
| than broad-based taxes unless the thing you're taxing is
| something you're specifically trying to discourage (e.g.
| cigarettes) rather than having the purpose of generating
| revenue, but since 1955 the government has become more
| inclined to ban things it doesn't like than tax them.
|
| In a global economy higher business taxes just cause
| large international corporations to incorporate in a
| different jurisdiction, which gives them an _advantage_
| over smaller purely domestic corporations, which is bad.
|
| Social Security is _already_ taking in less money than it
| 's paying out. Reducing the Social Security tax would
| imply reducing Social Security benefits, since that's
| where it goes, unless you're proposing a more significant
| reform of the system in general.
|
| The size of corporations and the amount they're taxed are
| two entirely different things. Indeed, the tax code does
| a lot of things to encourage corporations to be _larger_
| , like taxing dividends and capital gains after corporate
| income has already been taxed, which creates a tax
| preference for leaving the money inside of an existing
| corporation rather than investing it in starting a new
| competitor.
| themafia wrote:
| > In a global economy higher business taxes just cause
| large international corporations to incorporate in a
| different jurisdiction, which gives them an advantage
| over smaller purely domestic corporations, which is bad.
|
| This is the common wisdom. I doubt it. The legal system
| in the USA is worth paying for. If these companies really
| want to submit to European law, then, they're welcome to
| it. I don't think that loss actually hurts domestic
| businesses but helps the massively.
| AnthonyMouse wrote:
| Companies are subject to the laws in all the places they
| do business. They pay income tax in the place they have
| net income, which is something that they control
| themselves.
|
| Corporate income tax is essentially designed wrong.
| Property tax is where the buildings are, payroll tax is
| where the workers are, sales tax is where the customers
| are, corporate income tax is where the _profit_ is. Which
| they just put in the country with the lowest taxes.
|
| It's basically this: Employees in the US get paid $1B to
| design a product that employees in China get paid $1B to
| manufacture and then it gets sold to customers in Europe
| for $3B. The net profit is then $1B, but _where_ is it?
| If the subsidiary in Ireland pays the subsidiary in
| California $2B for the design then it 's in California.
| If they instead pay the subsidiary in Shenzhen $2B to
| manufacture it then it's in China. If they instead pay
| them each $1B then it stays in Ireland. And then the
| company picks based on whichever one has lower taxes.
|
| There is no real way around this because in real arms
| length negotiations it would depend on which subsidiary
| has more _leverage_ against the others, but in modern
| companies what that really comes from is the strength of
| the company 's brand or customer lock-in as a result of
| patents or copyrights, since without them the profit
| would be negligible because there would be no barriers to
| competitors entering the market and causing razor-thin
| margins, but all of those things are easy to move into
| whatever jurisdiction you like since they only exist on
| paper.
|
| So international corporations pay taxes in Ireland and
| purely domestic corporations pay taxes in California
| which puts the domestic corporations at a disadvantage
| when the taxes in California are higher.
| potato3732842 wrote:
| To get accurate numbers you need to scale either the
| before or after numbers to reflect changes in the
| effective overall tax rate over the time period.
|
| You also need to look at overall tax burden, not just
| federal. It used to be that the states levied taxes and
| did stuff. Now mostly what happens is that the feds levy
| taxes and piss it back onto the states in the form of
| grants to do qualifying stuff.
|
| IDK how this distorts the percentages but it certainly
| does.
| themafia wrote:
| I disagree. This is a way of looking at _where_ the
| government funding comes from or it's a way at looking at
| the _share_ of burden by source. The overall tax rates
| don't actually matter in this case and only implicate how
| that share is distributed within the group.
|
| The point I'm trying to make is businesses used to carry
| a more significant fraction of federal spending during a
| period where they had less overall influence relative to
| the citizen.
|
| Now we're inverted. Businesses have excepted themselves
| from most of the costs leaving that burden to the
| citizen, but we live in a country where business needs
| are put well ahead of the citizens.
|
| The bigger picture is what matters here.
| AnthonyMouse wrote:
| > That's just because moving from progressive-taxation to
| a flat-tax _reduces how much they pay_!
|
| That's what everybody says but then you look at effective
| tax rates in real life and the highest ones are paid by
| people like doctors rather than billionaires because the
| complicated system is the thing that allows the
| billionaires to pay less.
|
| Meanwhile you don't need a complicated marginal rate
| system to get a progressive effective rate curve. Just
| give everybody a tax credit in a fixed amount and then
| use the same rate for everyone. Here's your table when
| you do that: 90 peasants each earn $10
| and are taxed 42.5% and receive a $2.25 credit -> $2 per
| peasant, effective rate 20% 10 nobles each earn $90
| and are taxed 42.5% and receive a $2.25 credit -> $36 per
| noble, effective rate 40%.
|
| These numbers, of course, assume that as in your example
| you need the _average_ effective rate (by earnings) to be
| 30%. By comparison, for example, US federal receipts as a
| percent of GDP have been stable at ~17% of GDP since the
| end of WWII (and were dramatically lower before that).
| Your numbers would be more in line with what would happen
| if both federal _and_ all state taxes (including e.g.
| property tax) were replaced with this system.
| Terr_ wrote:
| > people like doctors rather than billionaires
|
| That's not a progressive-tax brackets versus flat-tax
| thing.
|
| That's a "having different rules for different ways of
| making money" thing.
|
| > the complicated system is the thing that allows the
| billionaires to pay less
|
| Something true of a parts is not necessarily true of the
| whole, and vice-versa. The reason billionaires pay less
| than we might expect comes from relatively simple
| factors, not because the tax-code is too complex for poor
| people to get the same result.
| AnthonyMouse wrote:
| > That's a "having different rules for different ways of
| making money" thing.
|
| That's the thing which is a consequence of the existing
| complexity, which in turn is a consequence of trying to
| do brackets by income.
|
| A flat rate tax is you collect VAT on everything no
| exceptions, send everyone a check in a fixed amount as
| the credit to make it progressive no exceptions, and
| you're done.
|
| Different marginal rates is oops, if you use VAT then
| rich people have poor people go to the store for them so
| you have to use income tax and track everybody's income.
| But some people get income from investments and then it's
| not realized until they cash out, which allows a bunch of
| fancy tax dodges, but trying to tax unrealized gains has
| a bunch of other serious problems like liquidity and
| valuation. Also, you didn't really mean to tax everyone's
| retirement savings, so now you need a bunch of stuff like
| 401(k) to undo the thing you didn't really mean to do,
| and now you have some more complexity. And it continues
| like this until you turn around and doctors are paying
| higher taxes than billionaires because billionaires have
| more resources to navigate all the complexity.
| jimmydddd wrote:
| Another issue is that super wealthy folks don't get their
| money from regular wages. They borrow money from banks
| using their assets (e.g., stocks) as collateral. They pay
| back the loan at relatively low rates. The borrowed money
| is not taxable income.
| potato3732842 wrote:
| >That's just because moving from progressive-taxation to
| a flat-tax reduces how much they pay!
|
| They would be more than willing to be flat taxed at their
| current rate because it would still save them the hassle
| and the stress and the uncertainty.
|
| Now, it would likely reduce what they pay eventually,
| because if you flat taxed the whole populous at their
| rate there'd be a new government pretty quick, but that's
| not the point.
| 6510 wrote:
| The numbers for Elbonia are unlike the US but you can use
| numbers to say all kinds of magical things.
|
| US median income $75,000
|
| top 10% $149000
|
| top 5% $352000
|
| Which is 203000 more, therefore half of the top 10% must
| earn $101500 less than $149000 to have an average of
| $149000 which is only $47500 which is 0.6 times median.
|
| If you tax them 40% they have only 0.36 times median
| left.
|
| See?
|
| top 1% $749000 is 397000 more than the top 5%, therefore
| 4/5 of the top 5% earns $99250 less than $352000 which is
| only $252750 which is only about 3 time median.
|
| top 0.1% $3312693 is 2563693 more than the top 1%,
| therefore 9/10 of the top 1% earns $284854 less than
| 749000 which is only 464145 which is only about 6 times
| median.
|
| I don't know where all the money went but it isn't here.
| Terr_ wrote:
| I have no idea what you're trying to demonstrate with
| this.... this 1+1=3 Chewbacca Defense.
|
| Moving from a progressive-tax to a flat-tax (with the
| same total receipts) will lower the tax-burden on one
| group and raise it on another. You don't even need
| numbers to understand it: It's the same as how leveling a
| see-saw will result in one end moving up and one end
| moving down.
|
| ___________
|
| To offer a specific critique:
|
| > top 10% $149000
|
| Correct, $149,000 is the hypothetical income of a single
| person sitting in between the bottom 90% and the top 10%
| of income. Every single person in the top 10% earns
| $149,000 or more per year.
|
| > therefore half of the top 10% must earn $101500 less
| than $149000
|
| No, something has gone Very Very Wrong with your
| reasoning by this point.
|
| It is literally impossible for anybody in the 10% to earn
| _less_ than the lowest-earning member of the group.
| bni wrote:
| AI will increase the complexity even more
| dguest wrote:
| Maybe the AI will create a level playing field and make the
| tax prep / loophole industry collapse.
|
| Or maybe the free models will start responding with
|
| """ It looks like you're asking for help with tax
| preparation. I recommend our designated AI tax service [link
| to service that asks you to upgrade your plan or pay a one-
| time fee]. """
|
| They are operating free models at a loss now, but at some
| point they are going to have to turn a profit. At that point
| tax prep becomes a revenue stream for AI as well.
| saagarjha wrote:
| Using AI to do your taxes seems like a quick way to get
| into a bunch of trouble.
| ibizaman wrote:
| Not if the IRS verifies using the same AI. Actually, it's
| probably twice the trouble.
| potato3732842 wrote:
| >Actually, it's probably twice the trouble.
|
| Plus interest and fees (they can't call them fines
| because then you'd have rights), so call it triple to be
| safe.
| _heimdall wrote:
| Please don't allow a computer to guess, one token at a
| time, what you tax liability is or how to fill out the
| forms properly.
| ta20240528 wrote:
| This is incorrect: the wealthy don't use loop holes. They use
| incentives explicitly enumerated in the tax code.
|
| What else is an incentive for, but that the government wants
| you to use it?
|
| Hell, Google got pre-approval from the IRS for their Dutch
| Sandwich tax structure.
|
| Most poor people don't read the tax code. They should.
| defrost wrote:
| ~ Kerry Packer, before House of Reps Select Committee on
| Print Media, November 1991.
|
| ( https://www.youtube.com/watch?v=e97kq2XflKE )
|
| It's still largely maximising what can be pushed through
| unintended loopholes.
| smaudet wrote:
| Most poor people don't read*
|
| They should.
|
| Of course, this is not to say they always are stupid or
| illiterate, it's again usually just another form of
| exploitation, they don't have (or feel they don't) time to
| read it.
|
| Which is arguably explicit exploitation/enslavement - the
| Walmart door greeter doesn't have a difficult job, however
| their role doesn't allow them to do anything that would
| benefit themselves. I wouldn't care if they were reading
| their phones or a book, but noo... can't have the peasants
| educating themselves.
|
| And they aren't paid enough, so when they return home, they
| likely don't have any time after needing to perform meal
| prep, taking a second job, etc.
|
| The USA is a third world country in many respects.
| victorbjorklund wrote:
| They could still live side by side. You could still have a
| system where you have simplified filing where for 99.99% of
| the people you can just pretty much fill in one or two fields
| of what you made and something like that and even maybe get
| this data directly from the employers. That's how it works in
| Sweden. And then for the people who have complicated
| business, you could have a more complicated form where you
| need to hire a lawyer or accountant to do it. This is just
| assuming you don't care about whether or not there are
| loopholes for people. Like that's a political decision maybe
| more, because I guess the people defending them would say
| that there are good reasons they exist and you know wealth
| creation and so on. But it makes no sense to make it so
| complicated for people who have very simple lives where they
| have one employer who is paying them a salary and that's it.
| _heimdall wrote:
| My entire life (in the US) there has been the idea floated
| that our tax code should be simplified to the point where
| filing can be done on something the size of a postcard.
|
| We absolutely could do that, but the government has no
| incentive to do so. At least in the US, taxes are a form of
| control, a source of power for those in charge, a political
| chip for elections, and a mechanism to further the wealth
| divide. Taxes _are not_ primarily meant to fund our
| government, and definitely don 't include goals related to
| making the average person's life easier.
| mrguyorama wrote:
| This idea is "floated" by the exact people who make taxes
| complicated in the US.
|
| Every time they insist they want to "simplify" taxes,
| they demonstrate that what that means is just another tax
| break to wealthy businesses.
|
| The DOGE team shut down a simple tax filing system the
| IRS had freely made available.
|
| It's republicans. Stop saying "Government" when _it is
| republicans_
|
| Form 1040 isn't even complicated! But republicans have
| convinced millions that the IRS is going to black bag
| them for missing a decimal point somewhere.
|
| Guess what! The IRS is not funded enough to care! They
| will send you an automated form saying "We fixed it for
| you, here's how much you owe/are getting back". _You can
| even ignore that letter_ and you won 't end up in prison!
| They just seized a couple of my state tax returns!
| tzs wrote:
| Much of the complexity is to close loopholes. Many things in
| the tax code start out fairly simple, then people find ways
| to use them in ways that were not intended, and then the
| simple thing becomes complex as additional rules are added to
| try to fix that. This can iterate and what started out as a
| couple of sentences that most people knew what they intended
| becomes a few pages of convoluted rules.
| throwaway667555 wrote:
| It's so easy that _one man_ creates an Excel 1040 every year.
| See https://sites.google.com/view/incometaxspreadsheet/home
| bilekas wrote:
| The tax system in the US is complicated, you've got different
| state taxes as well as the federal, for example if your kids go
| to a different state for school than you live, add that your
| partner might work in another state, maybe they have different
| relief taxes for disasters through the year. It might very well
| be a feature but it is complicated, and the more activities you
| have, maybe investments, a small business, multiple jobs. It
| becomes overwhelming for non accountants.
| zegl wrote:
| Many other countries have figured this out since the early
| 2000s, the US could do it as well if they wanted to.
| Thlom wrote:
| We got pre-calculated returns as an alternative in the
| early 90's, by the time I got my first real job in the
| early 00's everyone used the pre-calculated one and just
| made changes as necessary. The first years I got my tax
| return in the mail and I think a few years I had to mail
| back a signed copy, but these days everything is digital
| and if you don't have to make any changes you don't have to
| do anything at all.
|
| Back then you also had to physically deliver your tax
| deduction card to your employer so they could deduct tax
| correctly, but these days that is also digital and salary
| systems just fetches the current deduction card before
| running salary jobs every month.
| xnorswap wrote:
| Sometimes I think the most exceptional thing about the USA
| is exceptionalism.
|
| Solutions to problems that are solved elsewhere are pushed
| back against, because "The USA is fundamentally different".
|
| Other countries have states too. The UK even has a country
| with an entirely different legal system (Scots Law), but we
| still make our collection of income tax system simple.
|
| A "complicated tax system" (if that is the root cause) is
| not something that is impossible to change. It is within
| the gift of the government(s) to change that.
|
| The lack of appetite for change is the result of decades of
| lobbying for the status quo to continue.
| graemep wrote:
| I half agree with you in that the UK makes the tax system
| administratively easy for most individual tax payers.
|
| That said, i think the system as a while is far too
| complicated. The application is simplified, but the rules
| are far too complex.
| smaudet wrote:
| A 1040 form, while intimidating looking, is trivial to
| fill out. Once you've done it a couple times, it takes
| about 5 minutes.
|
| The only arcane bit is the law. The tax prep software
| knows which forms to use for which financial detail.
|
| If the law were written clearly, there would be no need
| at all for any special software, you could fill out a
| couple csv files and send an email...
|
| Even without the law, you are right, the actual flow of
| the tax prep software, for most people, is something a 16
| year old could probably cobble together in an afternoon
| or two... however the problem then becomes how to provide
| a public service at low cost (to cover hosting/bandwidth
| costs) while govt funds are explicitly forbade to be
| used.
|
| To me the solution is obvious - a third party non govt
| player that receives specific allotment of funding, no
| questions asked. However, see the rampant issues with
| lobbyists mentioned in the article...
| xnorswap wrote:
| "tax prep" isn't something I've had to ever think about
| for the UK system. I don't have to buy software, I don't
| have to pay anyone. I get my wage, it has my taxes taken
| out. That's it. I don't need to keep receipts, I don't
| need to work out how much mortgage interest I've paid,
| etc.
|
| My individual situation is calculated, by the tax
| authority and rolled into a "Tax code" which acts as the
| personal allowance. This then feeds into payroll which
| pay you net of tax.
|
| If at the end of the year, the tax authority (not you,
| this is automatic without a form being filled in) spots
| an over or under payment, they adjust your tax code for
| the next year to recoup or refund the difference. No
| cheques in the post, no forms to fill in. Just
| automatically happening in the background.
|
| Meanwhile for the US, I need to fill in 2555, 1040, and
| other forms. These aren't "5 minutes", they're slow, and
| more importantly error-prone, as they get you to add up
| different numbers rather than just asking for the
| information needed.
|
| No human should ever have to answer the series of
| questions ( this is legit, from the current 1040 ) :
| 24 Add lines 22 and 23. This is your total tax
|
| Where Line 22 is: 22 Subtract line 21
| from line 18. If zero or less, enter -0-
|
| Line 21 is of course: 21 Add lines 19 and
| 20
|
| And 18 is: 18 Add lines 16 and 17
|
| Where 17 is: 17 Amount from Schedule 2,
| line 3
|
| Where that is an entirely different form.
|
| The only purpose I can tell for this ridiculousness is to
| give scope for people to make mistakes.
|
| A form should collect raw information, not put the burden
| of calculation shouldn't be on the form-filler in a world
| where computers exist.
|
| The data is already on the form. What purpose can that
| solve except opening up a possibility for someone to
| accidentally commit tax fraud?
|
| You're missing the point suggesting it should be "a
| couple of CSV files". No, it shouldn't be any filing at
| all.
|
| Demand change, demand simplification of the tax system,
| and demand zero-filing solutions for regular employees.
| smaudet wrote:
| > Meanwhile for the US, I need to fill in 2555, 1040, and
| other forms. These aren't "5 minutes", they're slow, and
| more importantly error-prone, as they get you to add up
| different numbers rather than just asking for the
| information needed.
|
| For the many forms, yes of course it takes longer.
| However, from the W2 to the form, if you are familiar
| with both, it is many steps to be sure, but the process
| itself doesn't take long.
|
| I don't mean to hold up the 1040 as some shining example
| of how to write a form.
|
| Merely, the steps look involved, but usually boil down to
| several of the same number in multiple boxes, and a
| couple additions/subtractions. If you do it purely by
| hand, there is a high chance for clerical error, yes,
| with automation as simple as a calculator, it's much
| simpler.
|
| You usually get the 1040 as part of the "preview" of the
| tax prep software. When you compare the actual steps
| involved in the 1040 vs the overly long, overcomplicated
| process in the tax software, it's obvious that there is a
| large amount of fluff involved.
|
| Sure, there are some credits it might remember that you
| might not, but that's about the only reason I would think
| tax prep software is better here... however this could be
| accomplished by something as simple as a checklist
| provided by the govt...and if you are paranoid you could
| employ a lawyer to double check that every option has
| been explored (how do you know the tax prep software know
| every credit from this current year? You don't, so, what
| exactly are you paying for?)
| adestefan wrote:
| It's become worse since 2017 when they changed the 1040
| to make it "shorter." All they did was move everything to
| different forms so now it's an insane process of
| shuffling numbers back and forth across many forms.
| crote wrote:
| Sure, but what about the >95% of the population which _doesn
| 't_ fall under weird edge cases?
|
| Why doesn't the US provide a free 10-minute online wizard for
| _them_ , like plenty of other countries are already doing?
| hgomersall wrote:
| Even the complex cases fit into an overarching tool. Most
| people in the UK don't submit tax returns because they
| don't have any income beyond their salary. Even if you do,
| you then use the tool which asks you a series of questions
| like "do you have a student loan?" and "did you receive any
| dividend income?", then you have to fill in some next level
| detail if those are true. I'm sure there are people with
| weird tax arrangements that need to work outside of the
| wizard, but I'd wager it was less than 1 in 1000, and those
| people tend to have the money to pay for fancy accountants
| to do it for them.
| zkmon wrote:
| This is true for some European countries too. No tax
| filing is needed for salary only income. I don't remember
| when I filed my taxes last time.
| Ekaros wrote:
| Basically I only do mine in about 15 minutes, most spend
| on verifying what I actually paid for things. Because I
| go over of the basic deduction so I can deduct for
| workspace, internet and electronic equipment. But the
| workspace is going away so probably won't bother after
| this year.
|
| Everything else is fully automatic.
| graemep wrote:
| You also only need to fill in a tax return if you have
| income (or capital gains) above a threshold. SO having
| some interest paid on a savings account etc or a small
| side business or selling an asset at a small profit above
| what you paid for it does not mean you have to make a tax
| return.
| hylaride wrote:
| I'm not sure how it is in the US, but in Canada a huge
| amount of low-income benefits are directly tied to filing
| your taxes. Most Canadians experienced this in our
| college years when we got GST (our VAT) refunds due to
| being low-income adults.
|
| Canada recently announced that they're going to go for
| automated tax filing and it turns out the biggest cost
| may not be implementing it, but that they'd end up having
| to pay out a lot more in benefits to low income people
| that don't file.
| graemep wrote:
| To be clear, i was talking about the UK.
|
| > Most Canadians experienced this in our college years
| when we got GST (our VAT) refunds due to being low-income
| adults.
|
| VAT refunds for people on low incomes is something we
| have in the UK. I think we should!
| mcherm wrote:
| Because it is (or was it the time this article was written)
| against the law. The company that owned the tax preparation
| software lobby to Congress to pass a law requiring that the
| IRS _not_ provide a free and easy way for people to submit
| their taxes.
| runako wrote:
| This program was called IRS Direct File[1], and DOGE/the
| current administration killed it.
|
| 1 - https://en.wikipedia.org/wiki/IRS_Direct_File
| tchalla wrote:
| Many other countries also have complicated taxes and are able
| to provide a better user example to non accountants. The US
| isn't special.
| Beretta_Vexee wrote:
| I know French people who live near the Swiss border and who
| file their tax returns in a matter of minutes because all the
| information is pre-filled via their employer's income
| statement and their bank.
|
| They are two different countries, and Switzerland is not a
| member of the EU.
|
| When French bureaucracy is simpler and more efficient than
| your tax collection system, you have a problem.
| Xss3 wrote:
| This american exceptionalism is such a meme. You aren't
| special.
|
| The propaganda must be pretty special to have you so
| convinced though.
| smaudet wrote:
| It's a combination of diet and education.
|
| If you want to understand the first, take McDonalds - you
| probably have one and don't think it's that bad? Imagine
| everything on the menu is either 10 times sweeter
| (sickening), or made with wilted products on the cusp of
| expiration, and that's "standard" food.
|
| It's so bad, many Americans hate anything "healthy" because
| any time they are exposed to it, it's not much better than
| pigs swill. So there are many who will only eat meat,
| because that is harder to make taste poorly, despite being
| even more disease riddled (there are almost no standards
| for meat inspection).
|
| So then, you are constantly sick, low energy.
|
| And then education - suffice it to say there are many
| communities where it is seen as "reasonable" to believe in
| nonsense like "flat earth", and many struggle with basic
| things like addition. It's a wonder we aren't illiterate
| too... I suppose it's too useful to be able to read about
| products to buy them, so we can at least all read the
| adverts...(for now)
| skeletal88 wrote:
| You are not special, other countries have complex tax systems
| too and have figured it out, but you just refuse to and make
| excuses
| ZenoArrow wrote:
| > I never understood why the Revenue can't provide a set of
| simple online forms for tax returns like India does.
|
| Did you read the article? The TL;DR summary is that the US
| government has proposed doing this in the past, but has been
| lobbied against it by companies that seek to profit from
| software to help prepare tax returns.
| eloisant wrote:
| The whole point of the article is to answer to that question.
| rurban wrote:
| They do provide the forms, you simply fill them out. I did that
| every year without consulting any specialist or extra services.
| Much easier than in Europe. It was a 20min affair.
| graemep wrote:
| The UK has online forms for this, even for businesses, but is
| moving away from this as part of "Making Tax Digital" - i.e.
| they are axing paper forms to doing away with the online
| equivalents as well.
|
| Then again, most people here who have salary only income do not
| have to fill in a tax return at all - only if they have certain
| types of income (self-employment, capital gains or investment
| income) above a threshold.
| gerdesj wrote:
| I've been doing Self Assessment for 25 years. In the first
| few years it was fill in a colourful paper form which won
| awards for clear English etc. Nowadays it is online with many
| details pre-filled in. At the end you can download a .pdf
| that looks exactly like the paper form or not bother.
| rwmj wrote:
| That's for personal tax returns. For businesses, the new
| MTD stuff is all through commercial partners.
| Amezarak wrote:
| They do, it's called free fillable forms. If you have salary-
| only income that's about how long it takes.
|
| https://www.irs.gov/e-file-providers/free-file-fillable-form...
|
| Tax prep software exists for people with more complicated tax
| situations and people who are unwilling to add and subtract a
| couple of numbers. The 1040 form is not complicated and anyone
| can use it to file their taxes for free.
| tzs wrote:
| Something like ~40% of US individual taxpayers only need to
| file a form 1040 [1] for their federal tax return.
|
| Another large group will need that plus a small number of other
| forms, most of which will be easy to fill. For example if they
| are getting a tax credit to help with health insurance costs
| there is form for that. That one's easy to fill out because you
| will be mailed a report that contains the information needed
| for the form. The report is in a standard format, and the
| instructions will be of the form copy line X form the report to
| line Y of the form.
|
| If your income is just salary plus some investment income from
| investments like mutual funds you don't have enough deductions
| to be worth itemizing [2], it generally is pretty
| straightforward.
|
| [1] https://www.irs.gov/pub/irs-pdf/f1040.pdf
|
| [2] In the US you have a choice between "itemizing" your
| deductions, which means you have to list all of them, or taking
| the "standard" deduction, which is around $15k for a single
| person and around $30k for a married couple. Around 90% of
| people take the standard deduction.
| roxolotl wrote:
| They were rolling out a free service over the past few years
| that was getting solid reviews and plenty of people used[0][1].
| One of the top priorities[2] of the Trump administration and
| DOGE was to prevent that and it has been since shut down[3] and
| partly open sourced[4].
|
| 0: https://www.vox.com/future-perfect/24071005/irs-direct-
| file-...
|
| 1: https://www.investopedia.com/early-reaction-to-the-new-
| irs-f...
|
| 2: https://apnews.com/article/irs-direct-file-
| musk-18f-6a4dc35a...
|
| 3:https://www.cnbc.com/2025/07/30/irs-chief-says-agency-
| plans-...
|
| 4: https://github.com/IRS-Public/direct-file
| shepardrtc wrote:
| They do, IRS Direct File: https://directfile.irs.gov/
| BHSPitMonkey wrote:
| You mean they did, but the Trump administration and GOP
| passed a provision to begin eliminating the program earlier
| this year.
| jopsen wrote:
| Paying to file taxes, and then getting you tax refund as an
| Amazon gift card -- that's very American :)
| zkmon wrote:
| What? I just googled, and found it is actually a real thing.
| Holy molly! Has Amazon become a federal system for distribution
| of money and goods? What next? coupons for burgers, Netflix
| credit?
| saagarjha wrote:
| I assume this is done by the company, not the IRS.
| Steve16384 wrote:
| But where is the company getting the refund from?
| edm0nd wrote:
| I think its usually like a person is due to receive a
| $1,000 refund and the company they did their taxes
| through will give them the offer to immediately get an
| Amazon gift card for $800 instead of waiting for fed and
| state refunds to hit their bank accounts.
| CSMastermind wrote:
| In the US it's legal for the person filing the taxes on
| behalf of another person to collect the refund for them.
|
| This allows tax prep companies to give people 'instant
| refunds' (essentially loans for the expected refund
| amount) so people don't have to wait weeks for the IRS to
| send them a check in the mail.
|
| The IRS only pays out via check or direct deposit but the
| company who did your taxes can pay out in cash, gold, or
| pokemon cards if they want to.
| jopsen wrote:
| It's also awesome how the tax prep companies can
| advertise the cost as nothing, because you'll make it up
| in your refund. And they'll happily let you pay for their
| service using the refund.
|
| So much fun :)
| limabeans wrote:
| It reminds me of the movie The Fifth Element with all the
| company advertising everywhere, seemingly tied into
| government operations.
| timeon wrote:
| Boring dystopia.
| alexandru_m wrote:
| Why does the US have a tax prep industry in the first place?
|
| In every other country in the world, taxes are handled by their
| respective financial authorities.
|
| Why must every service and thing in the US must be a private
| profit making thing?
| ta20240528 wrote:
| Yip, consider how much money banks make by injecting themselves
| between you and the reserve bank.
| scott_w wrote:
| This is a very different situation. If you're interested, I'd
| recommend reading Can't We Print More Money by staff at the
| Bank of England (https://www.amazon.co.uk/Cant-Just-Print-
| More-Money/dp/18479...).
|
| The short answer is central banks are not setup to offer
| services directly to the public.
|
| This is different to the tax office in that _people already
| need to interact directly with it!_ Anyone in the UK _can_
| fill out a Self Assessment, for example, however it 's
| optional for almost everyone, because Pay As You Earn takes
| the tax off your employer instead.
| janwl wrote:
| Can't you file your taxes for free in the US if you know how?
| willis936 wrote:
| That's why GP said "tax prep". Anyone can download and submit
| a 1040. That isn't the part that takes domain expertise.
| janwl wrote:
| I don't know why assume that in every country in the world
| that is free. In my European country until 15 years ago or
| so you had to hire someone to do your taxes for you, and
| currently the free method only works for the most simple
| tax filing. In fact what you get is called a "draft" of
| your tax filings because you're supposed to make sure it's
| okay, and it's your responsibility if you miss something or
| if the draft is wrong.
|
| And obviously the draft usually assumes that you will have
| to pay more tax, since there's a perverse incentive given
| it's the government who fills it for you.
| bloomca wrote:
| Yes, you can download the form 1040 and fill it by yourself,
| you'd need a few Schedules attached. They all have
| instructions available online, your work has to send you a
| copy of everything they paid you and into the IRS (regular
| jobs always err on the side of overpaying), and while it is
| not hard, it definitely looks intimidating and takes time to
| understand, especially the deductions.
|
| You can also just not file your taxes, if you don't owe
| anything (and as I said, jobs always err on the side of
| overpaying) they won't bother you, but most people end up
| eligible for the tax refund, so it is more beneficial to pay
| for that service.
| reactordev wrote:
| Sad part is, when I started working, this was normal. My
| father showed me how to do it. I did it for a few years and
| then TurboTax came along and I used that for free. Then
| they rug pulled me into a deluxe one year because I had
| 1099 income and ever since I've been jailed into paying if
| I want to use them. 1099 or not.
| jayknight wrote:
| Switch to freetax USA. I have 1099 income and it's still
| free.
| reactordev wrote:
| Besides the point. The point I was making is that because
| I had one year of 1099 income in the past, I was
| paywalled into paying. I no longer use TurboTax as my tax
| needs have changed. Thanks though but I wasn't soliciting
| for alternatives.
| bluGill wrote:
| I used to do that every year. It wasn't hard. However one
| year I forgot to copy line 12b from form 9876 to line 34c
| of form 5432 and when the IRS caught that I had a big
| mess to clean up (since state taxes copy federal taxes so
| I had to refile state with the corrected numbers...). Now
| I just pay a small fee to FreeTaxUSA (I figure they
| deserve some money for their efforts in creating
| software).
|
| One thing I can say for sure: doing taxes with a computer
| takes me longer than filling out the paper forms by hand!
| There are so many delays while "calculated" (as if a ghz
| computer can't add numbers fast), and loading question
| pages that I can obviously skip (I never worked for the
| rail road, I'm not blind...) but take extra time because
| of how they setup the UI.
| btreecat wrote:
| > You can also just not file your taxes, if you don't owe
| anything (and as I said, jobs always err on the side of
| overpaying) they won't bother you
|
| From the IRS website:
|
| >Who must file >Most U.S. citizens or permanent residents
| who work in the U.S. have to file a tax return. >Generally,
| you need to file if: > Your income is over the filing
| requirement > You have over $400 in net earnings from self-
| employment (side jobs or other independent work) > You had
| other situations that require you to file
|
| Not sure if your intent was to discourage filing, but it
| read that way to me.
| SoftTalker wrote:
| Most people with a job have to file. If you're due a
| refund and don't file to claim it, probably they won't
| bother you but technically you could be penalized for
| failure to file on time.
| sgerenser wrote:
| IRS says you are "required to file", but in reality the
| only penalties for non-filing are as a percentage of the
| amount of tax owed. If no tax is owed (and in fact you
| are owed a refund), then there are no penalties for not
| filing.
|
| OTOH it would be a pretty dumb move since the chances
| that the amount taken out of your checks was exactly
| right is very small, and you'd be leaving hundreds or
| thousands of dollars in refunds unclaimed.
| tdeck wrote:
| I have done this a few times, but for me it takes several
| hours and I always am worried I have made a mistake. If you
| have simple investments you can still run into confusing
| things that are very hard to follow.
| SoftTalker wrote:
| That's what I do. It's really not very difficult if you
| don't have a complicated income situation. Even with some
| self-employment I found it straightforward. Once you've
| done one year, subsequent years are very similar (but read
| the bulletins that talk about "what's new this year"
| because there are always differences.
|
| The spreadsheet downloadable at
| https://sites.google.com/view/incometaxspreadsheet/home (no
| affiliation) is helpful to avoid math errors and get the
| entries from the various schedules into the proper place on
| the main forms.
| mrguyorama wrote:
| >and while it is not hard, it definitely looks intimidating
| and takes time to understand, especially the deductions.
|
| Even this is overselling it.
|
| Most people have _ZERO_ deductions to deal with. You put in
| your W2 pay, you take the standard deduction, and you file
| and get your money back.
|
| Next time you use something like turbotax, download the
| forms it generates and _look_ at them. There 's zero
| complexity. Turbotax doesn't _do_ anything. It 's literally
| filling in 14 rows of numbers that come directly from your
| W2.
|
| Hell, turbotax purposely runs fake animations and makes you
| waste a ton of time saying "Oh we are looking for all these
| deductions" but it's all a lie. None of the animations
| actually do anything. Most of the deductions it is
| supposedly checking for would _Never_ apply to someone with
| a normal job. They want you to think it 's complicated.
| They will ask you questions they _know_ the answer to just
| to waste your time. Every single year, TurboTax asks me if
| I 'm eligible for the earned income tax credit, and every
| single year, TurboTax knows from the previous questions
| that I cannot possibly be eligible. They ask me anyway,
| because it _seems_ like a complicated credit so it makes
| taxes seem more complicated.
|
| Taxes could take less than 15 minutes for nearly all
| Americans. Turbotax's bullshit, even disregarding the
| stupid tax they are charging the whole country just to
| _copy some numbers from column a to column b_ literally
| _wastes everyone 's time_ every year.
|
| People who insist that taxes are complicated are flat out
| wrong. If you run a small business, you absolutely have the
| choice to just file extremely simple taxes and pay a higher
| tax rate. It is a _choice_ to attempt to take every
| possible deduction. Each and every one of those deductions
| is a handout to business owners. They bitch and moan about
| how bad taxes are, but their taxes are complicated _so that
| they can make more profit_.
|
| Guess what? Nobody forces you to run a business, which
| again, is a handout to capital owners. A few hundred
| dollars in permits or registration every year is a
| perfectly valid cost to enable you to take advantage of the
| _insane_ benefit of "you can literally cause hundreds of
| deaths but as long as you weren't obviously grossly
| negligent you are in the clear". Nobody forced you to
| attempt to take every single handout offered every single
| year. Nobody forced you to be your own boss, to _own
| capital_ , to profit off of the labor of others.
|
| Such entitlement. These same people will turn around and
| cry about "freeloaders" and "welfare queens" and "handouts"
| benjijay wrote:
| Land of the f(r)ee
| bayindirh wrote:
| This is the greatest comment I have seen in a very long time.
| Kudos.
| TimTheTinker wrote:
| My wife and I have visited several European countries, and I
| just don't agree. Switzerland is the land of many fees,
| followed by Iceland and other nordic countries. Germany,
| France, and the UK are also expensive. The going "low" price
| in Iceland right now for petrol is $8.74 USD/gallon.
|
| (Did you know that most of the public transport in the UK is
| owned by German and Dutch companies? They can rack up prices
| with little consequence.)
|
| The US has gotten more expensive to be sure, but IMO most of
| our high-cost problems stem from consolidated industries with
| regulatory capture (healthcare, farming+food+pesticide, tax
| prep, etc.) and low wages for the bottom 50%, not fees.
| DiogenesKynikos wrote:
| The tax preparation industry exists in much of the world.
|
| Taxes are simple if you live in one place and only receive
| income from your employer. If you have multiple sources of
| income, connections to multiple countries, etc., things can get
| very complicated very fast. That's why the tax prep industry
| exists - and not just in the US.
|
| That being said, the Internal Revenue Service could prepare the
| taxes of most Americans. A simple system of, "Here's what we
| think you owe, based on the information we have on hand - sign
| and submit if you agree" would work for most people.
| wood_spirit wrote:
| Right, when the Europeans say the tax is paid as you earn and
| the authorities let you file differences free and easily,
| they mean the vast majority of tax payers. It is rare to be
| the exception.
|
| Whereas I guess American Exceptionism (tm) means you all have
| to pay a rent seeking company to file taxes...?
| DiogenesKynikos wrote:
| That only works if all of your income comes from your
| employer, and is thus reported directly to the financial
| authorities and subject to withholding.
|
| It is not that rare at all for Europeans to have other
| sources of income, and thus to have to file their own
| taxes.
| rsynnott wrote:
| In Ireland, and I think many other countries, if you have
| under 6k non-employment income, it's ~trivial; you fill
| in a form on the website. It only gets complicated over
| that (though you would still typically do it all online;
| the form just gets _a lot_ scarier)
| krige wrote:
| As an European with multiple sources of income, all that
| boils down to is literally excel style fill in the boxes
| deal. There's even free tools that can handle the simple
| formulas if I don't trust my calculator enough. 1 hour a
| year at absolute worst; definitely no space for a
| finacial parasite to latch onto.
| avalys wrote:
| Yes, and what do you think it is like in the US? It works
| exactly the same way.
| DiogenesKynikos wrote:
| You have a very simple tax situation. Many people do not.
|
| In the US, if you just have wage/salary income and an
| investment account, and you lived the entire year in one
| state, your taxes are also very simple. You can fill
| everything out yourself in one evening, or pay $100 to do
| it with tax preparation software.
|
| But things can rapidly get complicated. Did you move from
| one state to another during the year? Do you live in one
| state but work for an employer in a different state? Are
| there any credits or deductions you're eligible for? Or
| god forbid you live abroad, at which point you're dealing
| with double-taxation treaties and the like.
| Nursie wrote:
| In the UK, for example, if you are a simple case (PAYE
| employee, no other sources of income) they just do it, you
| never interact with HMRC _at all_ in the ordinary procession
| of things. You may get a yearly summary form (P60) but that
| 's about it.
|
| Here in Australia everyone must fill in an annual return, but
| it's a fairly well automated online system and they're
| probably already already have most of the fields filled in,
| you just need to add anything more complicated or any
| deductions you think you're owed.
|
| In both systems you can have an accountant file for you, or
| use other software, but you don't need to and most British
| people will never file a single return in their lives.
| bloomca wrote:
| > A simple system of, "Here's what we think you owe, based on
| the information we have on hand - sign and submit if you
| agree" would work for most people.
|
| They already do that -- if you calculate your taxes wrong,
| they will send the adjustment (they will do it both ways, pay
| you back or ask for the remainder). I guess they might not be
| aware of all the deductions, but standard deduction beats
| itemized one for the majority, so they can 100% automate this
| whole process if they decide to. For complex cases and
| businesses, sure, you are on your own, but at least most W2
| should be covered.
| djoldman wrote:
| Yes, but tax filers have potential civil and criminal
| liability risk if they make a mistake.
|
| Presumably much less if one pays more than the IRS
| calculates is owed.
|
| Essentially both the IRS and tax filers verify correctness
| of the tax filer's return and the tax filer can be
| prosecuted if they make a mistake according to the IRS.
| fn-mote wrote:
| > Yes, but tax filers have potential civil and criminal
| liability risk if they make a mistake.
|
| How is this an issue? Why would it be different under
| another system?
|
| I see you posting a lot of what I think are pro-tax-prep
| messages but they don't seem to have any substance.
| Please try to take them to the conclusion of an argument.
| (That is, finish by connecting the facts you are posting
| with some assertion about the desirability of the current
| system, or some assertion the parent has made.)
| djoldman wrote:
| Apologies.
|
| What I mean to highlight is that although a mistake in
| filing may lead to the IRS rectifying the mistake by
| sending/requesting the error balance, there are other
| possible effects, including civil and criminal
| liabilities.
|
| This is _undesirable_. As mentioned in many comments
| here, the vast majority of filers, especially those with
| one employer and no substantial investment income, should
| not be required to file their taxes and instead the IRS
| should communicate the calculation result and ask if the
| filer disagrees.
|
| This is a classic problem related to the "you slice, I
| choose" false dichotomy[0]. Essentially, even assuming it
| costs zero time to fill out and file a tax return, any
| mistake at all could lead to a negative consequence to
| filer.
|
| As an aside, always choose to choose and not to cut the
| cake :)
|
| [0] https://en.wikipedia.org/wiki/Fair_cake-cutting
| Delk wrote:
| I suspect failing to report significant income to the tax
| authorities would be considered tax fraud in just about
| any legislation. If there weren't any kind of a potential
| penalty for failing to report or for significantly under-
| reporting, doing so would be potentially beneficial with
| no drawbacks.
|
| Failing to report income or reporting false information
| for financial gain can lead to extra tax or prosecution
| for tax fraud where I live. I'd definitely be careful to
| report all income if I had income from sources that don't
| automatically withhold taxes, especially if it were
| significant.
|
| I don't think they'll drag you to criminal court if you
| make a small mistake, though. But if you fail to report
| thousands of euros of income and the authorities get wind
| of it, sure, especially if it seems intentional.
|
| I don't know if the risk of prosecution or other legal
| consequences is somehow greater in the US.
| mitemte wrote:
| In Australia, if you work in multiple places and at multiple
| companies, it's still trivial to file your own taxes. You log
| in to the government portal, where the collected amounts of
| tax from each income source, including bank interest, is
| listed. It can get more complicated if you have your own
| business but for the majority of people it's easy and doesn't
| require a third party.
| vel0city wrote:
| Australia has a progressive tax structure, right? If you
| have multiple income sources how does each source know the
| proper withholdings? How do they know what deductions
| you'll be eligible for or are wanting to take?
| Skinney wrote:
| If it works anything like what we've got in Norway, they
| take a rough percentage, and once every year when the
| taxes are filed, the IRS equivalent charges or repays the
| missing amount.
| fn-mote wrote:
| I don't understand how these could be issues. They aren't
| in my country.
|
| You're still responsible.
|
| Tell each company how much to withhold.
|
| If they take too much, you get it back when you file
| taxes.
|
| If they don't take enough, you pay a penalty for having
| too large of a bill when you file.
|
| The issues you mention exist regardless of how many
| employers you have, because you can have income that does
| not come from an employer (e.g. stock dividends).
| vel0city wrote:
| This sounds the same as the US then. If you have more
| than one income source or you're planning on taking
| something other than the standard deduction you need to
| tell your income sources to change withholdings. If they
| take too much, you get it back when you file taxes.
|
| What's the big difference? You don't need a tax preparer
| to do your taxes in the US, and if all you have is a
| normal W-2 income and a bit of bank interest its a pretty
| simple couple of forms to file.
| Delk wrote:
| It's hard to tell if there's much of a difference or not
| since I don't really know the US system (and I'm, in all
| likelihood, from yet another country different than GP).
|
| The simplest cases, however, don't really require filing
| forms _at all_. The withholding process sounds similar,
| and when the time for filing taxes comes, you get a pre-
| filled return sheet with withheld taxes and your pre-
| calculated actual tax based on the information the tax
| office has.
|
| Employers directly report income to the tax office, so
| that information is already included. Banks also
| automatically withhold taxes on the interest they pay and
| report it to the tax office. I think banks and broker
| companies usually report sales of stocks etc. made
| through them as well.
|
| The same pre-filled return sheet includes national and
| local income taxes that have been automatically
| calculated based on your place of residence. (I assume
| this is more complex in the US due to different state
| legislations; here the tax legislation is the same
| everywhere even though local tax rates vary.)
|
| If you don't want to add deductions (in addition to
| standard ones) and you don't have any corrections to
| make, you don't need to file any forms. The only things
| you need to do are to pay the difference if you owe
| something or to report your account number for a refund
| if they don't have it already. Otherwise filing in a
| simple case is a no-op.
|
| If you do want to file for deductions or make
| corrections, you can do that with an online form.
|
| And of course you still do want to check that the pre-
| calculated information is correct and whether there are
| any non-automatic deductions for which you're eligible.
|
| More complex cases are, well, more complex. If you've got
| income from renting an apartment, for example, you do
| need to report that information yourself. But it's still
| a relatively simple online form.
|
| Real estate tax is handled separately from income tax.
| You get sent a bill with a pre-calculated sum based on
| property registered in your name. If you have no
| corrections to make, you just pay the bill.
|
| In contrast, I think even small businesses commonly hire
| accountants since for them the process is probably more
| complex with all the deductibles etc.
|
| If the simple cases are similarly simple in the US and
| making corrections is a relatively straightforward form
| away, I wonder why there always seems to be such a big
| fuss in the US about filing taxes. Because of state/local
| differences in tax code? Just overall complex
| legislation? Or maybe it's just more common to have
| income from a variety of sources so more people need to
| deal with the more complex cases? Is the filing process
| paper-only and the only way to do simple online filing
| with automatic calculation to go through commercial tax-
| filing software?
| Nursie wrote:
| In the UK you get a code based on last year's earnings,
| which the company uses to set a flat rate of withholding
| on each paycheck. If there's any discrepancy that usually
| just feeds into next year's code.
|
| In Australia, you probably need to tell the companies
| about the other income sources, and they will attempt to
| withhold at the appropriate rate. Then at the end of
| financial year, you go to your pre-filled online tax
| return which has all the figures reported by each company
| you work for already present and sums up whether there's
| a refund or payment due. This is also where you enter any
| deductions.
| gdulli wrote:
| > "Here's what we think you owe, based on the information we
| have on hand - sign and submit if you agree"
|
| That implies the government would know significantly more
| about my life and my day to day affairs. That sounds like it
| would be a privacy nightmare.
| Ryokurin wrote:
| How exactly? Currently, you report your earnings, your
| employers report what they've paid you, and banks report
| specific transactions. How does simplifying/eliminating the
| deduction process (which is all that an accountant is
| doing) give the government more info about you?
| gdulli wrote:
| This one government agency would need to know the
| superset of everything about you that could possibly be
| reported on any tax form. The simple case breaks down
| quickly. If taxes were redesigned to become overall much
| simpler, then sure, the reporting could be much simpler
| and more passive for the filer.
| wredcoll wrote:
| Nobody is suggesting they create a government super
| computer that does every single person's taxes perfectly.
|
| They're suggesting letting the irs actually use the
| resources they already have to automate the vast majority
| of the people's taxes to save everyone time and money.
|
| It doesn't have to be perfect to be a huge improvement.
| macNchz wrote:
| Businesses paying people already file copies of the W-2s
| and 1099s that they send to their employees with the IRS,
| meaning that, for a very large chunk of Americans, the IRS
| already knows everything needed to fill out their tax
| forms.
| pavlov wrote:
| Having lived in both the US and several European countries,
| America is already the privacy nightmare because all your
| data is with corporations who can do absolutely anything
| with it. European-style effortless automatic tax filing
| certainly wouldn't make it any worse.
|
| (Also it's rather ironic that people who think like you
| have been voting for the party which is currently enabling
| Palantir to build Chinese-style surveillance in America.
| But as long as the data is owned by billionaires and they
| promise to only use it against the "others", I guess it's
| fine.)
| bigtunacan wrote:
| No, they would know exactly what they know now. Employers
| already report your earnings to both the federal and state
| IRS agencies and pay your withholdings automatically
| adjusted for your dependencies. So a simple form that says
| you made X and claimed Y dependencies. Click submit to
| confirm...
|
| That would be simple enough for most people (1 job, 1 home,
| maybe some kids) and it doesn't require the government to
| know anything additional.
|
| In that most common scenario no tax accounting service
| should be needed. Honestly a 1040 isn't that complicated in
| that scenario either, but is still too difficult for a good
| number of people and it's just unnecessary.
| gdulli wrote:
| There is so much more to filing taxes than earnings. Yes,
| if all I had was a W-2 this would be trivial.
|
| And if all you have is a W-2 you don't experience most of
| the complexity of filing as it stands now anyway.
| runako wrote:
| > the Internal Revenue Service could prepare the taxes of
| most Americans
|
| IRS Direct File[1] did exactly this. It apparently worked
| really well, and people liked using it, netting ~$20 billion
| in savings to the Americans that used it (roughly half of
| that came out of the pockets of the tax-prep industry).
|
| Then, DOGE got to it and the new administration's IRS
| commissioner killed the program.
|
| 1 - https://en.wikipedia.org/wiki/IRS_Direct_File
| yodsanklai wrote:
| > Why must every service and thing in the US must be a private
| profit making thing?
|
| Culture
| teekert wrote:
| Indeed, and tbh "work must be paid for" is not necessarily a
| bad thing. In the Netherlands we pay for our tax-software via
| our taxes (and I still spend about 250 eur on an accountant
| to do it for me, as it takes me a whole evening as an someone
| with a (small) company, I'm better of writing hours), is it
| the most efficient? I think not, judging from how much our
| government spends on IT projects that fail. There are a lot
| of hidden costs.
|
| That said, the lobbying is really bad of course, probably
| also prevents cheaper or FOSS alternatives.
| NelsonMinar wrote:
| wait until you hear about our healthcare middlemen.
| johnnienaked wrote:
| No other countries have tax prep services?
| rsynnott wrote:
| Most countries use some sort of PAYE system, so the average
| person will need to do little or nothing on tax.
| johnnienaked wrote:
| Every country I've ever lived in you had to prep and submit
| your own taxes. Never heard of that system.
| zinekeller wrote:
| If you happen to be an entrepreneur, a foreigner
| (relative to the country of work), or an American citizen
| (despite holding the citizenship you're on, thanks
| FATCA!), then, yeah, I can see why you have never
| encountered the simpler arrangements.
|
| If you're an ordinary citizen of most countries and work
| under a company, the company is obliged to track it for
| you. What you get is a very simplified form asking if you
| have more income sources than from your work, and the
| local tax system means that most of them legally do not
| have any (for example, banks collect the taxes for the
| interest you have received, not the arcane American
| system where you're the one responsible for that).
| rsynnott wrote:
| > a foreigner (relative to the country of work)
|
| In a PAYE system, merely being a foreigner isn't
| _usually_ an issue, provided that you're domiciled and
| don't have foreign income. The exception, as you mention,
| would be a US citizen; the US's approach to foreign
| income of its citizens is sufficiently weird that they'll
| generally have annoying tax situations.
|
| > What you get is a very simplified form asking if you
| have more income sources than from your work, and the
| local tax system means that most of them legally do not
| have any
|
| If even that. In Ireland, and I believe the UK, you only
| have to fill out that form if you actually _do_ have non-
| employment income which is not deducted at source. Most
| peoples' only interaction with Irish Revenue would be to
| claim tax credits on rent/mortgage/medical
| expenditure/whatever.
| johnnienaked wrote:
| >If you're an ordinary citizen of most countries and work
| under a company, the company is obliged to track it for
| you.
|
| So a W-2?
|
| >for example, banks collect the taxes for the interest
| you have received, not the arcane American system where
| you're the one responsible for that).
|
| So a 1099?
|
| I gotta be honest it sounds like you don't really
| understand the American tax system very well.
| avalys wrote:
| Yes, and this includes the US!
|
| When people say they are "paying their taxes", really what
| they're doing is checking whether the automatic tax
| deduction out of each paycheck was properly calculated over
| the whole year, and whether any special circumstances make
| them eligible for a refund (or whether they've had other
| income they need to pay tax on).
| bayindirh wrote:
| In my country, all my tax is deducted from my salary before
| reaching to me.
|
| For other things, I can go to a "Virtual Tax Office" with my
| browser or my mobile banking application and pay with cash or
| credit card, sometimes with zero interest installments, even.
| avalys wrote:
| This is exactly how it works in the US, too.
|
| The reason this topic continually comes up is that people
| in the US are stupid and bad at math, and the IRS is very
| heavy-handed and issues penalties for minor tax errors, so
| people are afraid to interact with the process without a
| trusted intermediary.
| bayindirh wrote:
| I mean, I don't file anything. For my car tax, I go to
| the site, enter my license plate, and a couple of other
| details, and the number shows up.
|
| I enter my credit card number, and pay. That's all.
|
| Same for other stuff like housing tax, too.
| bpt3 wrote:
| That's how it works in the US also, though personal
| property and real estate taxes are collected at the state
| and local level (if they exist, which is dependent on the
| state and local government).
|
| For most people in the US, filing their taxes is a very
| simple process, which is why it's so annoying that Intuit
| has successfully lobbied to integrate themselves into the
| process.
| wredcoll wrote:
| Literally none of this is true.
|
| The irs is neither heavy handed nor particularly quick to
| issue penalties.
|
| There is an extremely effective and powerful alliance
| between certain republican politicians and tax industry
| corporations that work to convince people taxes are hard
| and the gov can't do them and they need an agent.
|
| It works.
| avalys wrote:
| Okay, the official IRS policy is that you don't have to
| file taxes if you don't owe anything. What happens if you
| do not file your taxes, but the IRS believes you owe them
| money?
| wredcoll wrote:
| I mean, it depends if the amount is $10billion or $10,
| but generally they start by sending you a letter at
| wherever they think you live saying "hello, please write
| us a check for $x, thanks".
|
| Then they do that... again. At some point they probably
| put your name on some kind of list of Bad Taxpayers but
| unless we're talking millions here they probably aren't
| sending agents after you in specific.
| bell-cot wrote:
| Private, profit-making things are willing & able to "generously
| support" the politicians who enable their business models.
|
| Vs. public services and public servants? Not so much.
| test6554 wrote:
| Things that need work necessarily cost money. Someone doing the
| work for free is not inherently sustainable. Profits motivate
| work to get done all on its own. Profits by definition is money
| over and above expenses. So it creates a perpetual sustainable
| mechanism. Competition motivates quality and efficient pricing
| (eventually).
|
| Lobbying corrupts this a bit. However they are not lobbying to
| suppress private competitors only government-run competition
| that has no profit motive or competition. When the government
| runs it we still pay for it, except now people who don't use it
| also pay. Also wealthy people pay a disproportionate share as
| compared to their use due to progressive income tax.
|
| In theory anyone can start a company if they have a better or
| more efficient product or offering and get the profits instead.
|
| Thats the rationale in a nutshell.
| randallsquared wrote:
| The usual argument is that taxes are already paying for the
| collection of data and calculation of amount, so why can't we
| just use the figure already calculated by default? This is
| most true for W2 employees without any uncommon
| circumstances, but there would seem to be a lot of people
| covered under that.
| the_snooze wrote:
| It's a political challenge, not a technical one. There are
| constituencies that reap concentrated benefits from the
| current system (e.g., tax-filing services) while imposing
| disperse costs on everyone else. Also, there are those who
| believe that the IRS is out to get them, so filing your own
| taxes is more trustworthy than going with a government-
| issued pre-filled default. And that going through the
| motions makes the pain of paying taxes more salient, so
| you're more likely to complain about it.
|
| If you look at it as a practical or technical challenge,
| you're addressing the wrong question.
| CodingJeebus wrote:
| > However they are not lobbying to suppress private
| competitors only government-run competition that has no
| profit motive or competition.
|
| But there is a profit (or rather income generation) motive:
| taxation is what funds the government. Parceling this work to
| a private 3rd party means paying a bunch of salaries that are
| much higher than what government employees get paid,
| generating profit for the company that gets taken out of the
| tax revenue, which increases the cost of the service for end
| users or the government receiving income.
|
| Some politicians argue that government is inept and wasteful,
| and sponsoring no-nonsense projects that reduce middlemen in
| this process interferes with that narrative. If you got into
| office screaming that the government is your enemy, you're
| not going to support projects that make it easier for
| citizens to interact with the government.
| sofixa wrote:
| > Someone doing the work for free is not inherently
| sustainable
|
| This does not apply to government / public work that _has_ to
| be done anyways. Nor to any public service in general for
| that matter.
| thrance wrote:
| The 18F team was doing remarkable work devoid of all profit
| motives, before it was gutted by this admin. Americans are
| missing out on a lot of QoL improvements based purely on the
| false belief that private is always better than public. In
| France, they're rolling out a new system where your taxes are
| filed fully automatically, and you get a PDF in your emails
| with a one page recap, telling you to only contact the admin
| if you feel like something is wrong with the recap.
|
| Your take is the classic economist's "it works in practice,
| but does it work in theory?". Obviously tax filing works
| better when it's maintained by the government. You're severly
| underestimating the harmfulness of profiteering monopolies
| lobbying against any improvements and buying out the
| competition. Also, look at DOGE, with all the ruckus they
| made they just couldn't find that many inefficiencies. And
| for such "simple" software projects as a tax-filing platform,
| I just don't buy that private is better than public.
| wredcoll wrote:
| It seems worth while to emphasize that, while these are
| indeed arguments that are made, they're not actually _true_.
| rtkwe wrote:
| Most people's taxes don't actually need any real work 87+%
| just claim the federal deduction on there taxes these days.
| ernst_klim wrote:
| Citation needed.
|
| In Germany tax-prep industry is huge, there is a huge network
| of tax consultants plus paid online services like taxfix and
| smartsteuer.
|
| The only countries I lived which didn't require you to declare
| the taxes were Russia and Georgia, mostly because 13% and 20%
| flat tax rate respectively.
|
| Any country which does have complicated progressive tax system
| would require you to declare taxes at least at some cases.
| rcbdev wrote:
| Germany, as a de-facto vassal state of the US, is the
| exception that confirms the rule. This is an observation that
| comes from almost a lifetime of living in this region of our
| world.
| 256orbs wrote:
| Germany has ELSTER, which is a free government provided
| online service. I use it every year to fill in my tax
| declaration. It's not perfect but it works pretty good. Not
| so friendly for expats since it doesn't have
| internationalisation, so you need to know a bit of german (I
| use G translate).
| tirant wrote:
| ELSTER is available but it is extremely complicated to use.
| Not even my Tax advisor uses it directly. You must be the
| first person I've heard that uses it directly.
|
| For me not worth to use it having extremely good tools like
| the offering from WISO.
|
| In my opinion a complicated tax law is a direct attack from
| the State against low and middle income population. If you
| have low income and poor education you will not be able to
| make use of the tax law to increase your available income,
| something that high income citizens do daily.
|
| In this case we have to thank the free market to provide
| really easy tools for less than EUR30 so middle and low
| income citizens can start at least to take advantage of the
| tax law.
|
| I've lived in multiple countries and always did my tax
| report myself. And the German situation is so blatantly
| designed, compared to other countries, to benefit only a
| very small portion of the population.
|
| Not only that, If the amount of man/hours that the whole
| country of Germany spends doing taxes would be spent on
| productivity gains or just normal work, the country would
| become immediately the richest country in the world.
| Instead, it's just wasted effort and work.
| barbazoo wrote:
| I've used Elster to file my German taxes until I left the
| country. Very common to use that software directly.
| Probably not much fun though if one's situation isn't
| straight forward.
| 256orbs wrote:
| What does your Tax advisor use, post mail?
|
| "extremely complicated to use" well, that is something
| that you hear often from Tax advisors or tools for less
| than EUR30. Same FUD tactics.
| sofixa wrote:
| There is a world of difference between not having to declare
| taxes, and having an industry of tax filers.
|
| In France you have to declare taxes, but everything known to
| the tax authorities is pre-filled, leaving you to add any
| special incomes/deductions that didn't come trough regular
| channels that get automatically reported.
|
| You still have tax consultants to help you optimise if there
| are higher revenues, but it's a very niche service.
| MikeNotThePope wrote:
| The IRS actually knows everything, too. They just make you
| tell them what they already know.
| adestefan wrote:
| They helpfully send you letter when you screwed up, too.
| wredcoll wrote:
| There's a group of republicans who prevent them from
| doing anything else.
| bluedino wrote:
| Should the US employ enough people to file 160 million tax
| returns each year? (Just individuals not corporations)
|
| The tax code is a behemoth. Plenty of loopholes to find to save
| money.
|
| Also, most of the tax prep companies are thinly disguised
| payday loan companies.
| tokai wrote:
| Yeah they should.
| Philip-J-Fry wrote:
| I think the point is that the vast majority of people don't
| really have a unique tax situation. And all the data already
| exists. There's just no framework set up to allow this to be
| automated like there is in other countries.
|
| It should be the case that all your basic taxes get
| calculated for you and taken at the point you're paid by your
| employer. Anything exceptional should be able to be claimed
| back via a web portal somewhere.
|
| So it's not like 160m tax returns NEED to be filed. That's
| just how it is today.
| bluGill wrote:
| There are a lot less loop holes than in the past. In the
| 1950s taxes on the rich were 90% - but there were so many
| loopholes the rich in reality paid a similar tax rate to
| their peers today where the tax rates are lower, but there
| are also less loopholes.
|
| In the 1950s the common person couldn't take advantage of
| most loopholes (I'm not old enough to remember, but I'd guess
| mortgage interest was the only useful one, the rest where
| $100 here and there but it never added up to much for the
| common person)
| rtkwe wrote:
| Most of the tax code is irrelevant to 90+% of people. ~90% of
| people just claim the standard deduction every year, you have
| to be significantly well off or in an odd tax situation for
| itemized deductions to come out to more than the standard
| deduction.
| jrochkind1 wrote:
| One reason is that the US tax code is horribly complicated
| compared to anyone else, because we have tried to enact all
| sorts of social policy and subsidy through the tax code,
| because it was somehow more politically palatable to do it that
| way.
| doom2 wrote:
| If the government can determine that my taxes are wrong, then
| they know the amount I have to pay. So why can't they tell me
| the correct number up front? (Yes, I know the reason why, but
| I still feel like it's a valid question)
| TheJoeMan wrote:
| They can determine your taxes are "fishy" and then demand
| further documentation. Say you declared you sold a car and
| profited, but seemingly under-reported the sale price.
| They'd show up and demand to see the bill-of-sale, maybe
| contact the buyer, etc. How would the government know ahead
| of time what price you sold the car for?
| Tangurena2 wrote:
| Most fraud about car sales is to claim a lower price in
| order to skip on sales taxes collected by the states'
| motor vehicle agencies. Not all states charge a sales tax
| on individual-to-individual sales. Here in Kentucky, the
| state constitution says that taxes have to be charged on
| the assessed value, so part of the annual registration is
| based on the assessed value (min $100 for boats or $200
| for cars/trucks). I used to work for KY's Transportation
| Cabinet (combo DMV + highway dept).
| tempest_ wrote:
| I don't understand how this changes anything?
|
| How would they know now?
|
| These examples are silly, most people are not selling a
| car privately all the time and they can handle any
| reporting or changes when you transfer the ownership.
| mr_toad wrote:
| In many countries for the majority of the population they
| can and do determine how much tax should be paid, and many
| people don't have to file tax returns.
| gwbas1c wrote:
| I've always wondered if I could file some kind of freedom
| of information act request to get the IRS's opinion of what
| my taxes should be; and/or to get the source code to the
| IRS's program to calculate what their opinion of my taxes
| should be.
|
| ---
|
| That being said, my Dad worked for a few years at the IRS
| part-time before he finally retired. He loved it. (My Dad
| is one of those people who _enjoys_ taxes and finds them
| soothing.) I concluded that the IRS is a white-collar make-
| work program. It also leaks a lot of confidential social
| information, because he got to see all kinds of tax returns
| from all slices of economic status.
| rtkwe wrote:
| The issue is the government doesn't and shouldn't know
| every possible detail of your life so if you're in a
| complex tax situation (most people aren't and can just take
| the standard deduction) you'd still need to do the
| preparations. But for the vast majority of people the
| government does already know what you're taxes should be
| because you're just taking the standard deduction which 87%
| of people did in 2018 and that number has grown slightly
| since then. [0]
|
| For more complex cases where you have more deduction and
| income sources the government doesn't really know all the
| individual setups you may or may not qualify for and they
| only audit a small percentage of filers every year.
|
| The reason it's been blocked is a mess of ideological and
| economic. Ideological from people who interested that want
| to make taxes more annoying so people are generally more
| anti tax and then they get elected and make cuts to the top
| percentages/businesses permanent while the tax cuts for the
| majority of citizens are temporary. This sets up a debt
| crisis when those 'temporary' cuts are also extended they
| can use to leverage for government cuts. On the economic
| side there's a huge amount of money made each year by
| preparing taxes for people too intimidated by the
| complexity to DIY it. So they ally with the generically
| antitax side to keep their business going.
|
| [0] https://www.irs.gov/statistics/soi-tax-stats-tax-stats-
| at-a-...
| jrochkind1 wrote:
| What makes you think the government can determine that your
| taxes are wrong?
| dsr_ wrote:
| Every country enacts social policy and subsidy through the
| tax code; the US is not special that way.
|
| The US is special because the process of writing the tax code
| is corrupt. (Not uniquely corrupt, but certainly near an
| extreme among major countries.)
|
| The US is also special because it has 50 states, all of which
| have their own thoughts about taxes.
| greybeardgeek wrote:
| Not to mention the almost 5K local income tax jurisdictions
| in the US
| https://taxfoundation.org/research/all/state/local-income-
| ta...
| jrochkind1 wrote:
| I have read several articles suggesting that the US does
| this more than most other countries, has a more complicated
| tax code as a result, and that is one reason why the US
| doesn't have more automated collection like most other
| countries.
|
| But I don't have the articles at hand, and don't feel like
| an internet debate today, left as an exersize to the
| reader!
| rtkwe wrote:
| Most of that complexity does not matter for most people
| because the standard deduction is higher than you can reach
| through itemized deductions. Even home owners can usually get
| more via standard than going through the trouble of mortgage
| interest deductions.
| sgerenser wrote:
| Except for all those above-the-line deductions and credits
| that apply even if you take the standard deduction. Like
| the new tip tax credit and senior tax credit recently added
| to our already incredibly complicated tax code.
| rtkwe wrote:
| The tip tax credit is only for businesses though right?
| That's all I'm finding when I search for tip tax credit,
| so that's not a factor for individual filers. Senior
| credit is a bit more but it's still relatively simple to
| claim. That would also be pretty trivial under the
| government prepared initial return scenario too.
| bluGill wrote:
| Because most people don't know how simple doing their own taxes
| are. This is aided by a few people who have a complex situation
| and would have to have a real accountant do their taxes in
| every country.
| burnto wrote:
| But it's typically not simple. People often have some kind of
| life complexity that makes their taxes hard to confidently
| self-navigate here in the U.S.
|
| Receiving government assistance? Some kinds are taxable, some
| aren't.
|
| Moved states? You have multiple state filings now.
|
| Got married? divorced? Splitting custody or property? Special
| tax forms to fill.
|
| Native American? Veteran with disability? Senior? Student
| with loans? Bankruptcy? Freelance income? Etc.
|
| Normal life events turn into tax complexity consequences. And
| without expert help, it's hard to know if you're doing your
| taxes correctly, which adds stress and time.
| Spoom wrote:
| > Receiving government assistance? Some kinds are taxable,
| some aren't.
|
| One would think that the government should know what
| government assistance you're getting. In any case, taxable
| benefits get reported to the IRS automatically on form
| 1099-G.
|
| > Moved states? You have multiple state filings now.
|
| Arguably irrelevant. You can change how filings work
| federally without changing how state filings work. Perfect
| is the enemy of good, etc.
|
| > Got married? divorced? Splitting custody or property?
| Special tax forms to fill.
|
| Sure. Sometimes you have life events that happen where
| you'll need to make adjustments. Such possible events can
| be mentioned in the letter / email you get from the IRS,
| with details as to how to adjust the filing. This is
| typically how it's been done in other countries with
| automatic filing.
|
| > Native American? Veteran with disability? Senior? Student
| with loans? Bankruptcy? Freelance income? Etc.
|
| Income typically gets reported to the IRS on a 1099 or a
| W-2.
|
| Loan interest gets reported to the IRS on 1098-E, so the
| deduction could be automatically calculated.
|
| Presumably the IRS would know if you previously filed a tax
| exemption and could assume that hasn't changed if it's
| based on things like having registered membership in a
| federally recognized tribe. Even if you haven't filed that
| exemption before, presumably the government would know that
| you registered the membership.
|
| The government knows your birth date so presumably they'd
| be able to calculate when you become a senior, where that's
| relevant.
|
| Bankruptcy is one of those special cases that I'd expect
| would be an exception case where you'd need to adjust the
| filing (and your trustee would probably help with that).
|
| _Most people don 't have special cases that require
| changes._ The IRS already has a shockingly large amount of
| data on people. I encourage you to try getting your tax
| transcript some time[1], it should be illuminating.
|
| 1. https://www.irs.gov/individuals/get-transcript
| bluGill wrote:
| Most of those are another line on the form and read
| instructions. Some like moving states is hard but people
| don't do that often.
| gorwell wrote:
| You can do taxes for free most of the time. Millions of us do
| every year, and the IRS estimates that 70% of tax payers could
| file for free.
|
| > Why must every service and thing in the US must be a private
| profit making thing?
|
| It isn't. There are roughly 2 million nonprofits. "Nonprofit
| organizations play a significant role in the US economy. In
| 2022, there were 1.97 million nonprofits operating in the US"
|
| And there are endless government programs and millions of
| government employees. The federal government alone spends over
| $6 trillion of our money, and money we don't have, per year,
| and most of it is on mandatory social programs.
|
| "About 60% of all federal spending is categorized as mandatory
| spending -- which amounted to $3.8 trillion last year. This
| spending is essentially on autopilot because it funds programs
| whose eligibility rules and benefit formulas are set in law.
| This consists mostly of programs like Social Security,
| Medicare, Medicaid and Veterans care."
|
| https://usafacts.org/just-the-facts/budget/
| Tangurena2 wrote:
| > _Why must every service and thing in the US must be a private
| profit making thing?_
|
| This is a side-effect of the Protestant Work Ethic. Weber
| coined the term in 1905 as a way to explain why the Northern
| European countries (who were predominantly Protestants) were
| wealthy while the Southern European countries (who were
| predominantly Catholic) were poor. Prior to the election of JFK
| as US President, anti-Catholic sentiments were widespread
| throughout the US (which explains why Irish & Italians were not
| considered "white" until the early 20th Century). Even today,
| many Evangelicals do not consider Catholics to be Christians.
|
| > _Calvin taught that all men must work, even the rich, because
| to work was the will of God. It was the duty of men to serve as
| God 's instruments here on earth, to reshape the world in the
| fashion of the Kingdom of God, and to become a part of the
| continuing process of His creation (Braude, 1975). Men were not
| to lust after wealth, possessions, or easy living, but were to
| reinvest the profits of their labor into financing further
| ventures. Earnings were thus to be reinvested over and over
| again, ad infinitum, or to the end of time (Lipset, 1990).
| Using profits to help others rise from a lessor level of
| subsistence violated God's will since persons could only
| demonstrate that they were among the Elect through their own
| labor (Lipset, 1990)._
|
| > _Selection of an occupation and pursuing it to achieve the
| greatest profit possible was considered by Calvinists to be a
| religious duty. Not only condoning, but encouraging the pursuit
| of unlimited profit was a radical departure from the Christian
| beliefs of the middle ages. In addition, unlike Luther, Calvin
| considered it appropriate to seek an occupation which would
| provide the greatest earnings possible. If that meant
| abandoning the family trade or profession, the change was not
| only allowed, but it was considered to be one 's religious duty
| (Tilgher, 1930)._
|
| These 2 paragraphs also explain why many in the US have such an
| utter hatred for any sort of social safety net for poor people
| - those people are damned _in the Biblical sense_ and therefore
| it is a sin to give them any sort of money, food or healthcare.
|
| [0] - https://en.wikipedia.org/wiki/Protestant_work_ethic
|
| [1] - History of it: http://workethic.coe.uga.edu/hpro.html
|
| [2] - https://en.wikipedia.org/wiki/Anti-
| Catholicism_in_the_United...
| niwtsol wrote:
| This is a really interesting take I had not heard before. Any
| further reading or additional concepts you mind sharing on
| this idea?
| Tangurena2 wrote:
| Which one?
|
| During the Cold War, one criticism of socialists/communists
| was that they were taking orders from Moscow. Likewise,
| Catholics were presumed to be taking orders from Rome.
|
| > _Supporters of the Know Nothing movement believed that an
| alleged "Romanist" conspiracy to subvert civil and
| religious liberty in the United States was being hatched by
| Catholics. Therefore, they sought to politically organize
| native-born Protestants in defense of their traditional
| religious and political values._
|
| https://en.wikipedia.org/wiki/Know_Nothing
|
| During the later 1800s, many "charity hospitals" would
| abduct children of Catholic women and then sell them as
| orphans that other people could adopt. The Klu Klux Klan
| would also attack Catholics - not just burning crosses and
| lynching black people.
|
| https://en.wikipedia.org/wiki/Orphan_Train
| https://orphantraindepot.org/history/opposition-to-the-
| orpha...
|
| https://en.wikipedia.org/wiki/Definitions_of_whiteness_in_t
| h...
|
| > _Not only were Irish immigrants viewed as interlopers by
| many white Americans (an irony, considering the historical
| treatment of Native Americans), but these immigrants were
| Catholics in a primarily Protestant land. It was a
| religious difference that widened the divide, as did the
| fact that many Irish immigrants didn 't speak English. As
| strange as may it may sound today, Irish immigrants were
| not considered "white" and were sometimes referred to
| "negroes turned inside out."_
|
| https://history.howstuffworks.com/historical-events/when-
| iri...
|
| The history site covers how people perceive the value of
| work has changed over the centuries.
|
| Index of the history of the ethics of work/labor:
| http://workethic.coe.uga.edu/history.htm
|
| Home page of this mini-site:
| http://workethic.coe.uga.edu/index.html
|
| The Wikipedia page has lots of links and references about
| PWE.
|
| > _In 1998, the International Sociological Association
| listed this work as the fourth most important sociological
| book of the 20th century, after Weber 's Economy and
| Society, C. Wright Mills' The Sociological Imagination, and
| Robert K. Merton's Social Theory and Social Structure.[3]
| It is the eighth most cited book in the social sciences
| published before 1950._
|
| https://en.wikipedia.org/wiki/The_Protestant_Ethic_and_the_
| S...
| TrackerFF wrote:
| Partially there's this idea that if it the government that's in
| charge, you'll somehow pay more taxes.
|
| But if it's private enterprise, their incentive is to lower
| your taxes as much as they can, while you pay them a small fee.
|
| Not saying that this mentality or assumptions are good /
| correct, but that's basically the rationale I've heard too many
| times.
|
| There's this deeply, deeply ingrained idea that the government
| wants to rob you blind, no mater what.
| saulpw wrote:
| And yet the government as a whole has no incentive to take
| your money beyond the tax laws they pass. Individuals may be
| corrupt but that's a very different issue.
|
| Whereas a for-profit company's explicitly stated goal is to
| make as much money off you as they can.
| sambull wrote:
| Paywall all the things... all the things.
| wredcoll wrote:
| I mean, you answered your own question: because a minority
| found a way to make a profit at the expense of the majority.
|
| (This particular situation is an alliance between the tax
| preparers, who have the obvious interest, and republicans who
| are ideogically comitted to inefficient/ineffective
| governments)
| groundzeros2015 wrote:
| America is entrepreneurial and many people have a small
| business of some kind.
|
| In other countries the regulation and culture is less business
| friendly so people don't do it. Or they operate illegally,
|
| I think that a lot of immigrants have to adjust to how
| seriously tax regulations are taken where they may have been
| able to ignore them before.
| stronglikedan wrote:
| Because we were founded on, and still prefer, that the
| government stays out of as many things as possible. It's always
| cheaper to pay a private company for a service than it is to
| pay your government to do it. And yes, you're paying your
| respective financial authorities to do it through your tax
| dollars.
| testing22321 wrote:
| Factually, people in the US pay more for healthcare and get
| worse outcomes than developed countries.
|
| https://healthjournalism.org/blog/2024/09/report-u-s-
| spends-...
|
| I can't find it on mobile right now, but the associated graph
| is very illustrative
|
| It is not cheaper to pay a private company.
| calderarrow wrote:
| Two big reasons:
|
| 1. If the government is in charge of deciding the tax policy
| and collecting the taxes, it creates a potential conflict of
| interest if they are also in charge of telling you how much you
| owe. In theory, they could charge you more than they're legally
| allowed to, but how would you know unless you (or someone else)
| also calculated your taxes? A common suggestion to this is to
| have the government give a return that shows what they _think_
| is owed, but this creates a conflict if the government
| accidentally underbills you, since you're not likely to correct
| the mistake. In order to ensure compliance on both sides, both
| the government and individual need to prepare the tax return.
| Otherwise, one party risks being overcharged/underpaid.
|
| 2. Tax evasion is an effective law enforcement tool for
| catching criminals, so by putting the burden on the individual
| to report taxes, you add another tool in the law enforcement
| toolkit. From the state's perspective, it is more compelling to
| tell a jury "this person owed $5 but only paid $1" than "this
| person owed $5, but only paid $1 because we told them they only
| owed $1." Tax evasion is how famous gangsters like Al Capone
| and other shady-characters have historically been caught[0]
|
| The tax prep industry is lucrative largely because of lobbying
| and consumer ignorance. There are plenty of free-file options
| for folks below certain income thresholds, as well as non-
| profits who will do your taxes for free. There are also lots of
| free tax-prep sites, but they are being drowned out by the
| advertising and lobbying of the for-profit tax-prep industry.
|
| To add my own 2-cents: if your income comes from investments,
| 1099, or W2, you likely can do your own taxes in about an hour.
| I personally use TaxHawk [1] since it's free for federal and
| $16 per state return, and has the same kind of interface as
| turbotax and the like. If you want to save on that $16, you
| could use TaxSlayer [2] instead -- I've used all of them, and
| personally prefer TaxHawk. Just remember to decline any of the
| upselling they do just before you submit your refund. You
| probably don't need the premium service, a dedicated tax pro,
| nor audit protection.
|
| Source: am a CPA
|
| [0] https://en.wikipedia.org/wiki/Al_Capone#Tax_evasion
|
| [1] https://www.taxhawk.com/software/
|
| [2] https://www.taxslayer.com/#sf_qualify
| sowbug wrote:
| #1 works fine in stores and restaurants. Why would the
| government be different?
|
| #2 isn't a strong enough reason to justify the significant
| out-of-pocket costs and lost productivity of the US tax
| system. If the tax collector is regularly finding only $1 of
| $5 tax obligations, that seems better solved by improving the
| collector's record-keeping, not hanging civil and criminal
| penalties over the heads of 350 million citizens.
| tallowen wrote:
| My lessons from working on IRS direct file lead me to believe
| there are a couple reasons:
|
| 1) How the welfare state is administered - as an example, the
| US does a child tax credit as part of the tax code, other
| countries have agencies that are setup to give parents money
| directly. We are trying to do _more_ with our taxes.
|
| 2) State taxes - the fact that there are multiple agencies that
| have their own rules and procedures makes things more
| complicated. Many localities have their own laws which can be
| hard to deal with. Efile has improved this since there are
| fewer ways for states to ask for new information
|
| 3) A lack of political will to simply. For the purposes of
| taxes, the us have multiple definitions of "are you 65" (were
| you 65 on Jan 1, were you 65 on Dec 31, etc). This makes taxes
| more complicated than they need to be
|
| 4) Conflicts between making things simple and incentivizing a
| behavior things like no taxes on tips or an EV tax credit both
| make filling taxes more complicated with the way that the tax
| code works right now. With better systems, this could all be
| taken care of for the taxpayer but right now it would require a
| more complex tax filing process
|
| Direct File was able to solve some of these problems, even
| automatically using data the government had already where
| possible. Ultimately I think it is possible to make taxes
| automatic in the US but the data flows required for it are
| probably more complex than in other countries due to the
| fragmented nature of the US government.
| TimTheTinker wrote:
| > Conflicts between making things simple and incentivizing a
| behavior
|
| Yes. When there's a negative behavior that the free market
| incentivizes, tax code updates can address it without
| sounding as scary as "More Industry Regulations". Same with
| social policy and other goals.
|
| A lot of Americans are against the idea of "big government",
| which incentivizes government to use the tax code and other
| low-visibility means to accomplish larger goals.
| Gunax wrote:
| I just want to thank you for this nuanced comment. I had
| never considered #3.
|
| It seems to me that there are many conflicting interests. We
| want _simple_ taxes but we also want special protections and
| carve-outs.
| xp84 wrote:
| Yes! And the closer you look, the more you notice that
| "both sides" have their pet things that are _obviously_
| worth complicating the tax code to do. What most of us want
| is just for the _other_ half of the people to give up all
| their favorite complications, so that our "worth it" half
| would be manageable. Which is why the complexity only
| grows.
| tallowen wrote:
| A car sale is an activity that is already registered with
| the government. It doesn't seem impossible for the data
| about an electric vehicle sale and it's purchase price to
| make its way to the IRS. The IRS could create an API to
| share this type of data with tax preparation software.
|
| > their pet things that are obviously worth complicating
| the tax code to do
|
| I agree that this is at the root of the problem but I
| think that can be addressed by making it easier to file
| taxes or by reducing the complexity of the tax code. The
| child tax credit is a relatively common type of benefit
| across rich countries. The tax code could be simplified
| by administering this benefit via direct cash transfers
| through a different government agency. I think from this
| perspective, the IRS is _extremely_ efficient at benefit
| administration.
|
| My personal opinion is that the tax code is not always a
| bad way to administer benefits but the paperwork burden
| is the problem and the experience of filing taxes needs
| to be made easier.
| xp84 wrote:
| > the data flows required for it are probably more complex
| than in other countries due to the fragmented nature of the
| US government
|
| I'd also add the color that one of the main reasons for that
| complexity is political itself: In our zero-trust zero-
| confidence in government world today, even the notion of two
| .gov entities sharing data freely with one another terrifies
| people on any side of the political spectrum. Leftists freak
| out that say, their HUD application data could end up with
| ICE and allow a criminal immigrant who lives with them to get
| deported, while rightists freak out about their financials
| being shared with IRS to allow IRS to guarantee all taxes
| owed are paid.
| Goronmon wrote:
| The Republican party is explicitly against any government
| intervention to simplify tax filing for Americans, so it makes
| it hard for improvements as they currently control the
| government.
|
| It also means its hard for Democrats to improve as well since
| removing any improvements in filing are some of the first
| things Republicans push to undo when the come into power.
| gnopgnip wrote:
| Because of the Norquist tax pledge. Many politicians are
| opposed to any tax increase, including anything that makes
| paying taxes easier
| sowbug wrote:
| _Why must every service and thing in the US must be a private
| profit making thing?_
|
| In the US, some believe that it's better to replace a
| government function that costs X with a private entity that
| charges X. The reasoning is that the efficient free market will
| drive down X, leading to better prices for everyone.
|
| In reality, my city's parking meters now charge a $0.50 minimum
| with a service fee of $0.25 to the private company that now
| runs them. I've tried competing by setting up my own lower-
| priced meters, but that's not working out so well.
| fersarr wrote:
| the UK seems to be going in this same bad direction now "As part
| of our journey to modernise and digitise our filing routes, all
| accounts must be filed using commercial software from 1 April
| 2027." https://changestoukcompanylaw.campaign.gov.uk/changes-to-
| acc...
|
| you used to be able to do this yourself on the gov website for
| free
| rwmj wrote:
| Tell me about it! The bottom tier subscription services are
| also subtly crippled to make filing MTD tax returns difficult.
| eg. Xero's lowest tier doesn't let you easily add cash payments
| (without jumping through hoops for each payment).
| Nursie wrote:
| Eh, that's companies rather than individuals, and while it's
| still objectionable it's not quite in the same league.
|
| If you're running a company you probably already have an
| accountant, and they're probably already using one of those
| pieces of software. Or you're using something like Xero, which
| is already on the list.
| fersarr wrote:
| agreed it's not the same league, but it's still annoying for
| tiny companies that don't have much revenue
| smcl wrote:
| It is insane how the UK seems hellbent on implementing the
| things that are shit about the USA
| shawabawa3 wrote:
| That's company taxes only, not individuals, a huge difference
| fersarr wrote:
| yeah that is true, but still really annoying for the tiny
| companies I talked to
| Yizahi wrote:
| They are not as harmful as some other corporations, but for some
| weird reason I hate such parasites on our society much more than
| some bigger offenders. And I'm not even from USA :) . How do you
| all tolerate this?
| potato3732842 wrote:
| Few people give a crap because a two figure sum for tax prep
| once a year is just about the smallest thorn the government and
| government adjacent or intertwined industries put in the side
| of the average person even if it's arguably less justified than
| some of the other ones.
| wateralien wrote:
| Tax shouldn't even have to be handled by anyone. It should be
| part of the currency itself.
| johnnienaked wrote:
| The problem is how ridiculously bloated and inefficient the US
| tax system is. Companies see that as a possibility for
| exploitation and wet their shirts with drool.
| macinjosh wrote:
| One time I wrote a screed into a turbo tax feedback form on how
| they are an awful business and no one responded except that they
| refunded my money.
| timmg wrote:
| I wonder why there has never been open source tax software. It
| seems exactly the kind of thing the community would be good at. I
| imagine it would be hard for very complex taxes. But for the 60%
| that have simple taxes, I don't think it should be unmanageable.
|
| Is it a matter of liability? Like I could definitely see a big
| issue with mistakes -- even if it was just operator error.
| bayindirh wrote:
| Fast moving regulations and legislation. You need both a legal
| and developer team, at least to follow and implement things as
| soon as they become the law.
|
| Even the revision of yearly variables is a considerable task.
| hylaride wrote:
| Many laws also exist specifically to keep industries afloat.
| The complicated tax code keeps many lawyers and accountants
| in business.
| bayindirh wrote:
| > The complicated tax code keeps many lawyers and
| accountants in business.
|
| At least, some of the complications in these are not
| intentional, but result of centuries old evolution of these
| systems.
|
| Maritime shipping uses centuries old systems to handle
| costs in shipping accidents for example. I forgot the exact
| name of the system, but while the method is _extremely
| fair_ , it's equally complicated. The whole premise stems
| from "This ship has sailed because you wanted me to carry
| your cargo", and becomes something mind boggling.
|
| I'm sure there are some steps taken to keep people busy,
| but chalking up everything to it is unfair and wrong.
| hylaride wrote:
| Fair points, but there is hostility to fixing a lot of
| those historical rules for the same reasons. Long-
| standing business practices is another can of worms,
| especially ones as international as shipping.
| bayindirh wrote:
| Of course, this is a very complicated matter. I just
| wanted to point out that the issue has two sides, and
| it's not clear where a side ends and the other one
| starts.
|
| I have heard and seen enough horror stories about
| employee pushback on different scales against automation
| and simplification.
| datadrivenangel wrote:
| And often the yearly variables aren't published until a few
| weeks or months in advance, so it's a scramble every year.
| bayindirh wrote:
| I know a couple of professional accountants. They have
| yearly regular overtime periods. It's hard on everyone.
| tdeck wrote:
| Open Tax Solver has been around for years and is still
| maintained and updated each year.
|
| https://opentaxsolver.sourceforge.net/
|
| The UI leaves a lot to be desired, but it does work and I used
| it one year.
| CodingJeebus wrote:
| > Is it a matter of liability?
|
| No, government builds all kinds of IT systems for a wide range
| of sensitive functions, and they certainly have the means to
| build or fund an open source tax filing system.
|
| The reason they don't is twofold: A) massive corporate
| interests lobby the government to ensure projects like this
| don't happen, and B) building functional infrastructure for the
| people goes against certain political narratives that
| government is useless and wasteful. If you campaign on the idea
| that government is inept and wasteful, you're not likely to
| support projects that undermine your platform.
| theknarf wrote:
| https://github.com/IRS-Public/direct-file/tree/main
| jeremymcanally wrote:
| Precisely why I built https://freetofile.com (it's a simple
| static site with React for internationalization that
| automatically renders in Spanish, Chinese, Haitian Creole, or
| English depending on browser settings). It's shocking and
| depressing how many low income people don't know they don't need
| to spend $100-200 to file their taxes.
|
| I want to blanket my area (well the whole country really but baby
| steps...) in signs with the URL during tax season. I really do
| loathe the entire industry at this point due to their gross
| practices around free filing. Some offer "free" online filing but
| deceptively upsell until they squeeze some money out of the
| customer. So I want to make any little push back I can against
| these companies.
| godkernel wrote:
| great job. I used to use turbotax here in canada, until i
| figure it out that i could just fill it somewherelse for free.
| __s wrote:
| GenuTax is the free software I used for Canadian taxes
| goatking wrote:
| Wealthsimple Tax is free too, and pretty good for simple use
| cases.
| Spivak wrote:
| Who's spending that much on their taxes? I'm not low income by
| any means and I've not paid a single dollar to HR Block who
| does my taxes every year.
| phyzix5761 wrote:
| Maybe their fee is deducted from your refund?
| JKCalhoun wrote:
| Or they're over 65 or something?
| pkilgore wrote:
| Did you not read the article, at all?
| jeremymcanally wrote:
| My mom spends easily that much with her tax preparer who is
| an independent person who tries to dissuade usage of software
| like TurboTax. My sister spends about $100 to file, and they
| have simple W-2 stuff. I know several folks at my church who
| spend $50-$75 on TurboTax or something similar every year.
|
| I just spent like $200 to file mine with TurboTax only
| because I have a very simple 1099-K/Schedule C since my wife
| sells things on Etsy. I know Schedule C can range from my
| simple setup to absolutely ridiculous, so I don't totally
| grudge it. But at the same time, there are a lot of small
| business owners where that's a big chunk of change for them.
| dh2022 wrote:
| At Costco TurboTax with Business (or something like that)
| costs around $79.99 + tax. It has Schedule C [0]. Next time
| you want to buy TurboTax maybe buy it from Costco - $200
| for your usage scenario looks like over-payment.
|
| [0] It also has other things such as RSUs, stock sales,
| real estate, cash distributions from businesses, etc... For
| personal taxes I do not see why anyone would pay a tax
| accountant as opposed to using TurboTax.
|
| [Edited some formatting tags]
| jonah wrote:
| That often doesn't include their in-app purchases per-
| state for electronic filing.
| dh2022 wrote:
| Thanks, I did not know that - I live in a state with no
| income tax.
| ge96 wrote:
| Haven't filed mine yet for 2024, I did a bunch of side gig
| work eg. driving door dash, uber eats, donating plasma...
| been put off by that (having to track every mile). Also I
| usually end up owing too.
|
| I think the worst thing I had to do was write a FIFO
| calculator to go through my thousands of tiny crypto
| transactions back in early 2020s thankfully I don't screw
| around with that anymore (especially when I got rekt and
| lost $4K)
| lisbbb wrote:
| No semen?
| ge96 wrote:
| Don't you need to have qualifications like have a degree
|
| Also while I have intellect, I am defective like anxiety,
| bad genes (or maybe it's not genes but environment anyway
| I'm not who I want to be)
| GuinansEyebrows wrote:
| fight eugenics: lie.
| user_7832 wrote:
| Bravo, this is, quite possibly, the most morally chaotic
| (in the alignment chart context, [0]) comment I've seen
| on hacker news, much less in 3 words.
|
| Off the top of my head, this can be a topic of discussion
| in Nash Equilibria/Tragedy of the Commons/Game Theory
| just from an economic lens.
|
| I don't have any formal education in these fields, but
| I'm sure there are fields in general philosophy ("Given
| presumably others too have lied and done it, are genes of
| anxious liars actually better than that of an anxious
| honest person? But if they go ahead, don't they become a
| liar? Maybe their conscience makes them still a better
| person?") and medicine too ("Is honesty even inheritable?
| How significantly inheritable is anxiety? Does it even
| matter? - Because for example apparently almost 30% of
| all humans have a depressive episode. Maybe most humans
| already have the genes but it's just not expressed?)
|
| I'm rambling a bit, but I just wanted to show how much 3
| words could be expanded if someone wanted to analyse it
| thoroughly. Really love the comment.
|
| (I don't personally condone lying but I do appreciate a
| good philosophical dilemma and discussion.)
|
| 0 - https://en.wikipedia.org/wiki/Alignment_(Dungeons_%26
| _Dragon...
| rkomorn wrote:
| It was considered an uncharitable donation.
| Ir0nMan wrote:
| You haven't realized that they have been taking their payment
| from your refund all these years? They are a business not a
| charity.
| stronglikedan wrote:
| They truly do simple 1040s for free, even though they are
| indeed not a charity.
| Spivak wrote:
| I mean I've paid like $18 to efile my state taxes but they
| haven't taken any of my refund and I get it direct
| deposited from the IRS.
|
| What tax complexities exist for low income people that
| would cause $200 fees?
| tracker1 wrote:
| Sell some stuff on Etsy and get payouts on social media.
| As soon as you start adding in business expenses, it
| inflates pretty quickly.
|
| I've often taken on a side project or two a year for
| software dev/consulting and it usually winds up being
| $200-350 to have my taxes done. If I only have W2 income,
| I'll do the electronic version of TurboTax though. I also
| do 0 deductions and have extra out of each check taken
| out just in case, I don't set aside or do quarterly
| payments and usually get a decent return back.
| mothballed wrote:
| Even freetaxusa charges for state taxes IIRC. Some of the
| cheaper ones surprise you with fees as soon as you add
| capital gains, crypto, or anything more interesting than W2
| income.
| babyshake wrote:
| I think the state fee for freetaxusa is something like $30
| IIRC. It was small enough where I didn't even bother
| looking into whether it goes to the state or the software
| vendor. That's the cost of a casual lunch for one at 2025
| prices.
| DeRock wrote:
| Its half that, $15.
| jandrese wrote:
| I think it depends on the state. Virginia for instance
| used to have a free government run tax filing system, but
| the tax prep industry got a rep elected who killed it off
| and punished the state for its insolence with one of the
| highest e-file rates in the country.
| nsxwolf wrote:
| I pay my accountant $300 a year to do my taxes. It was really
| a shock to find out that TurboTax was completely ignorant of
| my tax situation and was costing me thousands of dollars a
| year.
| skrtskrt wrote:
| There's certain cases, like deducting student loan interest
| paid, which these companies gate behind paid versions. So yes
| if you have extremely simple taxes you can usually file for
| free but even some really basic deductions are gated.
| sharpy wrote:
| As someone whose employer uses a broker that doesn't do cost
| basis correctly for RSUs, I was very surprised TurboTax was
| able to import the supplement and adjust it correctly for me.
|
| Even without RSUs, I usually have hundreds of transactions
| across multiple brokers.
| dmoy wrote:
| > whose employer uses a broker that doesn't do cost basis
| correctly for RSUs, I was very surprised TurboTax was able
| to import the supplement and adjust it correctly for me.
|
| Approximately zero brokers do this, because RSU are still
| noncovered shares.
|
| > Even without RSUs, I usually have hundreds of
| transactions across multiple brokers.
|
| As a corollary, "hundreds of transactions" of covered
| shares collapsed into one summary line.
|
| RSU is a pain though to enter. Technically you can enter a
| summary line and send in a 1099 to the IRS (last year was
| the first year that could be done electronically, so,
| fingers crossed it actually works correctly).
| plorkyeran wrote:
| Etrade has always reported the correct cost basis for my
| RSUs. They do report an incorrect basis plus supplement
| for ESPP shares though.
| abustamam wrote:
| I do consulting on the side and trade crypto and I pay my
| accountant around $1000 a year for taxes and payroll. The way
| I have it structured is that it just qualifies as a business
| expense, so I can get my wife and I'd personal taxes done as
| part of the deal.
|
| I suspect many others on HN have something similar setup.
| xp84 wrote:
| Go look at the financial results of H&R Block and tell me
| your guess of how many people are spending a ton of money
| getting taxes done. (Intuit too, but we might not know how
| much is TT vs QuickBooks).
|
| And I suspect the #1 most common tax form H&R does for retail
| clients is the 1040EZ, the one that should take anyone with a
| $2 calculator a total of 10 minutes to get through. For the
| privilege of having H&R do it for you, you get to pay about
| $75 and they'll generously loan you your own few thousand
| dollar (due to EITC) refund on the spot, at an effective APR
| of like 7,000%
| alwyn wrote:
| Not from the US, but I did see a missing word in the footer:
|
| > There was a recent effort by the U.S. government *to* create
| a no cost,
| notherhack wrote:
| Refusing connections from VPNs is a baby step in the wrong
| direction. The connection has timed out
| An error occurred during a connection to freetofile.com.
| rglover wrote:
| Dude, thank you. This is exactly what I've been looking for.
| righthand wrote:
| One thing you will be up against is this mind set that TurboTax
| is saving you money. One way to dismantle this cognitive
| dissonance is to compliment your user with the option of
| choice. Even if the choice is obvious positioning yourself this
| way empowers your target user to make the right one:
|
| Freefile helps ensure you keep your entire refund unlike
| TurboTax and other filing services which takes money from your
| refund. This tax season the choice is yours.
| miki123211 wrote:
| Why isn't there a non-profit doing this work?
|
| If this is as big of a deal as people claim, surely a non-profit
| could have written a free tax filing app and just made it
| available to people?
|
| Does TurboTax have any kind of regulatory moat / AT&T style
| monopoly?
| elevation wrote:
| After a recent post[0] suggesting the federal tax code was
| already online in machine readable form, my first thought was
| "could I write my own US tax-filing software?" But the answer is
| still no.
|
| Paying taxes doesn't mean just paying federal taxes. Users don't
| want free Federal taxes software if it means they'll have to re-
| renter all their information into different software for their
| State taxes -- especially when more than one state is involved,
| such as for people who cross state lines for work, or moved mid-
| year. A tax service is a massive value add.
|
| The "free" software you get to do your federal taxes will be no
| threat to TurboTax until the states are required to publish their
| tax codes in the same machine readable format as the feds.
|
| [0]: https://news.ycombinator.com/item?id=45599567
| mikeweiss wrote:
| Except people living in one of the nine states that don't have
| income taxes. They're laughing all the way to the bank.
| WesleyJohnson wrote:
| Are the sales taxes generally higher in those states, which
| offset the lack of income tax?
| everforward wrote:
| Depends on the state, some have higher property taxes.
|
| Higher sales tax tends to be regressive because it doesn't
| tax money you don't spend, nor does it tax things where
| sales tax doesn't apply like buying assets.
| knute wrote:
| Sales and/or property taxes are typically used to make up
| the difference. TANSTAAFL
| BeetleB wrote:
| Depends on the income tax you compare with.
|
| My state is 9%, and it kicks in at under $20K. No state has
| a high enough sales tax to offset that income tax.
|
| Concrete numbers: Say you and spouse collectively make
| $300K. That's a bit under $30K in state income tax. On top
| of that you'd pay property taxes (admittedly low).
|
| Sorry Texas, but your property + sales tax isn't _that_
| high.
| ojbyrne wrote:
| I'm curious what state that is.
| dragonwriter wrote:
| > Are the sales taxes generally higher in those states,
| which offset the lack of income tax?
|
| Sales and property taxes are often higher, but this (which
| shifts the tax burden _down_ the income distribution
| compared to progressive income taxes) usually does not
| fully offset the lack of income tax; the no income tax
| states are generally low average tax burden states (but may
| still have higher tax burden at low-to-moderate income.)
| JKCalhoun wrote:
| > They're laughing all the way to the bank.
|
| Laughing I suppose until they get their property tax bill, or
| pay incessant road tolls.
|
| _(Sorry, I clearly have an axe to grind.)_
| s0rce wrote:
| I lived in WA and NV and didn't notice either of these. I
| miss not having to deal with state taxes not to mention the
| 10% of my income that goes away to who knows what.
| galleywest200 wrote:
| No but everything in WA costing 10% more than the sticker
| price is a pain in the butt, especially if you are a
| lower income individual.
| dragonwriter wrote:
| If you are high income, of course you don't notice
| differences in levels of regressive taxes on consumption
| (including real property taxes, which, while not
| nominally this, for most people end up as a--direct for
| homeowners and indirect for renters--consumption tax on
| housing) as you do levels of progressive taxes on income
| (which is why frequently the income-tax-heavy states with
| higher _average_ tax burdens also have lower tax burdens
| at equivalent income levels for median and lower
| incomes.)
| linsomniac wrote:
| Reminder: FreeTaxUSA is a great alternative, I've been using it
| to file my taxes the last 3 years and plan to use it if I can
| this year. My situation is made harder this year by my wife
| starting a business.
|
| https://www.freetaxusa.com/
| wombat-man wrote:
| It's not quite as good as turbotax, but turbotax also had it's
| issues. I've used it the past couple years though just to stop
| feeding turbotax.
| linsomniac wrote:
| Agreed, it's not quite as good as TurboTax, I'd say for my
| use it is 80-90% as good. But it is kind of important to me
| to avoid TurboTax because of the lobbying they do to keep us
| from just having the IRS tell us what we owe and be done with
| it.
| everdrive wrote:
| Taxes are crazy anyhow. The government won't tell me how much I
| owe, but if I'm incompetent enough at figuring out the number,
| suddenly they both have a clear idea of what I owe and also I'm
| now in trouble. Why doesn't the government just tell me what I
| owe, and if I think they've calculated incorrectly, only then do
| I do my own filing or hire a CPA or whatever else?
| nemomarx wrote:
| The tax filing industry is against it, essentially. Various
| attempts by the IRS to move in this direction have been
| stopped.
|
| There used to be a libertarian wing that thought paying taxes
| should be a little painful so people wouldn't vote for more
| taxes, but I've not heard anyone say that since the bush era.
| ch4s3 wrote:
| The Grover Norquist folks in the RNC were not libertarians.
| lelandfe wrote:
| My favorite part about Norquist and the starve the beast
| folks is the utter hypocrisy of their silence in the face
| of Trump's tariffs.
|
| So much for the "drown the government in the bathtub" talk
| - turns out it was always just about the rich not paying
| more.
| entropicdrifter wrote:
| Pretty wild to me that we're at the point where even Penn
| Gillette recognizes that modern American Libertarianism
| is ultimately just about rich white men who want to do
| whatever they want with no consequences
| ch4s3 wrote:
| It's not really ironic, he just broke with the LP per se.
| He's given interviews with Reason where he says his core
| beliefs haven't really changed.
| ch4s3 wrote:
| Norquist has always been a partisan hack. To his credit
| he was against the Iraq war when that was unpopular with
| Republicans, but he's acquitted himself especially poorly
| in the era of Trump.
|
| That said he's not and never was a libertarian.
| jampekka wrote:
| > Why doesn't the government just tell me what I owe, and if I
| think they've calculated incorrectly, only then do I do my own
| filing or hire a CPA or whatever else?
|
| This is how it's done in most other countries.
| dh2022 wrote:
| How do other countries find out income and deductions for
| small businesses? For example: the cost of replacing the
| blade on a lawn mower. For a small business doing gardening
| that is a cost that needs to be deducted from their income.
| How would the government know to deduct this cost from the
| revenue and calculate out the tax?
| jampekka wrote:
| Businesses typically do need to file. Individuals may have
| to report some of the deductables they want to claim.
|
| E.g. in Finland employers deduct taxes directly from
| salaries. Also some capital gains taxes are directly
| deducted by banks etc, or at least the income is reported
| to the tax office. Yearly the tax office sends a prefilled
| report based on these. If you are fine with it, you don't
| have to do anything. If you want to add e.g. deductions,
| you add them on the tax office's website and it calculates
| the new report.
|
| I've been getting taxable incomes for 25 years or so and I
| have never had to do any tax reporting.
| bobthepanda wrote:
| The dumb thing about your Finland example vs the US is
| that all of that is _also_ done in the US other than the
| prefilling.
| dh2022 wrote:
| Nit - as far as I know in US this standard deduction
| applies only to overall household income. It does not
| apply to Schedule C (aka small business tax return form).
| For Schedule C you really have to itemize what you spend
| your money on and keep receipts for some time in case of
| an audit.
| bobthepanda wrote:
| I mean, the grandparent also says that in Finland small
| businesses need to file
| pwdisswordfishs wrote:
| This comment conflates several things and risks confusing
| others.
|
| Schedule C (self-employment), which is a schedule you
| attach to your personal income tax return vs a business
| tax return (different depending on the type of business
| and what they're reporting) filed by the business.
|
| Itemizing deductions (Schedule A) vs reporting/deducting
| expenses as part of a Schedule C as required by the IRS.
| Tadpole9181 wrote:
| The overwhelming majority of any country takes a standard
| deduction and has no need for itemization of things the
| government would not know.
|
| If you don't fall in that bucket or run a business, you
| tell them those things and send back the corrections form.
| mixmastamyk wrote:
| They don't. You are liable for the full tax on earnings.
| It's up to you to record any deductions or take credits to
| reduce it.
| oblio wrote:
| That's a special case and in most countries people are
| regular employees.
|
| Gemini says 90% of the American workforce are employees.
| rlpb wrote:
| That's not a problem. You won't get into trouble for not
| declaring a deduction (in my jurisdiction, anyway).
|
| They don't know your business income either of course and
| you do have to declare that, but most people have only
| income as an employee and they do know that figure, so most
| people don't need to "file" anything here. It's all
| automatic.
| Tade0 wrote:
| Over here it functions as follows:
|
| When you're buying an item you declare you need an invoice
| on it and punch in your tax id.
|
| Later, when you're filling your monthly taxes, you include
| that invoice in an XML file (plenty of generators available
| along with the free government-issued one), sign it with
| your digital ID and send that to the Ministry of Finance
| servers (MF servers for short). The MF servers then compare
| your entry to what all the people that sold you stuff
| entered.
|
| This exists largely to prevent VAT manipulation, but at the
| same time gives all involved parties a clear, regular
| indicator that everything is fine in terms of taxes.
|
| I'm a contractor and do this little dance every month using
| an accounting SaaS.
| Theodores wrote:
| > Taxes are crazy, anyhow...
|
| Outside the Overton Window, why are individuals taxed rather
| than businesses?
|
| There was a time when the government had no business knowing
| the financial affairs of the citizens, but then some kings got
| the idea that they could tax everyone to pay for their wars.
| Nowadays we assume tax paying is good and socially responsible,
| with only tax-dodging scum not wanting to pay their taxes.
|
| Due to tax havens and whatnot, for a company to compete and be
| successful, some tax avoidance is needed. So we have every
| corporation opting out of paying taxes. Consequently, taxation
| is for the citizens, not the corporations.
|
| Companies have accountants and bookkeepers. Individuals don't
| unless they are seriously wealthy. As I see it, it would make
| much more sense to just tax companies and not individuals.
| Think of the amount of time that would be saved, particularly
| if VAT is a tax, which it isn't in America.
|
| I have to say that the American tax system sounds like hell,
| compared to what we have in the UK.
| angiolillo wrote:
| > it would make much more sense to just tax companies and not
| individuals
|
| Sure, but taxes are applied due to political feasibility, not
| because they "make sense".
|
| The most sensible approach is to tax natural resources (land,
| carbon, mines, wells, electromagnetic spectrum) and other
| forms of economic rent, but that is politically infeasible
| (edit: or more accurately, very challenging) in a capitalist
| democracy.
| mothballed wrote:
| Back when the federal government was constrained to that
| permitted within the 10th amendment, the average person
| paid taxes almost exclusively through indirect tariffs,
| property taxes, and some levies (effectively sales tax) on
| purchased goods. But back then the non-wartime spend of the
| federal government was like 2-4% of GDP
| skeeter2020 wrote:
| I don't follow you or the GP - all of these (and more) are
| taxed. I'm in Alberta, Canada where we pay property (land)
| tax, personal income tax, corporate income tax, consumption
| tax, payroll tax, wealth tax, estate transfer tax, mineral
| taxes (often in-kind), and (until recently) a direct carbon
| tax. And that's not nearly all of them. I can't imagine the
| US is much different.
| angiolillo wrote:
| Sorry, I should have been more specific.
|
| From an economic standpoint, the most "sensible" (i.e.
| most efficient and least distortionary) tax is one that
| relies primarily on natural resources and other forms of
| economic rent instead of taxing labor, businesses, non-
| land property, wealth, or the creation of value. However,
| these rent-based taxes would need to be set very high to
| fully replace income, corporate, payroll, sales,
| property, VAT, wealth, estate, etc taxes.
|
| Switching to such a system would be painful for people
| whose net worth is disproportionately invested in land or
| who consume significant resources relative to their
| income. If the majority of the population fall into this
| category (as is not uncommon in capitalist democracies)
| then such taxes would be broadly unpopular, making them
| politically infeasible.
| dimal wrote:
| > that is politically infeasible in a capitalist democracy.
|
| It's more accurate to say it it's politically infeasible in
| _our capitalist oligarchy_.
|
| Just because this is the way our society works now, we
| shouldn't be duped into thinking this is the natural order
| of things. It's not. A democratic society with a free
| market economy could work very differently.
| angiolillo wrote:
| I agree that it's more "difficult" than "infeasible" so
| I've corrected above.
|
| But I'm not sure I agree that the difficulty is due to
| being an oligarchy. In a democracy where the majority of
| citizens have the majority of their capital tied up in
| land (as is the case in the US and many capitalist
| democracies), shifting the tax burden onto land seems
| like it would be broadly unpopular.
|
| I do agree with your main point though that a democratic
| society with a free market economy _could_ work very
| differently, it 's really the transition that would be
| broadly unpopular, and therefore politically difficult in
| a democracy.
| mothballed wrote:
| Even a theocratic ~monarchy with a ~free market could
| work very differently. Dubai has minimal tax burden, with
| normally 0 income tax and a 0 or 9% corporate tax.
| pdonis wrote:
| _> why are individuals taxed rather than businesses?_
|
| The big question to me is, why do we tax production rather
| than consumption? We shouldn't have income taxes at all. We
| should have sales taxes. Make basic necessities like food
| exempt.
| saulpw wrote:
| I've always heard that consumption taxes are regressive
| because poor people consume 100%+ of their income while
| rich people consume e.g. 1% of their income.
| wagwang wrote:
| Bad logic, if u dont consume then who cares if u have
| money.
| hydrogen7800 wrote:
| >who cares
|
| The people who maintain the infrastructure which enables
| you to have that money.
| saulpw wrote:
| The people who don't have money because you have it and
| won't spend it. The dragon's hoard is bad for everyone
| (including the dragon, ultimately).
| wagwang wrote:
| You need to start thinking about the economy in terms of
| goods and services instead of money. Hoarded money is
| dead money, it's actually anti inflationary. If there are
| 100 apples and everyone can afford 1 apple except for a
| rich person who can buy it all, it's actually a good
| thing that the rich person doesnt spend their money to
| buy the apples, thus driving up the price and depleting
| supply.
| alchemism wrote:
| You are conflating macro- and micro- economics a bit in
| that statement. Entities accumulating wealth incrementing
| towards infinity contributes to inflation, e.g. My family
| can spend 1 trillion to out-bid my competitor for
| ownership of a villa worth 1 billion for bragging rights.
|
| Commodity pricing may contribute to inflation over time.
| But commodity prices go down, whereas currency tends to
| move in one direction until the civilization backing it
| collapses, or the specie changes.
| wagwang wrote:
| I'm more talking about how hoarded money has no effect
| until its spent, at which point the consumption tax kicks
| in. I.e. it's not really a regressive tax because you are
| taxed based on how you live, not how you _can_ live.
| pdonis wrote:
| I'm not sure it's true that rich people, on average,
| consume such a small percentage of their income. Think of
| all the rich people who end up having to declare
| bankruptcy--because they've spent so much on consumption
| that they've used up all their riches.
|
| It's true, though, that on average, rich people consume
| less of their income than poor people, because they save
| or invest a portion of it instead, simply because they
| can. That's a good thing. Our current tax system
| discourages people from saving and investing, and
| encourages them to consume. Then something bad happens
| and we wonder why there's nothing saved to tide us over.
|
| Exempting basic necessities from sales tax is how you
| prevent it from putting too much of a burden on poor
| people; most of what they consume is going to be basic
| necessities (or at least it should be, if they're
| rational), so it wouldn't be taxed.
| BobaFloutist wrote:
| Because that would incentivize sitting on money, and the
| economy works better when people spend money.
| jedberg wrote:
| So does taxing income, since we don't let people deduct
| most of their expenses. If you want to make people spend
| money, you'd implement a wealth tax.
| BobaFloutist wrote:
| Every time we try to institute a wealth tax, billionaires
| get antsy and start supporting fascism.
| jedberg wrote:
| Yeah, that's why we don't have one. :)
| pdonis wrote:
| _> that would incentivize sitting on money_
|
| No, it would incentivize investing, since if you just
| leave money sitting under a mattress, it loses buying
| power over time because of inflation.
|
| _> the economy works better when people spend money_
|
| The economy works better when people create wealth
| through cooperation, specialization, and trade. Taxing
| production reduces the incentive for people to do that.
| dboreham wrote:
| > why are individuals taxed rather than businesses
|
| Because rich people would find ways for all their income to
| be realized by businesses they control, resulting in zero
| personal tax liability.
|
| > particularly if VAT is a tax, which it isn't in America
|
| America has sales tax, which is functionally the same as VAT.
| It's levied at the state level, and some states have a zero
| rate at present. We also have high import tariffs now, which
| again work like VAT.
|
| > I have to say that the American tax system sounds like
| hell, compared to what we have in the UK.
|
| True.
| groundzeros2015 wrote:
| This is a meme, but it's not true. The fact is taxes are 1.
| Subjective 2. Based on your real world activity outside your
| W2.
|
| So the IRS has correlative algorithms to signal an audit if
| something looks strange. But besides that, you are evaluating
| your real world activity and classifying it according to the
| forms they have.
|
| This is why accountants and lawyers are useful in tax. They can
| help you interpret the tax code and argue to the IRS your
| interpretation,
| dmoy wrote:
| This is true in the general case, but it does miss the fact
| that a huge percentage of people could have their taxes done
| automatically by data that the IRS has
| groundzeros2015 wrote:
| Does the IRS know:
|
| - how much of the year your wife are kids are living with
| you? - whether you took college courses? - how much you put
| into your IRA? - which purchases count as medical expenses?
| - the cost basis of the stock you sold?
| aidenn0 wrote:
| Those things matter for less than half the population.
| groundzeros2015 wrote:
| If you don't care about deductions you can fill out a 2
| page 1040 with your W2. As they calculated for you.
|
| but people do care and so they are willing to pay $60 for
| tax help
| aidenn0 wrote:
| About 80% of filers take the standard deduction.
| groundzeros2015 wrote:
| You're referring to itemizing deductions. But you still
| qualify for income deductions like IRA and credits like
| child without itemizing.
| Izkata wrote:
| With the way these conversations often go back and forth,
| I sometimes wonder how many people have actually done
| their own taxes by hand with the official forms, vs have
| only ever used some program or service.
| AnimalMuppet wrote:
| And, if they don't, do you _want_ them to know?
| mixmastamyk wrote:
| Not their problem, it's your responsibility to record
| deductions.
| rafram wrote:
| > how much of the year your wife are kids are living with
| you?
|
| They can make a likely guess (the full year), and you
| tell them if they're wrong.
|
| > whether you took college courses?
|
| Yes, your college files Form 1098-T to tell the IRS this.
|
| > how much you put into your IRA?
|
| Yes, your IRA custodian (your bank) files Form 5498 to
| tell the IRS this.
|
| > which purchases count as medical expenses?
|
| Very few people spend enough on medical expenses to take
| a deduction for them. They have to exceed 7.5% of your
| AGI.
|
| > the cost basis of the stock you sold?
|
| Yes, your brokerage files Form 1099-B to tell the IRS
| this. There are only a few rare cases where they won't be
| able to report a cost basis.
| dmoy wrote:
| Agree with all of them except the kids. That was the big
| reason I said "huge percentage" instead of something like
| "overwhelming majority", because I have a sneaking
| suspicion the IRS doesn't know anything about your kids
| at all. So I'm guessing child tax credit isn't
| automatically calculable right now.
| xp84 wrote:
| Let's assume you're right that they don't have a simple
| table that shows parentage of every SSN, sounds plausible
| that they wouldn't at least to start, but on the other
| hand, (for people who don't add or remove spouses or kids
| from their household) it's arguably VERY common for kids
| to persist with the same parent(s) from one year to the
| next.
|
| I don't think anyone is saying "All taxes should be
| automatically calculated to the final numbers" -- just
| that for instance, when I filed last year with a spouse
| and 2 kids, a default calculation could be done this year
| that assumes an unchanged household.
|
| And anyway, just as TurboTax does, the IRS could maintain
| a simple fact database for you for you to sign in and
| indicate what SSNs are part of your household, with the
| bonus that it would detect a duplicate claim for the same
| kid up front and show you that someone else (e.g. your
| ex) is claiming them and that you should get them to
| remove them to avoid both your returns being incorrect.
| The complexity for a taxpayer of signing in to IRS to
| manage household members, address, etc. with IRS is an
| order of magnitude less than that of tax prep they have
| to do today.
| groundzeros2015 wrote:
| Yes they receive these forms. Do they put them in a
| database with your TIN in time to calculate your tax? I'm
| not sure.
|
| It seems their real use is to provide a paper trail for
| audit should they choose to.
| llsf wrote:
| Why not use all those forms and prefill my tax form for
| me ?
|
| If I disagree, I can add/remove/update it. If I agree, I
| just file
|
| Asking me to collect those documents and reports the
| different numbers into a form, is not efficient, error
| prone and time/money consuming.
| jandrese wrote:
| Even in this case the IRS could pre-fill everything it
| knows and let you spend 5 minutes adding any details they
| missed. For the majority of people it would be "open up
| mytaxreturn.irs.gov, verify that everything looks
| correct, hit yes and be done".
| jedberg wrote:
| The IRS knows enough before tax time to auto-file about
| 90% of American's returns. Because 90% of people only
| have a W2, maybe a mortgage (which they know), and take
| the standard deduction.
|
| The could send 100% of people a bill that you either pay
| or file tax forms to replace.
| estimator7292 wrote:
| If your taxes are simple enough to fall under the 1040-ez as
| most Americans are, the IRS does know your exact tax
| responsibility. I have personally received a letter from the
| IRS informing me that I'd filed wrong, and gave me the actual
| correct values. Many Americans have.
|
| Just because you personally disagree with something doesn't
| mean that it's a ridiculous lie.
| pwdisswordfishs wrote:
| There's no such thing as a 1040-ez.
| Izkata wrote:
| There used to be, they got rid of it around a decade ago.
| I _think_ I remember the reasoning was the 1040 was
| simplified at the same time.
|
| Edit: Yep, 2017 was the last year the 1040ez was around,
| and the regular 1040 went from 74 lines that year to 18
| the following year. The 1040ez for 2017 was 12 lines.
| dh2022 wrote:
| The case you outlined is for employed people - in this case the
| income and deductions are very clear and relatively easy for
| government to find out and calculate the tax.
|
| How would the government be able to know the income and
| deductions for small businesses? And in the USA at least lots
| of people have small businesses (cleaning businesses,
| landscaping, sub-contracting in construction industry, mowing
| lawns, consulting gigs, Uber/Lyft drivers, etc...)
| op00to wrote:
| > How would the government be able to know the income and
| deductions for small businesses
|
| Determine the amount of average deductions for small
| businesses, benchmark against however much money you want to
| extract from small businesses, then give all small businesses
| a blanket standard deduction.
| dh2022 wrote:
| I personally have a problem with "benchmark against however
| much money you want to extract from small businesses"... So
| a hard NO from me.
| jedberg wrote:
| They wouldn't, those people would have to file like usual.
| But the vast majority of filers (something like 90%) only
| have forms that the government already has, and takes a
| standard deduction.
| wat10000 wrote:
| It's annoying, but the trouble is overstated. The common
| version of this statement talks about jail! As long as you're
| not actively evading taxes, the trouble consists of some
| penalties and interest. Better not to have it, but also not a
| very big deal.
| dfxm12 wrote:
| Trump is already talking about going after his perceived
| political enemies via the IRS. I guess if the President of
| the USA wants to target you, he'll get you, but still, no
| trouble is overstated when the government actively works
| against its constituents.
| nxor wrote:
| Looks like you've had a bit too much to think!
| testing22321 wrote:
| The United States is not a successful country in that it does
| things to benefit citizens.
|
| It's an extremely successful business in that it does things to
| ensure more profit can be made.
|
| Healthcare, education, defence contracts, tax collection, etc
| etc.
|
| The goal is to make more money for some company.
| entropicdrifter wrote:
| That's because it's a plutocracy. Money is literally
| considered speech here, which is insane.
| mindslight wrote:
| Except when it comes time to speak in private with other
| people, speak for other people so they may obtain privacy,
| speak for sex work, speak for drugs, speak at banks, speak
| to people in other countries, refuse to speak to
| government, etc. Then it's very serious Money which has
| Very Important Regulations. Regulations which always seem
| to burden regular individuals while facilitating business
| as usual for those with power who can grease the system.
|
| FWIW I think the "money is speech" is actually a bit of a
| distraction. What we really need is wholesale reform to
| corporate/LLC law. Corpos are not mere groups of people
| exercising their individual rights, but government-created
| liability shields. Thus it makes perfect sense to regulate
| them to prevent obvious mechanisms of harm that leave
| others holding the bag. The vaunted "man in the arena"
| needing minimal regulation can actually get into that arena
| with a sole proprietorship or general partnership. (which
| is exactly where most small businesses actually are,
| regardless of any LLC filings)
| TheCraiggers wrote:
| What, never heard the term "money talks" before?
| testing22321 wrote:
| Yes, and that corporations have the same rights as people,
| but can't face the same consequences.
|
| The fines for wrongdoing are so tiny the incentives are to
| always do bad stuff and just pay the fines - that's how to
| maximize profit and there's no downside.
| mrguyorama wrote:
| Since nobody gave you the meaningful answer:
|
| It's republicans. Republicans are against making taxes simpler
| _to individuals_ because, and they have _explicitly said this_
| , they want taxes to hurt so that Americans will be more likely
| to vote for tax reduction.
|
| I'm sure some democrats get a few thousand from Intuit
| somewhere but at the end of the day, it's republicans voting
| down things like free file and the government's digital
| initiatives and refusing to let the US gov do your taxes for
| you.
|
| It's frustrating how often people in the US blame "the
| government" instead of _the very specific subset of that
| government that they keep voting for that objectively and
| openly and loudly do things that harm them_.
| nitwit005 wrote:
| The problem is, there's a history of doing the exact opposite
| of what they claim to want to do. Plenty of Republicans have
| expressed a desire to make the tax code simpler, only to
| promptly add to the complexity.
|
| More recently, Elon Musk was publicly proposing a mobile app
| for making filing taxes easier (See
| https://www.fox26houston.com/news/doge-tax-filing-app), but
| then once part of the Trump administration, they happily
| killed Direct File, a program to do exactly that.
| dguest wrote:
| > and also I'm now in trouble
|
| I know people who mess it up every year and the government just
| sends the forms back corrected. In fact they started treating
| the government like a tax prep service. Do people actually get
| in trouble for this?
| filoleg wrote:
| > Do people actually get in trouble for this?
|
| Unless they willingly and provingly try to grift IRS on a
| continuous basis, no, people don't get in trouble for this.
|
| If you mess something up or underpay on your taxes, and if
| (or when) IRS detects it, they will send you a letter
| explaining their concerns and provide you with remediation
| options (as well as an opportunity to dispute, of course).
| The remediation options provided by IRS typically include
| both "pay it now and we will go away as if it never happened"
| and "talk to us, and we can work out a payment plan with you
| (in case you aren't able to cover at the moment)".
|
| So no, IRS isn't some boogeyman that is gonna get you in
| trouble over a mistake. If they catch a mistake, they will
| work with you to remediate it, and their terms are typically
| extremely reasonable, and have zero negative consequences for
| utilizing them (unless you are, beyond any reasonable doubt,
| trying to defraud them or refuse to cooperate entirely).
| DontchaKnowit wrote:
| Eh the problem is when they dont catch mistakes for several
| years, and then come after you for like 80 grand at once,
| and then when you cant pay it threaten to seize your assets
| HWR_14 wrote:
| When you cant pay it, they will set up a payment plan
| over years (maybe a decade) to pay it off.
| amelius wrote:
| What happens if the submitted numbers are too high instead of
| too low?
| amelius wrote:
| This is, among other things, how Republicans make ordinary
| people hate the government.
| cowmix wrote:
| This is what people like Grover Norquist fought hard to stop.
| They want every part of the tax collecting/paying process as
| hard as possible:
|
| https://priceonomics.com/the-stanford-professor-who-fought-t...
| SLWW wrote:
| Income tax was supposed to end after we recovered from the
| Civil War anyhow, so it's, by any other definition applied to
| any corp or business, unjust theft (like autobilling someone
| after they paid off their loan).
|
| So of course it doesn't work. Also plausible deniability, if
| you overpay, rarely will the gov give you back what you give
| them, and if they do, it's months afterwards.
| gramie wrote:
| The Canadian government recently announced automated tax
| filing. I assume that you still file your exemptions because
| there is no way (I hope) they know what charities I am donating
| to!
| estimator7292 wrote:
| > Why doesn't the government just tell me what I owe[?]
|
| Mostly because of:
|
| > TurboTax's 20-year fight to stop Americans from filing taxes
| for free
| fogzen wrote:
| Taxes are free to file. Just fill out the form(s) and mail it in.
| I find it way easier than using crap software. No logins, no ads,
| no spying, no losing my progress. There's literally instructions
| for every box on the form.
| DudeOpotomus wrote:
| Americans are the proverbial frogs in the pot. They've been
| ratcheting up the heat over the last 30 years, the first signs of
| danger are well past, now its 300mm people being held captive by
| abusive leaders and insanely greedy profiteers.
|
| This entire story exemplifies everything wrong with the USA and
| its form of corporate run government. Socialize the risks,
| privatize the profits and foremost, let the foxes not only guard
| the henhouse, give it to them!
|
| World, if you're listening. We need a pepperoni pizza.
| sometimez wrote:
| CashApp is free for both federal and state. Have used it since
| its Credit Karma days and has worked fine.
| netrap wrote:
| Very interesting. I'll give that a try..
| mixmastamyk wrote:
| If it's free, you're the product.
| shepardrtc wrote:
| The IRS does have a free filing service called Direct File:
| https://directfile.irs.gov/
|
| The Trump Administration is trying to get rid of it, but its been
| so successful and so well-rated that they're having trouble doing
| that.
| mixmastamyk wrote:
| I looked this year and the site went nowhere. But now seems to
| be up. Not sure what happened.
|
| But I just went through the eligibility steps and it requires
| id.me verification! Big nope. Mailing a paper form does not. Of
| course Uncle Sam figured a way to fuck it up.
| pkilgore wrote:
| Politicians cannot write loopholes that benefits only their
| doners if the tax code and tax filing is simple. Period.
|
| Take corporate/dark/unlimited money out of politics and watch
| this problem (and many other) disappear.
| a456463 wrote:
| AMEN! How is that taxing is easy, computed by govt yet people
| and rich people keep evading taxes, not showing taxes, finding
| workarounds through other orgs to reduce tax profile but as an
| individual you have so many restrictions
| lisbbb wrote:
| Around 2018, my accountant retired and sold his business to some
| other firm. That year, the other firm had some newbie cpa do my
| taxes. If I had blindly gone with his effort, I would have had to
| pay thousands of dollars. The problem is, he made a huge mistake
| because he didn't listen to what I had told him regarding a step
| up cost basis on inherited stocks. I fired them the instant I saw
| that issue. Then I was stuck with nobody to do my taxes! I used
| TurboTax and got it done myself and actually received a small
| refund that year. And no, nothing was done fraudulently, it's
| just that I knew the details of our situation far better than any
| cpa who refused to listen to what I told him or was too "green"
| to know what I was talking about (unforgivable, imho). I've used
| TurboTax ever since then. Yes, I know it sucks in many ways, but
| the thing is, they bailed me out and saved me thousands of
| dollars over the years for hundreds of dollars in fees.
| skirge wrote:
| In Poland since 3-4 years tax form for regular employees is
| automatically filled and submitted. Before then many NGOs filled
| them for you (directly or indirectly) for 1% of tax (I think
| avoiding loss of 1% motivated govt to make this automated
| system).
| netfortius wrote:
| Unfortunately TT is [still] a must for expats. While my new home
| country makes things extraordinarily simple, not only for the
| free online filing, but also for an amazing assistance one could
| get from the local tax services (first year I reached out to
| them, in the office, they had their expat expert fill out the
| taxes online, in my account, in front of me, so I could learn on
| doing them on my own, from then on), filing to avoid double
| taxation, with uncle Sam, is stil a PITA
| nightski wrote:
| I think it would be great to just have the IRS website list all
| reported income. Free automated filing is amazing, but if that is
| too large of a political battle just making this income
| information easily accessible would be a giant first step.
| wuuza wrote:
| I mail in a paper form because F TurboTax.
| memcg wrote:
| Intuit emailed me stating that Turbo Tax 2025 will not install on
| a PC running Windows:
|
| "We're reaching out to provide an update on TurboTax Desktop
| software for tax year 2025. After October 14, 2025, Microsoft
| will no longer provide software updates, technical assistance, or
| security fixes for Windows 10 operating system. Because security
| is a top priority for us, TurboTax Desktop software for tax year
| 2025 onwards will not be compatible with Windows 10 operating
| system.
|
| To use TurboTax Desktop software for tax year 2025, your computer
| will need to run on Microsoft Windows 11 operating system. You
| can also consider switching to TurboTax Online, which will work
| on any supported browser (available December 2025)."
| memcg wrote:
| Edit: Windows 10
| bobbyprograms wrote:
| I do not work here so this is just tip. I have used freetaxusa
| for years amazing including schedule c. Since in Texas truly free
| haha!
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