The IRS already has most of my tax information and knows the tax code. Why must I deal with a third party (and potentially have to pay them) to electronically file my own taxes?
As for "having most of your tax information", they don't. They know your reported income. You see that on your W2s/1099s/etc. What they don't know is whether or not you had a kid this year, or whether you lost a kid this year, whether you got married or divorced, if your spouse is claiming the kids this year or not, the number or amount of your charitable contributions, whether you have deductible mileage expenses, or a million other things.
The info that the IRS has from your employer is maybe 5 boxes on your return. Literally takes a few minutes to take the info from your w-2 and put it on a 1040.
If it's so easy, why is the IRS unable to do that? Why must I retype all of the information that they already have? If there's anything they don't have, I have zero issue tying that in myself.
The number and type of people living in your household is not an edge case. It applies to almost everyone, has huge tax impacts, and the IRS doesn’t know.
They can’t. Because IRS IT has been starved, beaten and abused for 20 years. If they had the resources and leadership, all of this could be possible via MOUs and better data access/normalization from the mainframes.
Filing a 1040 in the US is also very easy and takes a few minutes and can be done for free.
Another factor most people are ignoring is that state taxes are filed at the same time and each state has its own separate system. These third parties let you fill in and file both at the same time. It would be nice if the US gov did this too but it requires a total restructuring of the American system, and Intuit’s lobbying has nothing to do with why it hasn’t happened or for that matter why the tax codes looks like it does.
Not for most people. It’s a giant pain in the ass if you have bank accounts and want to file correctly.
If all you do is plug in your w-2 and pretend that’s your whole tax return and you don’t care about anything except the standard deduction, sure. That’s not correct for most people.
> state taxes are filed at the same time and each state has its own separate system
Can we stop pretending like this is a problem insurmountable for the federal government?
This idea that TurboTax can make this work but the government can’t is absurd.
25% of returns include the child tax credit and 16% include the earned income tax credit. These aren’t wealthy people filing with CPAs. These are lower income folks who specifically benefited from the IRS direct file program.
Again, you seem to simultaneously believe that nearly everyone has trivial taxes to file while believing that the government cannot reasonably support free direct filing for these people. I have to wonder how you reconcile these beliefs in your head. “I mean, this is so simple. Any moron can do it. But not the agency specifically responsible for handling trillions in tax revenue. Nah, too complex for them.”
Yes, in many European countries dependents and marital status changes are registered in a national civil registry, which the tax authority can query directly.
Countries like the U.S., Canada, the U.K. cannot easily do that without huge data-sharing reforms.
The federal government doesn't always know if you've had a child or if you've died. Not even specifically the IRS, but its possible for you to have a child and never involve any organization that reports to the federal government.
It is absolutely possible, just as there are tons of other exceptions that Direct File wouldn't cover. The point is that there's a golden happy path that many people trot along where things could just be easy.
When I lived in the US(5 yrs), early 2000s, from my second year onwards, I used to receive a pre-filled 1040NR-EZ with my W2 info already printed/filled-in on it. Typically, I would just add a deduction, and mailed it back. Does that program not exist? Or was it only for NR?
That's not what we're talking about. What we're talking about is: "We did your tax return for you based on all the information reported to us. Please click 'OK' to complete your return for the year."
The US is not a county optimized to provide quality services inexpensively. It is a business optimized to maximize profits.