Turbo Tax is the reason why the government doesn't just give you a number to pay. The process could be easy, but the giant corporation Intuit and their political lobbying is why it sucks.
TurboTax plus Republicans wanting to make paying taxes as difficult as possible so people will vote to cut taxes
The IRS is actually going test pilot such a program in a few states in the near future.
Which is why they keep wanting to defund the IRS (example):
- It allows the wealthy to cheat on their taxes with less concerns of getting audited or if they do get audited, they can outspend the auditors.
- It would have de-funded this measure the IRS is getting ready to test which would allow Americans to figure out and pay their taxes without feeling compelled to go through middle men like Intuit and TurboTax.
Edit: More direct example of point 2
After President Joe Biden’s December 2021 Executive Order instructed Treasury Secretary Janet Yellen to consider “expanded electronic filing options,” Yellen testified before the Senate Finance Committee that building a free direct filing service is “definitely a priority.” The Inflation Reduction Act of 2022 allotted $15 million for the IRS to explore the creation of a free federal tax filing service.
In May, the IRS released a report announcing plans to launch the pilot program for the 2024 tax filing season and indicating that most U.S. taxpayers are interested in filing their taxes directly to the IRS for free.
But in June, Republicans on the House Appropriations Committee proposed a budget rider that would bar the IRS from using federal government funds to create a government-run tax preparation software, unless approved by the House and Senate’s appropriations committees.
America moment
Except people been having to do their taxes for a hell of a lot longer than turbo tax has existed. Turbo is a big lobbying entity, but they aren't the only ones.
They aren't the only one, but they are the largest one. They didn't make the system the way it is, but they benefit massively from it staying this way.
The IRS is actually testing a new system where they just tell you how much you owe/get, and that's it unless there's unreported income and such that needs to be corrected.
Also, the IRS only escalates straight to jail if it's incredibly obvious you're intentionally committing tax fraud. If your forms are wrong they just send you a letter to fix it.
I wish more people were aware of this. One year I made a rather significant number entry error and should have owed a couple thousand more than I paid. I got a fairly routine letter later in the year asking me to correct the error. I had a little mental panic, reran the numbers, and filed an amended return. There was no pressure, you always have payment options, and they send you back another letter confirming the acceptance of the amended file. I understand that many people would have significant problems paying extra unexpectedly but unless you are actively committing fraud you are not an immediate priority for the IRS.
Link? I will instantly use it. Mostly to stick it to Intuit.
If you don't qualify for the pilot, you can also find out what other tax filing companies do not lobby to keep taxes hard to figure out and file.
Things you need to know first
Why that isn't the default to begin with is anyone's guess
I mean it's not really. Lobbying. Lobbying is the reason.
It's the default in places like the UK. Tax companies gotta get in there and stall progress for profit.
Yeah. Where I live I get a message from our version of the IRS. They tell me how much taxes I've paid last year, and if I'm owed back taxes or if I owe more. If I don't change it, I accept it. Easy.
It's already like this with free tax returns. It just sucks you have to go through Intuit, because of their lobbying. The government is also counting on you to not properly doing your taxes. They want you to be lazy and pay more in taxes, for the convenience.
They don't want to come after people who aren't paying their taxes. They're making it inconvenient to file, so poor people who don't have time/ knowledge overpay.
That sounds like how it works in my country. Every year is just log in, take a quick look at the numbers, sign and send it away. Takes a minute or two and it just works.
Testing for 13 states for now.
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Okay, so I get the reason why NOWADAYS IRS can't tell you how much taxes you owe is lobbying. But how did it work BEFORE computers? Did you file your forms and IRS agents checked them one by one, and it was just most efficient to check taxes instead of calculating them? How did we get to the situation where the IRS checks the taxes instead of calculating them? I'm genuinely curious, because that's a recurring theme worldwide.
We have a "voluntary" tax system in the U.S. -- that's always been the situation. "Voluntary" doesn't mean that that you can choose to not volunteer to pay your taxes. It mostly just means that the way we run things, by default, it is each citizen's responsibility to calculate and pay their taxes each April.
American taxpayers filled out 1040 forms in the days before computers, a lot like they do now. The IRS selected certain fillings for audits, just like they do now -- sometimes because of an apparent discrepancy, and sometimes just at random.
It would be a lot more work, take a lot more resources, and be prone to a lot more error and lawsuits, if the IRS tried to calculate everyone's taxes for them. Even now that we are in the days of computers, it is much more efficient for the IRS to only audit a fraction of the filings submitted each year.
I'm also pretty sure our "voluntary" tax filling system has something to do with the Fourth Amendment and other privacy concerns. A lot of Americans very strongly believe that it is not the government's place to be all up in their private business.
-- EDIT to add:
There is a difference between whether it would be possible for the IRS to calculate individual citizens' taxes and whether we should abandon our voluntary tax system for one in which the IRS simply calculates the taxes owed by every citizen and send us each a bill. My original response was intended to address the latter, but now I'll say something about the former:
For someone whose single source of income is a job working for someone else, of course it is possible for the IRS to calculate your taxes. You've already volunteered all the information the IRS needs to do so. Your employer has already told the IRS exactly how much income you've earned and exactly how much of it you've had withheld for taxes. Remember when you signed that withholding paperwork with the HR department on your first day? That was the moment when you personally volunteered your income information and payments to the IRS. You've literally already been reporting your income and paying taxes on it ever since.
The way taxes work in practice for a single-income employee does not reveal the potential complexity of tax accounting for individuals who are self-employed, who have multiple sources of income, and anyone who doesn't want to make regular fillings and withholding payments throughout the year. The tax situation for single-income American employees is not the situation for all Americans. Not everyone has an employer who calculates their taxes and pays installments for them throughout the year.
It is common for Americans to have a single job with an employer who calculates and pays their taxes for them. This makes it very easy for the IRS to know exactly how much the taxpayer owes (or is owed) at the end of the year. If it ends up feeling to like this is the same thing as the IRS calculating your taxes for you, however, I'm guessing it's because you forgot that it's actually your employer who's been doing that accounting job for you all along, with each paycheck.
The IRS is confident it can do direct file for most american returns, which is why its running a pilot program this year to do just that.
if the IRS tried to calculate everyone’s taxes for them
The IRS does calculate everyone's taxes without an audit. If you mistype a bank statement you will get a bill or a check from the IRS (depending on whether the error was paying too much or too little).
An audit is completely different than the typical, "you typed $1000 in bank interest but you only really received $100 so here's a check for the difference in taxes. This has happened to me many times over the years. It's why I no longer get stressed over taxes because I know the IRS will just send me a bill or a check in 6 months to fix any mistakes.
We had the same in France until not so long ago. It is a democratic principle that you voluntarily and freely pay your taxes, rather than the state take your money without you hvving a say in it.
It is both a principle of transparency and consent for taxes.
Not in the Netherlands, there it's all calculated for you and you just do the checking. If you have a more complicated situation like self employment or other stuff you may want to hire an accountant that will not only double check but also make sure you get the best outcome by doing some strange wizardry but for most people it's literally just go online, check the salary numbers etc, click okay and get some cash back to your account.
Too bad the Belastingdienst (Dutch Taxservice) is a massive shitshow on pretty much anything else. Their hardware is so damn old new tax laws can't be passed, because it would break the systems. Of course this is more the fault of shitty upper management and poor political will to do anything about it.
Can't speak for the American IRS, but in my home country they audit some declarations at random, specially the parts they don't have in their system, like checking if professional deductions are valid or if there's anything that indicates some foreign income wasn't declared. Before computers the system was probably more or less trust based for most cases.
In reality -
Me: $600
IRS: are you a billionaire?
Me: what if I am?
IRS: $600 is too much
Damn y'all Americans really do taxes weird
Americans as a whole are very stupid and don't realize that the overwhelming majority of them can file for free. In fact, 100% of Americans can self-file (for free) if they can handle about an hour of basic paperwork, but for 70% of Americans, you can file taxes for free in less than twenty minutes. It's not hard at all.
But most people would rather Google "how to file taxes," click on the first sponsored link they see, and buy something before they ever actually try to do even a minute of research.
if they can handle about an hour of basic paperwork,
People make it out like tax filing is like travelling to Ry'leh and transcribing eldritch runes, but it's made pretty dead simple. Put the number from one box in piece of paper A into the corresponding box in piece of paper B. If it has you do a math, you can just... Do a math. Pull out your calculator and subtract the amount you've paid so far from the amount you owe. Is the result a negative number? Congratulations! You're getting a return! Is the number positive? Oh no! That's how much you need to pay the IRS!
I get that for some people it is significantly more complicated than that, but if you work one job where you make some number of dollars per hour and you don't invest in the stock market or cryptocurrency, it's virtually idiotproof.
Canada does this too. Do other countries just tell you? That'd be nice.
My country just tells you.
Yeah. Basically, we get a pre-filled form with most of what can automatically filled in, already filled in. Of course some stuff like donations (which are deductible) and other stuff that are not automatically linked to you have to be added by hand, but for a vast majority of people there is no such thing.
So basically, open the pre-filled form, check that the incomes and your current situation is correct, send it back, then you basically get the amount (which can be either automatically collected through direct debit at a given date, split monthly, or paid manually).
We usually argue about why and how much tax we pay, but I never had any heated discussion about the tax system itself.
In the Netherlands, AFAIK (and please correct me if I'm wrong), the government tells you how much it is and you can make your own filing that contains various deductions that the government doesn't know about that can make the amount to pay lower. The system still has a few issues here and there but it's much better than the US, like just about anything these days
Yes, you are quite correct. Here you can file your taxes either on paper, which means you'll have to fill out everything yourself, or you can use the website of the tax authority (Belastingdienst). In the latter case the most important stuff is usually already filled out, like your earnings, remaining mortgage & interest paid over it (which gets you a tax deduction), etc, so you'll only need to check if the prefilled data is correct and add the stuff that the government doesn't know about.
Bit of a correction on what you said, you not only have to add some deductions yourself (some of which are actually already filled out, like the previously mentioned mortgage interest), but also other kinds of taxable income or wealth that couldn't be determined in advance, e.g. that bank account in a sunny country that doesn't share data with our government.
For standard cases you can be done in 30 minutes tops, it is actually a pretty good system, and you indeed immediately get to see either what you have to pay or what you are getting back. Although you'll need to wait for the official message from the Belastingdienst which can take a month or two. But usually that won't differ from what you were already shown.
Also nice, if you made a mistake you can simply correct it by opening your previous filing digitally, you can adjust a filing up to 5 years ago. Depending on what you adjust do expect to have to deliver some proof, as those adjustments are checked by an employee of the Belastingdienst. The regular filings are checked randomly.
How it actually works is that the IRS doesn't known how much you need to pay. You provide your income and taxes already paid throughout the year then the IRS says "yeah, looks about right for what you made" or here's money back you paid to much or didn't pay enough. It only gets complicated when you have huge amounts of money.
That's still dumb AF, they could easily do like many other countries do and send you a breakdown of what you owe/getting back and why. You look it over and go "looks good to me" and have to do nothing or "This part is wrong" or "I qualify for Y tax break/incentive/credit" and then file some proof and you're done.
But the tax prep companies lobby really hard to keep things as difficult as they are
and there is a tax form that is setup exactly like this available for years. the 1040x. but they don't use that to predo our taxes.
Your employer is required to submit the amount you were paid and the taxes that were withheld. The IRS knows how much you owe assuming that is your one source of income and you don't have deductions beyond the standard.
Exactly. The IRS has TONS of information on every individual and business. There may be some unreported items, but that’s the exception to the rule.
The IRS has a “transcript” with all of the many reported transactions associated with each person/entity. And you can request this transcript, which many people with complicated tax situations do so they can verify that everything is reported correctly and their records match the IRS data.
That's only true if you're getting paid cash under the table, make tips, or are self-employed. Your job reports your earnings to the IRS.
Pretty much how it works in India too.
I'm so tired of paying HR Block $300/year to do my taxes, which has no tax return because I do my deductions carefully. Why can't we have a straightforward system like the rest of the world??
Because Congress creates really, really complicated tax laws that reduce tax burdens for business losses and obviously favor a structure that if you're wealthy enough you can exploit it for things that aren't actually contributing to our economy. Regular person with a few deductions that might go over a standard deduction? You might want some help with that, even if you're "doing it yourself" with the help of software (just like almost all of tax preparers do) or if you're just doing a standard deduction, it is easy.
Why can't you just fill out a 1040EZ in a webform and file online through the IRS?
Companies like Intuit lobby Congress so that the IRS can't just make it easy for most people. For example, the IRS wanted to just have their own app on a website to help you do your taxes for free just like TurboTax but nope.
As an example, you can specifically blame Intuit as an example that has actively tried to limit the IRS making tax filing free and easy for most Americans.
The same thing has happened with weather in the US. NOAA/NWS pretty much provides all weather data and RADAR data to the public for free. They also provide a public API and all those weather apps either directly or indirectly get their data from there for the US.
Why don't they have an app like all these weather services do? Well companies lobbied so NWS isn't allowed to. The best they can do is provide a website that you can "use like an app." Paying extra for that up-to-date RADAR feed in your weather app? Guess what? You already did through taxes and now you get to pay a private company to simply display it in their interface.
You can specifically blame AccuWeather as an example of a company that actively has tried to limit the NWS and actually lock the public out of the data that they paid for through taxes.
Congress has the power to end this non-sense but does not. I'm sure this won't surprise anyone when I say this but US law is slanted towards empowering businesses and lowering accountability.
FreeTaxUSA provides free federal filing, including Schedule C (Self-Employeed) and Schedule E (Rental Income). I'm sure they have more scenarios.
You pay for state but it's usually a $12-15.
You can import your TurboTax/HR Block returns and it mostly does a good job bringing it in.
I started a thread on asklemmy to find out what are alternatives to scummy tax services that lobby against the better interests of tax payers. So far Tax Free USA seems like the one with the lowest cost (free Federal, $15 State) and while they are a member of a lobby group, the group has spent a fraction of what Intuit and H&R Block has to keep our tax returns complex.
Seems if I link the thread, my comment is hidden.
Have you looked into TaxAct or CreditKarma? Both seemed pretty good (compared to turbotax) when I tested them out.
Meanwhile here, come tax time I get a letter and only people that have special things going on like stuff they would get subsidies for (like installing solar panels or insulating), will have to alter what the letter says. Most everyone else can ignore the letter as all their taxes have been paid in full or they get something back.
I've often thought it would be fun to just punch in some random numbers, send it off and say that I owe $10, pay the amount and let them figure it out ... they already do anyway.
But I know that if I do, they'd probably make me pay financially or legally anyway.
I somehow forgot to do my taxes in 2011 (was a student and travelling), it took them 10 years to come at me asking about it. Now I have no access to any of that info and even if I did they'd owe me money. Their systems are slow unless you owe a lot I think.
I actually haven't done my taxes in like 2 years due to extreme poverty (in the u.s you don't have to file if your income is under a certain threshold) I think I'm still under that, but I still should probably file this year right? Is there anything specific I should do? Maybe not the best place to ask, but I hate financial anything so I'd really appreciate some advice
in the u.s you don’t have to file if your income is under a certain threshold
You don't have to but also if you're under that threshold you would almost certainly be getting a refund of all of the taxes you paid that year. So I highly recommend filing even if you don't need to
First thing would be to figure out if you're still under the limit. If you don't have to do them, don't do them.
If you are over the limit, there are plenty of free options out there to assist. I personally use free tax usa which works for me. It's great if your income just comes from normal sources like a job, it's not as great if you have investment income or things like that.
I think turbo tax has a free version as well if you meet some qualifications. It's a bit simpler to use imo, but Im not a fan of the company
You guess with a calculator and detailed instructions. Educated guess.
Here in Sweden they just come finalised. There may be occasions where you'll need to make changes, but that's literally never happened to me. "Doing taxes" involves me logging onto a website, skimming over a page or so, and then digitally signing it using my phone. Takes less than five minutes.
Here in the US, we have companies who offer their services to prepare taxes for you, and they spend an unreasonable sum lobbying the government specifically to not do what you lucky folks have been getting all along. Just can't have the US without unfettered capitalism ruining things for average folk. :(
You do engineering with calculator and detailed instructions, educated guess. You do mechanics with detailed insturctions. You do cooking with detailed instructions. You do rocket science with calculator and detailed insturctions. Just be built diffrent ladies! It's not THAT hard or an entire predetory industry, JEEZE FELLERS! /s
Blows my mind that you have to file tax returns and stuff in America.
An account's take on this https://youtu.be/Vu3T4ZXzOyw?si=KnAP2TEvx9WSLzno
Is it a good take?
Not really, says Australia has a good system and 45 countries at least partially do it already. The IRS will be testing a free online tool amongst a small group of filers in 2024 but none in the information will be pre populated due to limited scope of the project. He seems nice but talks really slow, rehashes content repeatedly and doesn’t even provide an answer or any kind of analysis. At the end he briefly wonders if TurboTax lobbying Congress impede progress…no shit.
He never really addressed anything in the video, it’s honestly impressive.
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