IRS will pilot free, direct tax filing in 2024
techcrunch.com
IRS will pilot free, direct tax filing in 2024::Direct File is a shot across the bows of Turbotax, H&R Block, and others who have resisted free and simple tax filing for decades.
IRS will pilot free, direct tax filing in 2024::Direct File is a shot across the bows of Turbotax, H&R Block, and others who have resisted free and simple tax filing for decades.
The rest of the developed world has had this for decades.
So I fully expect this initiative to be lobbied out of existence by Intuit and the rest of the tax filing industry.
Pretty sure most people outside the US never even have to file a tax return? Income tax is deducted at source by employers. Solicitors collect it if you buy/sell a house. Etc etc. You only need to do a tax return if you're self-employed or quite wealthy (in the UK, at least).
I am self-employed. It takes about an hour to do my taxes online.
In France everyone has to fill a tax return. It will be prefilled with your salaries, but you still need to add deductions (for example house renovations or child care) or special revenues like real estate.
But yeah, if you only have salaries and no deductions you just validate your prefilled return and be done with it.
You can deduct house renovations in France? Does this mean if your reno is the same as your salary you pay no tax that year?
That seems odd
Western Europe here. I’m old enough that I’ve had to file many paper tax forms. There have always been free services to help with that.
Now you can do it all online, and the known information is pre-filled. The last few years you don’t even have to click “accept” anymore, accepting is automatic if you don’t do anything.
That said, there still are paid services, but their main aim is to find all the ways to reduce what you pay (and they are likely used mainly by the well off).
Australian here. The ATO (australian tax office) has a website you go to. It is pre-filled with various dada, your salary, your bank interest, uni loans, etc.
You add any additional salary, eg gig economy or crypto earnings (lol) and put in your deductions. I deduct heaps because I make money on the side renting out my camper van, and all its expenses are deductable from its earnings, but if you just have one job and thats it, then you can be done with your tax return in 10 mins, for free, online.
You can even preview your expected tax return before you commit. Once you commit, the return lands in your bank acvount usually within a week or so. You even get a receipt showimg what they spent your money on.
Cost whom billions?
Intuit's bottom line.
To the taxpayer, ofc. As opposed to the status quo, that costs billions to the taxpayer.
Yeah, even my third world country does this. But this only works if you only have a 9 to 5 job. Some people have more complicated tax.
This guy explains it a bit more:
https://youtu.be/Vu3T4ZXzOyw?si=rEa-U7GHoe_DapeV
Luckily, most people are 9 to 5ers. The vast majority of people have simple taxes that a trained monkey could handle if it weren't for the Intuit cabal.
Let not perfect be the enemy of good. This is a good step and from here, we can improve the system by steps until the only people who can't use it are tax cheats. Over optimistic? Yes, but I'm taking my wins to go.
What? The government will actually collect taxes itself like every other sane country, instead of privatizing it out to middlemen grifters? Oh my, where is mah fainting couch?
Beautiful :)
You always had the ability to freely file your taxes.
That guy is obviously exaggerating for effect and you are technically correct, but he's not wrong.
Companies like Inuit and H&R Block have been lobbying for ages to keep the free file forms ridiculously overcomplicated, difficult to navigate/complete, and dangerously generalized to the point where if you mis-interpret a line on one of your several non-intuitively named financial forms you will be committing tax fraud
It is objectively easier, safer, and more convenient to file taxes through one of these private companies and the is by design.
Thank you -- the point I was trying to make is that technically USians can file their own taxes, but that it's overly complicated, and many believe intentionally obfuscated, in order to push citizens to use private corps to do it for them (at a healthy profit for said corps).
Whereas, in Canada (and as I understand it, most other nations) the tax system is not so baroque as to discourage people from doing it themselves.
I've been doing my own taxes for 22 years, it's not hard
In Canada, unless you have some weird stuff, the tax filing form is smaller than the census. They just need to confirm things that links your accounts. They already have your pay and taxes amounts from your employer, your bank tax statements from your banks, etc. So unless you’re doing something only like 1% of the population does, it’s a two pager online, 20 minutes in and out, that’s it.
That’s not far from the same for simple filings here in the USA. Both my adult kids do their own in about 10-15 min. Maybe less after the first year. This is through TurboTax online.
Also, it’s free as long as you don’t make much or have things like HSA or 401k.
Isn't 401k pension payment? Not from USA.
It is a retirement savings plan that most employers offer. You put money in it from your pay period into it, and it is taken out pre-tax, as in your taxes are calculated from your pay during that period after the retirement deduction is taken out (other things are pre-tax also, but 401k is one of them)
Filing taxes still isn't free then, if filing for something basic as pension isn't.
It’s still free, just not through turbo tax.
Filing taxes is always free. But for some people, it can be more complicated than they are comfortable doing. If all you have is a W-2 job with an HSA and a 401(k), your taxes are so straightforward you could do them yourself very easily in 10 minutes using the irs.gov ffff site.
Oh, but then there is the issue of state taxes which most states have. I can’t speak to all 50 states, but I do know if you live in a state with no income tax there’s literally nothing to file.
sure down vote the truth
Why can't they pre fill in the form and ask us if it's correct. The cast majority of us have pretty straight forward filling is.
Because Intuit and H&R Block have given more money to have it stay the same than anybody has for simplifying it.
Gotta love a bribery based legislature system.
Can’t like… a few million of us put a dollar in to make a big enough bribe to counter these assholes’ bribes?
People have tried with minimal success to do something like this IIRC.
The biggest problem is that corporate America has shit loads of cash. So much so that even if Americans were to pull the money together, it just wouldn't compete.
The solution is to vote politicians into power that don't accept bribes and are willing to criminalize them.
So basically never vote for Republicans!
More or less, yeah
This makes it sound like some dystopian survival lottery.
I volunteer!
Four states signed up for the test, the rest "may be eligible" due to not having state income tax.
No, we'd call this a closed beta test.
Where I work, we'd just call it an established product...
Prototype performs one function on the happy path and crashes regularly on the edge cases?
Ship it!
I've been using IRS Free File Fillable Forms for a few years now. It's not super great but it does the job. It also has a dorky name.
IF^4
Yeah. Stupid name even when I try to hype it up.
I²P is real name. IF-four or IF Hypercube? Maybe call it IRS' Hypercube?
Wait, do US citizens have to pay to file taxes? Or is this a service to help navigate the complexities?
Not American, bit my understanding is that filling taxes in the US is complicated and confusing to the point where most people use paid software to do it. There is an obvious lobby of tax filing software companies keeping it that way.
nailed it.
It isn't even that complex if you are doing basic forms. Literally plug in numbers from a document that gets mailed to you January 15.
These are just private companies that typically fleece you out of a percentage of your income tax return.
My ex made us file taxes using "experts" for 17 years, even though I proved to her I could do it myself, and came up with the same numbers the "experts" did, because "they insure you if something goes wrong"
It's a scam. TurboTax, Jackson Hewitt, it's a scam
The government charges no fee to file.
However, until this year, lobbying has prevented the IRS from providing online services to help taxpayers fill out the forms or file directly, instead being required to outsource that and only expose a (wildly insecure btw) API for electronic filing.
Because the US tax code is also complicated as fuck and changes all the time, services like TurboTax exist and charge you to fill out the forms.
Repeat the above for each state you work / have income / own property in.
US citizen here. Used to file my own for free. At one point I bought a house and qualified for some tax credit so I paid an accountant to do my taxes that year to ensure I got everything right, bascially never went back becuase it was worth the $175 to litterally do nothing except mail my tax documents to an accountant.
You have a pretty basic tax situation so you might reconsider paying that $175. I'm in roughly the same boat as you and pay $10 for FreeTaxUSA (and previously $0 for CreditKarma Tax) to file my state return and $0 for the federal return.
It's the latter.
The short short version is that Intuit and H&R block make software to make filing taxes easier, market heavily and lobby heavily to prevent the IRS (which is itself a separate entity from the federal government whose sole customer is the federal government) from making similar software
For most people who have a job and rent the place they live they can fill out all of their taxes in just a couple of pages of forms (see the 1040EZ for example. Just punch in the info from the W2 your work gave you, some quick addition and subtraction then mail it off) and the IRS already knows most of the information, so it's already extremely easy, and if you own your home or want to take advantage of additional tax incentives it might be a bit more complicated. You can always download the forms and do it all manually, but tax software generally makes it easier
You can download forms from the IRS website or use free software like TaxHawk. Many people prefer to use similar software that you have to pay for or pay an accountant to do their taxes for them.
This is the best summary I could come up with:
The IRS will test a free tax filing service in 2024 for a subset of lucky taxpayers in as many as 13 states, the agency announced today.
The program is more or less a direct result of funding provided by the 2022 Inflation Reduction Act, through which $15 million was earmarked for the purpose of exploring and implementing a simple, free, government-provided tax filing service.
Over the last year and a half, the IRS has been building out the pilot program, which it characterizes as being “one more potential option” on the continuum from self-managed Free File, to commercial products like Turbotax, to a tax prep professional.
The IRS describes Direct File as “a mobile-friendly, interview-based service” available in English and Spanish, intended for people with simpler tax situations like W-2s and common income credits and deductions.
This will in turn “allow the IRS to evaluate the costs, benefits and operational challenges associated with providing a voluntary Direct File option to taxpayers.” In software terms, we’d probably call this an alpha.
Intuit and others which have surreptitiously fought against simple, free, and transparent tax filing for many years (as ProPublica documented not long ago) are no doubt seething and scheduling emergency meetings.
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LET'S FUCKING GOOOO
Wait, there was no direct tax filing?
You've always been able to file directly, but it involves paper forms not software that can guide you through the process and identify extra forms/deductions/additions that you might need to include.
Nah, it's OK. Every person in the world knows what's IRS, no need to explain the acronym.
You're right, that title would have been much less wordy if "United State of America's Internal Revenue Service, the government department responsible for collecting taxes" was added.
Be cooler if we didn't have to pay tax at all..
At a 20% tax rate (relatively low) over a 5 day work week, you will work 1 whole day and receive ZERO money from it. It gets washed away to taxes
You exchange that money for infrastructure and services. You think that roads build themselves with fairy dust and unicorn wishes?
I wanted to write a clever, sarcastic reply to this, but I couldn't come up with anything.
Suffice it to say taxes are what fund society at large. Roads, schools, etc. If you lived on an isolated island without any access to the benefits of society, I'd say you have a point, but you're using the Internet, so...
We have progressive tax rates so you'll be paying less than 20%. A simple example using your single week of work would have you paying 0% for day 1, 5% for day two, 10% for day 3, 15% for day 4, and 20% for day 5. Assuming you make $100 a day/$500 a week, this would put your tax bill at $50 for the week or 10% even though you hit the 20% bracket.
Well have fun when your house burns down, cause the fire department certainly isn't gonna come there without getting paid.
And even after you pay the fire department to come out, you'll have to pay someone else to dig out a road to your house for the firetruck to drive on and then pay a third person to dig a trench to the nearest body of water so they'll have something to spray on the fire.