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March 26, 2013 4:50 PM   Subscribe

As the tax deadline approaches in the United States, ProPublica investigates why the promise of free and simple tax filing has yet to be fulfilled.
posted by antonymous (61 comments total) 14 users marked this as a favorite

 
I don't trust the state or the feds to calculate my taxes for me. In my experience they've been wildly off and do not correct their errors until you point them out (which usually involves more phone calls and paperwork).
posted by desjardins at 4:59 PM on March 26, 2013


That's fine, but for the dominant plurality of folks, the 1040 EZ is all you need. And the California one is pretty simple, even including a couple of 1099s.
posted by klangklangston at 5:01 PM on March 26, 2013 [6 favorites]


I don't trust the state or the feds to calculate my taxes for me.

No one is proposing that you be forced to trust them. They're simply offering to provide everyone with a calculation that they can take or leave as they see fit. For a very large number of people that will be a perfectly accurate calculation and will save them either time or money or both. For quite a few poorer people it will mean getting more money (in Earned Income Tax Credits) than they realize they are eligible for.

For the vast majority of people whose taxes are complicated enough that there is something significant to be gained by calculating their taxes independently it's not a serious burden to either buy Turbo Tax or hire a CPA or whatever.

Of course, there is another issue hidden in this which is the absurdly baroque complexity of the US tax code. Simplify that and the motivation to have a professional finagler handle your taxes pretty much disappears. I know reasonably well-off professional people in other countries for whom "doing their taxes" is a five minute exercise.
posted by yoink at 5:09 PM on March 26, 2013 [19 favorites]


Why do you socialists all hate labour? The tax industry is billions of dollars of economic activity.

Now you, get back to digging that ditch and you, over there, get back to filling 'em in.
posted by GuyZero at 5:09 PM on March 26, 2013 [18 favorites]


One sentence from the article struck me in particular:

The idea, known as "return-free filing," would be a voluntary alternative to hiring a tax preparer or using commercial tax software.

I'm a citizen of the United States, and I already don't hire a tax preparer or use commercial tax software. Am I so rare?
posted by baf at 5:11 PM on March 26, 2013 [3 favorites]


Seriously, what is with Grover Norquist? Whenever anything related to taxes comes up, it seems like he's throwing the most money around and shouting the loudest for whatever option makes the absolute least sense. Does any mention of the word taxes activate some bit of, like, howler monkey DNA buried deep within his brain?
posted by aw_yiss at 5:13 PM on March 26, 2013 [19 favorites]


Oh man. In 2012 I bought a house together with my fiance, so the tax preparation this year has presented some... new and interesting challenges.

A lot of times the debate about tax simplification, whether it's flattening rates or eliminating loopholes or just reducing the paperwork or whatever, gets tangled up with income inequality and claims that "the rich should just suck it up and pay their fair share," etc. But here's something to think about, that occurred to me as I was fiddling with the several different schedules and instruction sheets I needed to reference this year: between all the different minute details and the numerical "reward" you get when you find a deduction or exemption, a complicated tax system is, like, the highest-stakes example of gamification EVER.

For instance, once I realized where to put my property tax amount to get that exempted, it dropped a few thousand bucks from my taxable income: score! I mean, all the little click rewards on all the Facebook games combined are a pile of shit compared to a few thousand bucks!! (though obviously the amount I save in taxes is far less than the reduction in taxable income.)

So... I wouldn't say that being aggressive on your taxes exactly has the "fun" aspect of gamification, but it is a specific rule-based reward system where the harder you try, the better you "score" in terms of exempted income - and reduced payment to treasury. So regardless of what you think about return-free filing in particular or tax simplification in general, is it really the best idea to be providing this sort of incentive to spend as much time as possible and try as hard as you can to knock bits off your tax bill? It seems crazy.
posted by Joey Buttafoucault at 5:25 PM on March 26, 2013 [3 favorites]


the IRS would be doing essentially the same work it does now. The agency would simply share its tax calculation before a taxpayer files rather than afterward when it checks a return.

So, basically, this is just added transparency. The government doesn't get significantly larger so the big government argument doesn't apply.
posted by Obscure Reference at 5:27 PM on March 26, 2013 [9 favorites]


Like Joey, I see the forms as a giant game. I usually do my taxes once, then go back then and take stuff out to get my marginal rate high enough to stave off an automatic audit flag. My feeling is that as when GE and Exxon start paying their taxes, I will stop looking for every loophole. That said, I never bitch too much about my property or school tax, even though I think they are ridiculously high, I like the services they pay for.
posted by dejah420 at 5:36 PM on March 26, 2013 [1 favorite]


In 2005, Norquist testified before the President's Advisory Panel on Federal Tax Reform arguing against return-free filing. The next year, Norquist and others wrote in a letter to President Bush that getting an official-looking "bill" from the IRS could be "extremely intimidating, particularly for seniors, low-income and non-English speaking citizens."

Because, of course, Norquist's crusade against nearly all government spending is in service of the elderly, the poor and the immigrants.

In actuality, it's very simple. Anything that makes the average citizen's experience with taxes the slightest bit easier, simpler or more pleasant will harm Norquist's mantra that taxes are confusing, malicious and ultimately needless.
posted by Bromius at 5:40 PM on March 26, 2013 [13 favorites]


Like Joey, I see the forms as a giant game.

A game where one possible consequence of failure is total financial ruin. Sounds great!

No thanks, I'll keep on paying H&R Block to do the forms for me, because then if the IRS ever decides to try to destroy my life at least I have some kind of insurance.
posted by Mars Saxman at 5:46 PM on March 26, 2013 [2 favorites]


Shout out to ReadyReturn. It turns out that CA's free file service isn't very popular because of a lack of advertising. This is the first time I'm ever going to shill a product on Facebook.

https://www.ftb.ca.gov/readyreturn/
posted by The Ted at 5:55 PM on March 26, 2013 [1 favorite]


As others have said, taxes are homework, not a test. You can re-file them and if you make a mistake you just tell them and generally it gets corrected without a penalty.

Fraud is a whole other issue. But as long as you're not attempting fraud the IRS is fairly benign in its Kafkaesque way.
posted by GuyZero at 5:56 PM on March 26, 2013 [6 favorites]


For quite a few poorer people it will mean getting more money

You can stop right there, you've found the reason why some people find the idea so offensive.
posted by Kadin2048 at 6:03 PM on March 26, 2013 [11 favorites]


Taxes were a breeze for me up until two or three years ago, when they stopped sending the tax books. As an overseas resident, I fill out the 1040 and the 2555, and it took all of 15 minutes. "Do you live overseas?" Yes. "Did you make more than $92,000 this year?" Snort, derisively, then sigh longingly, no. Done.

Now that they don't send the books out anymore, I'm freaked out, trying to find which one of the private companies?! the IRS recommends for me to do my filing with online. The joy of that whole ridiculous situation (aside from giving information about my income and expenditures to a private, for profit company so that I can fulfill a legal obligation) is trying to find one of those online forms that actually accepts the foreign earned income exception. Tons of fun getting halfway through filing (which takes longer than just figuring it out with paper forms and a calculator) and finding out that, oh, sorry, this online filing format doesn't support that form.

I'd sign up for this in a second. It's pretty much what's already done in Japan.
posted by Ghidorah at 6:03 PM on March 26, 2013 [2 favorites]


As a former resident of post-Prop-13 California, reading any quote by Grover Norquist makes my blood pressure rise. It will be a happy day when he moves on from his anti-taxes crusade (casket or common sense, I don't care which kicks in first).

As a taxpayer with a stupid simple tax return, I'd love to use this system. Taxes stress me out, so I pay Turbo Tax to deal with them, but I'd love to stop paying them and instead just double-check what the government sends out. Intuit no doubt shudders at the very thought of that dystopic nightmare and then throws more money at Cantor.
posted by librarylis at 6:07 PM on March 26, 2013 [2 favorites]


I'm a citizen of the United States, and I already don't hire a tax preparer or use commercial tax software. Am I so rare?

Yeah, making extremely little and owning less makes my taxes fairly simple.

But it's still a pain collecting a handful of forms that have been mailed to me over the course of six weeks and spending a couple hours some weekend filling the 1040EZ out.

Would I rather spend two hours filling out forms or ten minutes checking a form? Isn't it weird that people who seek to prevent me from even having the ability to chose for myself say they are trying to "protect me from tyranny?"

Also, let's pause to remember that time when Grover Norquist compared progressive taxation to the holocaust.
posted by midmarch snowman at 6:07 PM on March 26, 2013 [6 favorites]


I can see the return-free option would have been a great option for my younger self. Every return was a 1040-EZ where all I did was subtract a 3 digit number from a 4 digit number and wait for check with a 1 digit number in the Amount Box.

It took 4 phone calls for the IRS to send paper work to my current address. Yeah, great for other people to have options, I'll stick with TurboTax.
posted by MiltonRandKalman at 6:09 PM on March 26, 2013


I'll just chime in with the fiscal conservative / libertarian perspective here. If we're going to have an income tax, I have no problem with the government administering it directly, rather than having the bizarre system of independent filing companies that we have now. I'd much rather go to IRS.gov, fill out and submit a 1040 and appropriate supporting forms directly on their website, rather than going through the rigamarole that I'm going through now. Even today, I paper-mail my business tax forms and state forms rather than pay cash for the privilege of filing them.
posted by Hatashran at 6:19 PM on March 26, 2013 [5 favorites]


midmarch snowman: "Also, let's pause to remember that time when Grover Norquist compared progressive taxation to the holocaust."

Progessive Taxation - Never Forget!!!
posted by symbioid at 6:38 PM on March 26, 2013


I'm a citizen of the United States, and I already don't hire a tax preparer or use commercial tax software. Am I so rare?

(Raises hand.) So also about half of my relatives. We also send the forms in through the mail. Cheap!

We've been second guessed by the IRS from time to time over the years. Only once was it particularly painful, and of other times, it's been pretty evenly mixed between their insisting on a trivial amount more, our prevailing on a point of interpretation, and the IRS crediting us with more than we had claimed. Swings and roundabouts.

Now that they don't send the books out anymore

You can get them online
posted by IndigoJones at 6:55 PM on March 26, 2013 [4 favorites]


I'm a citizen of the United States, and I already don't hire a tax preparer or use commercial tax software. Am I so rare?

We are apparently rare indeed. I like doing my own taxes, and I'm not afraid of reading or arithmetic.
posted by Renoroc at 6:57 PM on March 26, 2013 [2 favorites]


Does no one else know about Free Fillable Forms?
posted by Hollywood Upstairs Medical College at 6:58 PM on March 26, 2013 [5 favorites]


Norquist testified before the President's Advisory Panel on Federal Tax Reform arguing against return-free filing. The next year, Norquist and others wrote in a letter to President Bush that getting an official-looking "bill" from the IRS could be "extremely intimidating, particularly for seniors, low-income and non-English speaking citizens."

Sure. Norquist is just really worried about the most vulnerable among us, and concern about this "bill" being more intimidating than the process of filing is his way of showing it. It's not *at all* that he's concerned that a lower hassle way of paying taxes would make it harder for him to grind his axe.
posted by weston at 7:12 PM on March 26, 2013 [1 favorite]


The IRS has caught and corrected errors in my return that led to bigger refunds, so I guess I trust them more than I trust myself to do taxes correctly.

Seconding Free Fillable Forms - it's heavily advertised on the IRS website, so I wonder why more people who want to avoid Turbo Tax but want to file online aren't using it?

Of course, the ProPublica article is talking about a system one step beyond efiling. They're talking about the IRS pre-calculating taxes, which a lot of countries already do.
posted by muddgirl at 7:15 PM on March 26, 2013 [1 favorite]


Barack Obama actually supported this during the 2008 campaign, but it pretty much died in Congress when no one was looking. Which is a shame, because this would not only help significantly with increasing revenue by increasing tax compliance, but also help increase the effectiveness of the Earned Income Tax Credit--which is one of the largest anti-poverty the country has--by getting it to folks. I worked at a non-profit that did tax work for low-income folks, and the stat we were given by the IRS was around 1 in 5 EITC eligible folks didn't apply for it.
posted by Weebot at 7:27 PM on March 26, 2013 [2 favorites]


I remember a few years ago, the IRS had this online app based on Flash or Shockwave or whatever, and you could fill in your forms online for free. But it was so damn slow that literally if you typed too fast, the characters would appear in the wrong order. At first I thought I'd lost my ability to type when I kept seeing myself misspell my name. And this isn't even competition typist fast, this is just normal person typing fast. It was a perfect example of government ineptitude - I mean something as simple as filling in a FORM they couldn't even get right.

Is it still the same? Have not tried in years.
posted by pravit at 7:34 PM on March 26, 2013 [1 favorite]


if people were not so enamored with getting the BIGGEST and FASTEST refund ( which I mean really, unless you had a child in say January, do a little planning and not lend the Feds so much of your money), a simple trip to the local library to get the forms, and then 6 weeks alter you have a small check to cash.
posted by 922257033c4a0f3cecdbd819a46d626999d1af4a at 7:40 PM on March 26, 2013 [1 favorite]


We have this in Chile. It works.
posted by signal at 7:43 PM on March 26, 2013 [1 favorite]


For the last several years, I have used TaxAct free federal filing software, because
1- It's a downloaded program (18mb or so), not a web solution
2- It is quite complete (lots of forms)
3- It has no maximum income for free filing
and this year, for the first time (I think)
4- It does a free e-file of the return.

On the other hand, it does a fair amount of advertising for the $ edition, including buttons that only work on the $ edition and bring up yet another please-buy-me screen. And it only prints the return; no saving as a PDF ($ version only). And of course, no free state returns.

Both states I deal with (NY & NJ) have fillable PDF's of their forms on the state tax websites, and also PDF's of the instructions.

However, the NJ-1040 PDF is the worst designed fillable PDF ever seen; almost all fields are single-digit, so to enter $150.32, you must type 1 tab 5 tab 0 tab 3 tab 2. Or you can print the blank PDF and fill it in with a, waddayacallit?, pen.
posted by hexatron at 7:51 PM on March 26, 2013 [1 favorite]


For the last few years, I've used the crusty-unix-beard-and-suspenders OpenTaxSolve program, though this year it looks like its maintainer hasn't updated it to match current tax laws so I just used a pencil.

I'm not sure whether using TurboTuitBlock would actually be faster or not; I've used software a few times, and the bulk of tax preparation time still goes to "where is box 3(b) on this weirdly-formatted form?" and "what exactly does except for some controlled designated somethings mean here?", which software doesn't help with. Regardless, I like being slightly familiar with what tax laws apply to me.

Now that they don't send the books out anymore, I'm freaked out, trying to find which one of the private companies?! the IRS recommends for me to do my filing with online

You can download everything they would have mailed you from irs.gov, you know! The instruction parts are available as PDFs and as more-easily-browsable HTML. You can fill the forms out either before or after printing (they have the PDF form annotations) and mail them in.
posted by hattifattener at 8:55 PM on March 26, 2013 [1 favorite]


I wish they would just open up their damn "e-services" program or whatever they're calling it now to the public. Host a couple of hackathons or Open Government conferences and we would have a competitive ecosystem of alternative tax software and services the public could use.

For all the talk of Open Government, transparency and open data, in areas where it really matters, access to data is still hampered.

The IRS isn't even listed on the opengov dashboard the Whitehouse has.

I don't need the government to do my taxes for me. Just give citizens the ability to take own their own data, and submit it on their own terms.

Yes, there are issues of trust, privacy and long-term software maintenance. But it's better than the existing monopoly public-private partnership with the IRS and companies like Intuit. Right now, we have the option of half-inch thick stacks of paperwork to read, file and fill out. Or pay companies that are actively spending millions in lobbying dollars to remove options for citizens.

If the IRS can require employers to provide them with machine-readable forms, can't they see the burden they impose on others is hypocritical? Not only hypocritical, but wasteful. The initial cost to implement a secure open filing system may be high, but the savings over time more than make up for it.
posted by formless at 9:46 PM on March 26, 2013 [4 favorites]


What's amazing is if you go to the ID state free-file website, the third listing down is the Intuit Tax Freedom Project.

Fuckers sure know how to game the system.
posted by BlueHorse at 9:51 PM on March 26, 2013 [2 favorites]


Also, let's pause to remember that time when Grover Norquist compared progressive taxation to the holocaust.

Man, am I ever sick of hearing Republicans make variants of the argument that democratically decided and broadly popular left-leaning policies are comparable to Nazism.

First they came for the supply side economists, and I didn't speak out because I wasn't a supply side economist.

Then they came ...

posted by obscure simpsons reference at 9:54 PM on March 26, 2013


Just post the IRS's godforsaken APL or whatever code on GitHub, we'll fix it up and build a KDE front end in a few days. It'll still look better than Quickbooks.
posted by RobotVoodooPower at 9:59 PM on March 26, 2013 [1 favorite]


I'm doubting that many of the "taxes are easy I just do them myself with a pencil" here have ever sold stock.
posted by tylerkaraszewski at 10:08 PM on March 26, 2013 [2 favorites]


Calculating the gain from a stock sale is still basic arithmetic. Unless you're a daytrader or something and have dozens or hundreds of trades it's not difficult.
posted by Justinian at 11:30 PM on March 26, 2013 [3 favorites]


tylerkaraszewski: "I'm doubting that many of the "taxes are easy I just do them myself with a pencil" here have ever sold stock."

Yes, but you have to be terribly overburdened with money to be buying and selling stock from a nonqualified retirement account.
posted by pwnguin at 11:55 PM on March 26, 2013 [1 favorite]


No thanks, I'll keep on paying H&R Block to do the forms for me, because then if the IRS ever decides to try to destroy my life at least I have some kind of insurance.

I'm not sure what insurance you're referring to here but once you sign that tax return you're liable for everything that's on there no matter what Block might tell you about how they'll come to your defense in an audit. Of the available options, going to a tax return prep chain like Block is the worst. They're interest is in doing as much unnecessary work as possible so that they can charge you more, not maximizing your refund. And the person who actually does your return is likely someone they hired for the season who doesn't have a tax background. Then when that person is done, someone with credentials looks it over and signs it.
posted by ultraviolet catastrophe at 5:02 AM on March 27, 2013 [2 favorites]


I have a small amount of money in a bond fund. That fund invests partially in muni bonds. IRS requires you to list the amount of muni interest in each state individually. Alabama $0.23, Alaska $0.07, Arkansas $0.12, etc, etc. It took over an hour of my time to figure these out and copy them down, even though the total amount was less than $10.
posted by miyabo at 5:46 AM on March 27, 2013 [1 favorite]


Taxes were a breeze for me up until two or three years ago, when they stopped sending the tax books. As an overseas resident, I fill out the 1040 and the 2555, and it took all of 15 minutes. "Do you live overseas?" Yes. "Did you make more than $92,000 this year?" Snort, derisively, then sigh longingly, no. Done.

I wish it were anywhere near that simple. That $92,000 exclusion only applies to earned income, so if you have unearned income that puts you over the standard deduction, you may end up having to pay tax on that (not that I have the good fortune to know this from personal experience).

And don't forget your FBARs!
posted by one more dead town's last parade at 5:59 AM on March 27, 2013 [1 favorite]


a complicated tax system is, like, the highest-stakes example of gamification EVER.

"The Secrets about American Taxes that Rich People and The Government don't want YOU to know!"
posted by aught at 6:12 AM on March 27, 2013 [1 favorite]


My feeling is that as when GE and Exxon start paying their taxes, I will stop looking for every loophole.

Note that Tax Avoidance is perfectly legal. If you can structure a transaction to legally minimize or even avoid taxes, the courts have repeatedly defended that.

Tax Evasion, where you lie about your income, is illegal. But if you are in compliance with the law, you can exploit any loophole you find -- though if you're in the high income arena, the Alternative Minimum Tax comes into play.

The issue with corporations is they can afford to pay very smart people to find the loopholes and structure the business to exploit them, saving them far more than they pay them. But both corporations and you have the right to legally minimize your tax liability.
posted by eriko at 6:15 AM on March 27, 2013 [1 favorite]


"Free and simple?" Every year I download pdfs of forms and instuctions from the actually pretty good IRS website, fill them out onscreen, and slap a stamp on an envelope. It's really not too hard.
posted by werkzeuger at 6:21 AM on March 27, 2013


I've only got a couple years or a couple raises (wishful thinking) left before I can no longer file New York state taxes for free with H+R Block.

http://www.tax.ny.gov/pit/efile/freefile_eligibility2.htm

From that site: *The amount you earned is the same as your federal adjusted gross income, or FAGI.

Really, NY State? What are you, twelve?
posted by aught at 6:21 AM on March 27, 2013


The issue with corporations is they can afford to pay very smart people to find the loopholes and structure the business to exploit them, saving them far more than they pay them. But both corporations and you have the right to legally minimize your tax liability.

It's that they buy the loopholes in the first place. They do not really find them so much as force them.
posted by srboisvert at 6:42 AM on March 27, 2013 [1 favorite]


I don't trust the state or the feds to calculate my taxes for me. In my experience they've been wildly off and do not correct their errors until you point them out....

The one time we tried to have a professional do our taxes, he came up with exactly the same number that we had figured. But on after we pointed out that he had made a mistake, requiring him to refile on our behalf. And this guy was recommended to me by my own favorite CPA/tax lawyer.

And this is in a state with a tax form that pretty much says, "Just copy over a number from your Federal 1040 and multiply it by this small decimal, and write that on a check."

I would love to see free online filing for simple returns like mine, with the option to go to a human or a fancier software package -- or even paper forms -- for those who want/need to.
posted by wenestvedt at 6:43 AM on March 27, 2013


I usually do my taxes once, then go back then and take stuff out to get my marginal rate high enough to stave off an automatic audit flag. My feeling is that as when GE and Exxon start paying their taxes, I will stop looking for every loophole.

It doesn't really make any sense to do this. If a credit or deduction or exclusion is available to an ordinary person and you're not just making up false income or something it's not a "loophole." It's there for a reason, which is that the government wants you to take it because they think that it promotes the general good.
posted by ultraviolet catastrophe at 7:03 AM on March 27, 2013 [3 favorites]


Don't forget that the accounting industry actively lobbies to keep taxes complicated. Intuit spent a lot of money lobbying to prevent the IRS from introducing free competition for TurboTax.
posted by miyabo at 7:06 AM on March 27, 2013


desjardins: I don't trust the state or the feds to calculate my taxes for me. In my experience they've been wildly off and do not correct their errors...
I used to do my taxes by hand, but then I became technically self-employed, and things got complicated. I stopped doing them myself after I messed up and the IRS corrected my return. The IRS correction increased my refund. But I was really embarrassed. Now I use software.

The IRS has no motive to goof things up; on the contrary, it costs them money and batters their already dismal reputation (with some) to deal with correction after correction. They've got every incentive to get it right the first time as often as they can. That's not to say that they do always get it right the first time -- the humans involved are only human, after all.

But I don't understand the (common) attitude that a professional tax preparer is more trustworthy, as if the profit motive alone has ever encouraged ethical behavior. The IRS's mission is to carry out the law accurately; it's not as if an IRS employee gets paid a percentage of his or her collections. On the other hand, the pro tax preparers mission is to take as much of your money has he can while giving you the impression that he's earned it. His incentives are pretty much the same as a used car salesman's incentives.
posted by Western Infidels at 7:06 AM on March 27, 2013 [2 favorites]


I usually do my taxes once, then go back then and take stuff out to get my marginal rate high enough to stave off an automatic audit flag.

That doesn't really make much sense. Audit flags are generally particular deductions that people tend to lie about that give big benefits. Stuff like having a money losing "business" for several years to reduce your income or claiming part of your home as a home office business expense.
posted by smackfu at 7:28 AM on March 27, 2013


Don't forget that the accounting industry actively lobbies to keep taxes complicated.

Heck, everyone lobbies to make taxes complicated.
posted by smackfu at 7:29 AM on March 27, 2013


Yeah, I have made the same relatively simple mistake an embarrasing number of times, and every time the IRS dutifully corrects me and sends a slightly higher refund.
posted by werkzeuger at 9:37 AM on March 27, 2013


this would not only help significantly with increasing revenue by increasing tax compliance,

That's a question, though. Ever since they started with-holding at source (WW2), do they really care about compliance? Interesting subject for a study, if you're into that kind of thing.
posted by IndigoJones at 9:45 AM on March 27, 2013


Ever since they started with-holding at source (WW2), do they really care about compliance?

Yes, yes they do, for self-employed people who have to file quarterlies.
posted by desjardins at 10:21 AM on March 27, 2013


Nowadays my taxes are messed up enough that I probably wouldn't be able to take advantage of this sort of thing, but I still think it's a great idea. There's a lot of predatory stuff going on in the tax prep world, from high-interest refund anticipation loans, to that TV ad I saw the other day trying to get people scared about filling out a 1040EZ. Of course, this would mostly benefit poor people, so there's no traction.

Personally, I have a higher opinion of the IRS than I do of tax prep companies, and if the IRS already has all of the information to fill out the forms, and they're going to be doing that math anyway, why not?

The California Franchise Tax Board can go jump off a cliff, though.
posted by ckape at 11:01 AM on March 27, 2013


I will say, the recent changes to the 1099B to include cost basis are quite nice, and should be a win for the taxpayer. Without that, if you forgot to declare a stock sale, the IRS would assume you got the shares for free, and their total value would be taxable income. This tended to make minor errors with small tax consequences into major urgent issues where the IRS wanted their thousands of due tax immediately.
posted by smackfu at 2:15 PM on March 27, 2013 [1 favorite]


Intuit has spent about $11.5 million on federal lobbying in the past five years — more than Apple or Amazon. Although the lobbying spans a range of issues, Intuit's disclosures pointedly note that the company "opposes IRS government tax preparation."

I hatessss the little bagginsesssss.
posted by Mental Wimp at 2:47 PM on March 27, 2013


I'm doubting that many of the "taxes are easy I just do them myself with a pencil" here have ever sold stock.

When I was 19 I had to file taxes that included capital gains related to an inheritance and did it myself by hand, which made me sort of cocky. ;) With one sort of unusual exception*, I've done my taxes myself all my adult life, including dealing with stock sales and a 401(k) disbursement. Filling out forms doesn't bother me, and the fillable PDFs on the IRS site are actually pretty decent.

I would love to be able to just review all the numbers they've got and check a box, since most of the time that's what I'm doing anyway. Even just being able to download the numbers from them and add in other credits etc would be nice.

* It's a long story that I'm not particularly proud of...involved an employer who messed up my taxes after I graduated from college and my own embarrassment. Thankfully later I worked with an accountant who helped me out as a friend, and the damage wasn't too bad.
posted by epersonae at 3:01 PM on March 27, 2013


Without that, if you forgot to declare a stock sale, the IRS would assume you got the shares for free, and their total value would be taxable income.

Been there, done that. Those letters are scary!
posted by miyabo at 3:02 PM on March 27, 2013


yoink: " For the vast majority of people whose taxes are complicated enough that there is something significant to be gained by calculating their taxes independently it's not a serious burden to either buy Turbo Tax or hire a CPA or whatever."

I am by no means wealthy or even well off, but one thing I can tell you about investments today is that MLPs have been providing fantastic returns consistently for the last few years. The other thing I can tell you is that the tax structure of MLPs puts more cash in your pocket, but the taxes are passed on to you, so the dividends are often treated as ordinary income. This structure also includes the responsibility of being considered a partner in a limited partnership, which are usually investing in natural resources, so you to deal with some Byzantine (and sometimes contradictory) tax codes that most CPAs won't touch. This can be true even if you have your MLP shares in an IRA, but only if the cost basis of those shares goes to zero due to unrealized gains in the form of reinvested dividends. How do I know all this? Well, most CPAs won't touch this stuff, and the ones who do charge a premium.

However, I've found TaxACT usually gets this paperwork right, even if I screw it up, and it's free. When it hasn't caught an error I made, the IRS usually does. I try to be very conservative and pay more than I need if there's any question, but it doesn't help much if I get audited. I have learned a lot in the process of dealing with this for the last few years, but that's always in the back of my head, and even if you're clean it's an ugly, expensive process...
posted by krinklyfig at 2:28 AM on March 28, 2013


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