[dheera]

sigh this is a baby step but

- Many if not most software engineers in California earn more than the $200K household limitation for using Direct File

- From my understanding there is no way auto-generate my state tax return from Direct File so I would have to do all the work twice even if I can use it

- Complicating my tax situation (legally) allows me to save more money, I would save far more than the price of TurboTax by using TurboTax instead of Direct File, as much as I hate it

[dmd]

94% of Americans make less than $200k a year. Not everything is meant for "software engineers in California".

[8note]

I don't get why there's an income cap though. There's nothing that gets more complicated on income alone, only if you add extra stuff to track

[Sivart13]

In an effort to keep the scope manageable for the pilot year, the Direct File team chose to have an upper income limit so they would not have to support Form 8959: Additional Medicare Tax (https://www.irs.gov/pub/irs-pdf/i8959.pdf) which only kicks in at that threshold.

Though it's also very likely at these high incomes that you would be disqualified for other reasons (investment income etc)

[MarkSweep]

8960 (net investment tax) is another form that only applies at 200k or more income.

[CamperBob2]

Anybody who makes more than about $200K-$300K/year is likely making a mistake if they don't have a CPA.

[Sohcahtoa82]

What makes you say that? I'm assuming you're adding other assumptions.

My wife and I combined make about $300K/year. We don't run a business, don't make charity contributions, only pay ~$5K in mortgage interest, and don't have kids. We don't even do retail stock investing (EDIT: And I haven't exercised any employer stock options), just a 401k, an IRA, and a 5.25% savings account.

We take the standard deduction. I can't imagine a CPA would be able to find so many possible deductions that it would be worth itemizing.

[brianwawok]

Yup totally silly. My CPA wouldn’t even take you on as a client, he would say go to HR block if you don’t want to do it,

[FireBeyond]

Which is also silly. My experiences with HR Block was that they basically had their own version of a TurboTax-like thing, and all they were doing was literally asking you for the numbers for each question. There was zero critical thinking applied.

I had just bought a house, just bought a hybrid, started working from home, and was new to the US.

"What are you claiming?" "What can I claim from this?" "I'm not sure. But I can put these numbers in here and see what it says."

You're literally paying for someone to type in the same numbers you would, with as much (or at times less) knowledge than you (who is also less invested than you in getting it right, but much more invested in selling their 'audit protection' stuff).

[fooker]

The IRS prays for citizens like you!

[dheera]

I disagree. If there's a CPA who wants to give me money-back guarantee, be my guest.

I do my taxes first. You (CPA) look over it, if can save me any additional money, I'll give you 1/2 of the additional money saved as your compensation. Deal?

[cqqxo4zV46cp]

Part of their fee is for you to not go through doing it yourself, so, no.

[PopAlongKid]

> if they don't have a CPA.

There are alternatives to CPAs, who are licensed by individual states and don't necessarily specialize in taxes. Several states, including California, require testing and registration for paid tax preparers who aren't CPAs or Enrolled Agents. EAs are the only federally-licensed tax professionals with unlimited practice rights before the IRS.

It's reasonable to assume that CPAs pass along the costs of their marketing and lobbying efforts to their clients, without any guarantee of higher quality compared to the other professionals available.

[silisili]

Yeah no. I thought I'd hire a CPA one year to see what 'breaks' they might offer.

All they did was fill out Turbotax for me, and charge me an extra 150 for that.

[m463]

I kind of wonder if software engineers making this kind of money but no tax problems should be getting advice from folks who can look back and see what they should have done. (tax problems sometimes come from outlier behaviors that might be good)

[dheera]

I meat this is Y Combinator Hacker News, so I would expect "software engineers in California" to be a significant fraction of the user base here.

[cududa]

The problem is you're exposing yourself as someone extremely self-centered, and someone that assumes their lived experience is equivalent of everyone else's, and adjudicating the utility of this particular thing as if you are reflective of the larger population.

Saying the majority of engineers in California make at least $200k makes you even more out of touch. According to Glassdoor, over $200k for a SE in CA is 90th percentile. The average SE in CA makes $132,000

https://www.ziprecruiter.com/Salaries/Software-Engineer-Sala...

[Dalewyn]

>The problem is you're exposing yourself as someone extremely self-centered, and someone that assumes their lived experience is equivalent of everyone else's, and adjudicating the utility of this particular thing as if you are reflective of the larger population.

Most of Hacker News and indeed the tech community at large exhibit "I don't understand life outside of California cities." syndrome, this by itself is nothing new.

[noahtallen]

True, but we’re talking household income which includes partner income. Eg $140k + $60k or $120k + $80k. Your main point is still fair, though.

[ksec]

>make at least $200k makes you even more out of touch.

$200K as the entry level for FANNG ( what it used to be call ), and then Big Tech and now Magnificent 7 has been the norm on HN since 2016. It wasn't until 2023 did reality started to hit many.

[dzhiurgis]

Which is ~$70 per hour - which you can earn from US firms while remoting across many timezones.

[Jtsummers]

$70/hour is about $145k/year. If you're meaning it's close to $200k/year, that'd be $95/hour assuming 2080 hours/year (52 weeks at 40 hours a week).

[dzhiurgis]

I always assume 48 weeks (1 month vacation per year as is normal in most places)

[dheera]

GlassDoor and Ziprecruiter are grossly out of date.

https://www.levels.fyi/t/software-engineer/locations/san-fra...

[runako]

Use Levels, but change the location to the other big cities in California. The LA number is ~$80k lower than the SF number, while the Fresno average is $120k. The SF area is a wild outlier even in big California metros.

[BeetleB]

Sorry, but they're far more representative than levels.fyi. The latter has a very strong sampling bias - most of the companies in its DB are on the high end of the payscale.

[schmidtleonard]

Your suggestion that we don't / shouldn't care about anything other than ourselves is more than a little insulting, whether you intended that or not.

In any case, like the root of this comment tree says, the best way to make sure this program lives to reach us is to make sure it paces itself. If that means another year or two of TurboTax, that's A-OK!

[ohashi]

Some people have a broader view of the world and care about things which might not directly impact them

[nickpinkston]

This 100% - thank you

[PaulHoule]

They are still a tiny minority. I mean HNers from everwhere from Wyoming to Germany and Brazil.

One of the best ideas the Reagan administration had was paperwork simplification, they introduced a 1040EZ for (roughly) the same kind of filer that Direct File works for.

My son put off paying his 2023 taxes to the last minute, I told him he should try Direct File (I'd believed the story that it would be easy) but when he tried it he had extreme difficulty authenticating himself, I think because they check you against consumer databases and they could not compare to past tax returns, credit history, etc. because this was his first tax return and he had no credit history.

We were forced to wait for a long time to talk to a human operator for him to verify his id. In that time I found out that there was no longer a 1040EZ, see

https://www.investopedia.com/terms/1/1040ez.asp

but I was able to fill out a complete 1040 and the New York equivalent of it before we got through to the operator. We just got the check from New York the other day after about 6 weeks, haven't heard from the IRS yet.

[elicksaur]

We have internet everywhere else. They even measure it in gigabits!

[ilyagr]

In practice, for software engineers in CA, I'm guessing that https://www.freetaxusa.com/ will be superior to Direct File for a while. It also files federal taxes for free with no limits AFAIK.

In terms of societal and long-term impact of eliminating the middlemen, Direct File has much more potential. Hopefully, in a few years, states will integrate their tax systems with Direct File. Perhaps one day the government will finally send us a completed tax return as opposed to the other way around.

[fragmede]

> Many if not most software engineers in California

have complicated taxes, due to how they're making that much money. I don't have a problem with them optimizing for the simpler case (eg the intention behind the 1040EZ) while software engineers, who can afford a CPA to deal with optimizing their tax burden off non W2 income, aren't initially able to use it.

[gamblor956]

DirectFile was created by the IRS, a federal agency, for preparing your federal income tax return, in a manner similar to the streamlined e-file options available in other countries (i.e., for the most common/basic situations).

There are 50 states, and every single one of them has their own idea of what an income tax return should look like, so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain.

The US also has significantly more tax planning/tax structuring opportunities than do other countries, and DirectFile doesn't even try to handle those...but neither do its foreign counterparts. If you have a more complicated tax situation, like most software engineers do, than DirectFile isn't for you, and never was intended for your use case.

[ethbr1]

> so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain.

The way to extend this, if the federal government wanted to push it, would be to define a standard export format from IRS DirectFile, containing all the information in it...

... then make some federal money contingent on states implementing a filing system with an import function (for the shared data).

Nice clean interface, and still states' choices on if they want to support.

[dheera]

> There are 50 states, and every single one of them has their own idea

That's not my problem. The states are part of the country. This is as bad as restaurants charging tips instead of stating one number. Government dudes should meet and work it out between state/federal and give me one damn number.

All I want is one number.

[galdosdi]

Incorrect. You must not be a US citizen (or else went to a poor quality K12 school that failed to teach the basic civics)

States are NOT an administrative subdivision of the larger country. This is a common misconception. They are not at all like Japanese prefectures, not like Canadian provinces, nor like the counties or parishes that US states are subdivided into.

States are fully sovereign entities that retain to this day certain inalienable rights vis a vis the federal government.

A good analogy is that the US is more like a stronger version of the EU. States like New York and Texas within the US are more like Germany or France-- they've ceder some rights to the federation but retain many others. The US constitution, which is short and easy to read and required reading for the US Citizenship test, clearly outlines which powers are reserved for which part.

>That's not my problem. The states are part of the country.

[galdosdi]

While I'm at it, the very attitude of "that's not my problem" reveals your foreignness (or if you are from here and very young, perhaps the sad fact that civic culture is dying everywhere but maybe new england)

America has or has traditionally had a strong culture of self determination and citizen involvement in and ownership of politics and government policy.

Another word for this is democracy. Real, genuine, messy democracy. America is not a service provider to you. It is a union or coop you are a part of.

You are not a customer of your country. You are a member. A shareholder.

This attitude is I know very foreign to many people who come from elsewhere and only know authoritarian states or democracies in name only. Or very young people who have caught on that civic culture is dying in most of America.

But it's fundamentally diametrically opposed to what this country has always been intended to be at its best. it is very very much your problem

[jltsiren]

US states are not fully sovereign. There is a simple test for that: can a state secede unilaterally. If not, states are subordinate to the federal government.

The original idea of the US was a decentralized state. The Union is the sovereign entity, while power rests with the individual states, unless explicitly given to the federal government. Over time, it became clear that you can't run a country like that in the modern world. Slowly, with creative interpretations of the Constitution, the federal government gained more and more power over the states.

One of the distinctive features of the actual US system is that it's often unclear which level of government has the authority to regulate a particular matter. Much of the political debate is about the constitutionality of laws and regulations, which may have been in force for decades. And controversial legislation often ends up in the Supreme Court, which may then decide that the state or the federal government did not have the authority to regulate that.

[rockinghigh]

No need for personal attacks. The states and the federal government could better coordinate tax filing, it would not be against the US constitution.

[galdosdi]

Not a personal attack. There is nothing wrong with being a foreigner or having grown up in a bad school district.

[lttlrck]

The US Constitution is not required reading for the citizenship test.

[galdosdi]

Not formally, but might as well be. Plenty of the questions can be answered by looking them up in the Constitution, and it can be read through and annotated thoroughly in an afternoon.

[Jtsummers]

The US is a federated system, the states' tax laws are independent of the federal tax laws (mostly, there are some interactions in there) and the responsibility for collecting state taxes falls on the state. The federal government cannot step in without authority which would have to be delegated by the states because it is their authority, not the fed's.

[8note]

From you early comment along the lines of "I make my taxes as complicated as possible so that I can save money on taxes"

You would never take the one number if you could save money by making it a thousand instead. Eg. if your state did that simplification, youd move to a different state that doesn't have the simplification so you can save a couple bucks on the taxes

[Spivak]

> so a direct file that handled state returns would take several years and hundreds of staff to develop and maintain

Or just contract one of the companies that already do it with a public-private partnership. HR Block or whatever gets paid say 2x their current tax prep revenue in exchange for being the white-label direct-file available for free to everyone.

Like these tax prep companies are crazy cheap for just being able to hit import next next next next next submit and never think about taxes ever. The work is already done, why duplicate it?

[dessimus]

>Or just contract one of the companies that already do it with a public-private partnership.

The IRS tried that already and the 3rd parties just used dark patterns that tricked customers into paying for unnecessary services.

[idiotsecant]

You must be quite devastated that you have to take a few of those 200k dollars and hire a CPA. Try not to sigh so hard you run out of breath.

[macrael]

Yes? That was the point of my comment? If they had tried to support everyone's tax situation on day one they likely would have failed, but instead they shipped something that works, got made permanent, and now we all get to look forward to using this tool sometime in the next few years as it graduates from MVP to entrenched software

[whymauri]

I'm confused, I used (what I thought was) DirectFile for Massachusetts via MassTaxConnect (totally free). I make more than that threshold.

Did I do something wrong?

Edit: I understand now. DirectFile is for Federal and MassTax is for State taxes.

[cqqxo4zV46cp]

This comment, specifically, makes me hate this website. I don’t specifically care about “engineers in California”. Tech bros deserve all the hate they get.

[avgDev]

This comment is why people hate tech bros.

[tombert]

I mean, I don't dispute anything that you said, but a baby step is still a step. As they onboard more people onto the platform, they're be able to suss out bugs and fix issues and be able to raise income thresholds and maybe start handling state returns as well.