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by eel 1954 days ago
I don't qualify for "Free File" tax software, but I still file my taxes for free using the IRS forms. It's easy. Yes, it could be easier, and yes, Intuit's tactics are repulsive, but the fact remains that filing individual income taxes is easy and free.

I would not be surprised if articles like these are just another form of PR for tax preparation companies. The goal of these articles seem to be to convince us that taxes are complicated and difficult.

5 comments

I'm not from the USA but I live here now. I came from a country where you log into a government website and hit a button to confirm your return because your employer already typed it all in and sent it in earlier... The idea that you're printing out forms and filling them out is crazy. The idea that you have to type in numbers someone already has is crazy.

I don't think it's a case of people making free tax filing is difficult. It genuinely is far far harder than it has to be.

One side of the political spectrum has argued that the government will take advantage of this to overcharge citizens. Which sort of treats the taxing entity as an unscrupulous business looking to make a quick buck.
I don’t think increasing compliance costs and complexity is part of any mainstream political ideology. It seems a lot more like a perverse special interest to me.
It's because everyone wants their situation to be special and get special tax breaks because of it. Don't get me wrong, Turbotax is scummy but the real truth is if a politician wants to eliminate "deductions" which is what makes taxes so complicated - then you get a large backlash because someone's taxes are getting increased.

The government can't automate it because a lot of these deductions are not things they can learn about looking at your W-2.

If anything _your_ comment sounds like propaganda from the tax prep companies: "hey! Why you hassling us! See this bloke filed his taxes by filling out the forms himself, people always have that option! All we do is offer a paid easier option! Also don't mind us lobbying the hell out of the status quo which is quite literally insane if you compare it to any other developed country! "
Easy for you, yes. As someone who has helped others with tax preparation, plenty of people find it daunting. Many Americans struggle with both financial literacy and literal literacy.

Tax preparation should be automatic and handled by the government, full stop.

Again, I agree tax preparation should be easier. Most income is already reported to the IRS, so it stands to reason that the government could calculate my taxes for me.

I still think we're playing into the tax preparation industry by calling it daunting. I maintain the current process, while inefficient, is in fact easy for most Americans.

The IRS provides free fillable forms regardless of income level. The process for individuals is to first collect all of one's tax documents, read the instructions, and copy the numbers into the correct boxes. The forms calculate most of the math for you. If you make a mistake, the IRS will likely tell you. Not perfectly efficient, but far easier than I was led to believe.

How easy is it? The system here in Australia seems super well done. They already have all my data. I just look through it and confirm its correct and add in any deductions I want to make.
Its not terribly difficult if you only have say wage income and some interest on a bank account [0]. But, it can get very complex very quickly if you have other sources of income, or want to be sure to take all of the deductions you might be eligible for. On top of that, each state has their own set of taxes (though in my experience, they are simpler and largely rely on information from the federal taxes). Hence why most people use software or pay tax professionals to prepare their taxes for them.

The IRS probably could provide a more or less pre-filled form for many people. They have the information on most taxable income already. However, they dont. The reasons for this are complex, like the tax code, but mostly boil down to "politics".

[0] Here's the main tax form: https://www.irs.gov/pub/irs-pdf/f1040.pdf

I think that it's straightforward enough in Australia, but that's partially because we file and pay only federal taxes, with states levying payroll tax, land tax (or stamp duty), etc, but those are less frequent transactions and generally accountants are involved.

For federal taxes, payroll systems typically transmit your data to our taxation office on each payrun, and then a few weeks (or sometimes, immediately) after the end of the financial year, your details are already in the system and you just need to hit the button to submit.

Our tax office has also tried to make it easier for individuals with simple requirements to keep records of work-related tax deductions, etc, such that you can use a mobile app to record them, and then it can also be imported into your return with a single click.

I think for many people - myself included - it's easy enough that you can (and I have) complete it on your phone on the way to work on July 1st (the first day of our income tax year, and the first day you can file for the prior year).

>would not be surprised if articles like these are just another form of PR for tax preparation companies

They absolutely are not - the crux of the issue is tax prep companies should be a very niche product - the government should provide an efile option. Since most people's taxes are fairly simple they should be automatically done for you so all you have to do is log in and approve of the autogenerated form. At the very, very least e-forms should be pre filled out with what the government already knows about you because your employer, bank, or brokerage reported to them.

All this standard in almost all other developed countries. It's absurd there is for profit companies calling the shots in this area.