Good Riddance, TurboTax. Americans Need a Real ‘Free File’ Program(nytimes.com)
nytimes.com
Good Riddance, TurboTax. Americans Need a Real ‘Free File’ Program
https://www.nytimes.com/2021/07/19/opinion/intuit-turbotax-free-filing.html
257 comments
In 2019 I filed my (Dutch) taxes on my phone, while I was on a bus somewhere in the north of Argentina after previously having traveled for 20 something hours. It took me about 15 minutes to check if the numbers from the government were correct (they were) and I was done. Americans are being duped by these predatory companies.
Same in France.
But I am going to play devil's advocate here, did you get the "best deal"?
It all comes down to deductibles. In France, the "one click taxes" option assumes 10% of your salary is deductible, which is often a good deal but sometimes, it may actually be more, especially if you have a long commute. The government app won't help you with that.
It may not help you with incentives too. For example, you may get some tax rebates if you did some work to improve the energy efficiency of your house, what exactly you can declare? And charities, loans, etc... A good accountant may help you save a significant amount with all these details.
Tax software are like a middle ground between simple, no brainer, government issued "one click" tax filling and hiring a professional accountant. Note that in France, most self-employed people hire an accountant, proper tax filling can be a minefield if you are not an employee.
And by the way, that's Intuit's argument. That it is used to justify its evil deeds is a thing, but the argument itself is not without merit.
But I am going to play devil's advocate here, did you get the "best deal"?
It all comes down to deductibles. In France, the "one click taxes" option assumes 10% of your salary is deductible, which is often a good deal but sometimes, it may actually be more, especially if you have a long commute. The government app won't help you with that.
It may not help you with incentives too. For example, you may get some tax rebates if you did some work to improve the energy efficiency of your house, what exactly you can declare? And charities, loans, etc... A good accountant may help you save a significant amount with all these details.
Tax software are like a middle ground between simple, no brainer, government issued "one click" tax filling and hiring a professional accountant. Note that in France, most self-employed people hire an accountant, proper tax filling can be a minefield if you are not an employee.
And by the way, that's Intuit's argument. That it is used to justify its evil deeds is a thing, but the argument itself is not without merit.
I believe the way it works here (US), is most people with the standard deduction works for probably 80-90% of cases because their finances aren't complex enough or they're not doing enough where the deductions exceed the standard. So most would be fine with government just telling you what you owe/they owe and you just signing off or making a correction.
If you're doing a lot of charity donations, real estate, student loan debt, saving receipts for work related expenses, calculating depreciation on assets, etc, then its worth it, but by then you probably have a personal accountant doing it for you, not a program.
If you're doing a lot of charity donations, real estate, student loan debt, saving receipts for work related expenses, calculating depreciation on assets, etc, then its worth it, but by then you probably have a personal accountant doing it for you, not a program.
Also factor in the removal of the State and Local Tax deduction. Prior to that I ended up writing off my CA taxes instead of taking the standard deduction.
I’ll save my personal political ranting for a different space.
Addressing the GP, yeah our system has been messed with by the tax prep companies. One year I had a complicated (for me) tax situation and I hired a CPA. They managed to make a mistake that lead me to overpaying by thousands. The IRS was nice enough to mail me a check.
The IRS clearly has enough info to run a European style system. We (as a country) just underfund the IRS and have special interest vested in maintaining the status quo. Clearly those special interests are doing a great job if someone with a state certification and professional tax software can mess up the math. A friend had the same issue with this past tax year and owes a balance plus penalties. She has every intention of paying her taxes. Why does our system make it hard for her to do so?
There’s no good reason why we should have to chance these situations. We should just be able to pay our taxes correctly at time we are paid and move on.
I’ll save my personal political ranting for a different space.
Addressing the GP, yeah our system has been messed with by the tax prep companies. One year I had a complicated (for me) tax situation and I hired a CPA. They managed to make a mistake that lead me to overpaying by thousands. The IRS was nice enough to mail me a check.
The IRS clearly has enough info to run a European style system. We (as a country) just underfund the IRS and have special interest vested in maintaining the status quo. Clearly those special interests are doing a great job if someone with a state certification and professional tax software can mess up the math. A friend had the same issue with this past tax year and owes a balance plus penalties. She has every intention of paying her taxes. Why does our system make it hard for her to do so?
There’s no good reason why we should have to chance these situations. We should just be able to pay our taxes correctly at time we are paid and move on.
It's not only Europe. I live in Uruguay and I got an SMS to check if my auto-filed taxes were correct, if I do I have the option to make changes right in the government website.
And the local IRS has the best paying software development jobs in the government, so they actually have decent software (although they could do with some more UX people).
And the local IRS has the best paying software development jobs in the government, so they actually have decent software (although they could do with some more UX people).
[deleted]
Also the standard deduction was recently significantly increased (I think it was doubled in 2017, can't remember for sure the exact the time/amount though), so it's a better deal for even more people.
I'm Dutch as well. A couple of years ago my university fees were made tax deductible, I'm hazy on the details but basically I dropped out of my masters degree to work on a startup. Normally if you finish your degree some of your costs are relieved by the government with some loan forgiveness scheme. After 5 years or so they decided I definitely wasn't finishing that degree and all my university costs were suddenly tax deductible.
Obviously I had no idea of this scheme, I have no accountant and my university fees of 5 years ago were far from my mind.
Randomly got €6000 euros income tax back, very nice windfall courtesy of the Netherlands government.
Obviously I had no idea of this scheme, I have no accountant and my university fees of 5 years ago were far from my mind.
Randomly got €6000 euros income tax back, very nice windfall courtesy of the Netherlands government.
That seems like a surprisingly large amount of money. I thought university wasn't that expensive there (enough that the deduction of the income saved 6000 euros on taxes). Did you mean it became a tax credit and you just got all the money you paid in fees back?
Yeah it was all of it for three years, education costs are 100% deductible, so if it was 3 years at 2000/yr (standard university rate back then) it would be 6000 total. I forgot the exact amount because in that same year I also bought a house and there's a bunch of tax deductibles there as well, I think I got back over 8000 in total that year.
Normally the final dues are a lot less, probably 0 for people who have no mutations and a regular job. I had to pay 300 euro this year because I did a single freelance gig on the side.
edit: Note that this is probably a very exceptional situation. Normally college students don't make enough money to be paying taxes in the first place, I had the perfect storm of having all the deductibles being applicable in a single year, and making a good wage that year. I'm just telling this story because it's an example of the system randomly giving me the sort of tax benefit even a dedicated accountant might have missed, just because it system applied its rules to all the information it has about me.
Normally the final dues are a lot less, probably 0 for people who have no mutations and a regular job. I had to pay 300 euro this year because I did a single freelance gig on the side.
edit: Note that this is probably a very exceptional situation. Normally college students don't make enough money to be paying taxes in the first place, I had the perfect storm of having all the deductibles being applicable in a single year, and making a good wage that year. I'm just telling this story because it's an example of the system randomly giving me the sort of tax benefit even a dedicated accountant might have missed, just because it system applied its rules to all the information it has about me.
In the US that's called a "tax credit". A "deduction" is something that reduces the amount of income used for tax calculations.
So I thought you meant you got 6000 back because your university fees became deductable. At 25% tax rate, that would be 24,000 in fees. It sounds like you got a tax credit.
So I thought you meant you got 6000 back because your university fees became deductable. At 25% tax rate, that would be 24,000 in fees. It sounds like you got a tax credit.
Hmm, you're right. So there's one thing I didn't mention and that is that my income was abnormally high that year because I was bought out of the company I resigned from. Pushing me into the 50% tax rate territory. This might have made the deductibles that much more significant. I would have to look up the exact numbers to know for sure.
And yet all those deductions are possible in France. You make it sound like they'd be impossible to claim with that system.
> did you get the "best deal"?
From my experience with the NL tax system, next to nothing is deductible. Very straightforward taxes, they take 51% of all personal income. ;)
From my experience with the NL tax system, next to nothing is deductible. Very straightforward taxes, they take 51% of all personal income. ;)
AVG income tax in NL is 28%. It's progressively banded like most other countries. With complications for withheld income (pensions, etc).
Could you source the average tax rate number? That’s only the base tax rate for all income above ~20k.
Honestly, it was a two-second Google for "nl average tax rate". I didn't look at it any deeper at the time but the source was https://www.oecd.org/tax/tax-policy/taxing-wages-netherlands...
> In the Netherlands, the average single worker faced a net average tax rate of 28.7% in 2020, compared with the OECD average of 24.8%. In other words, in the Netherlands the take-home pay of an average single worker, after tax and benefits, was 71.3% of their gross wage, compared with the OECD average of 75.2%.
The specific number wasn't as important as pointing out that NL doesn't have a magically fixed number (and certainly not a high one) for income taxation.
> In the Netherlands, the average single worker faced a net average tax rate of 28.7% in 2020, compared with the OECD average of 24.8%. In other words, in the Netherlands the take-home pay of an average single worker, after tax and benefits, was 71.3% of their gross wage, compared with the OECD average of 75.2%.
The specific number wasn't as important as pointing out that NL doesn't have a magically fixed number (and certainly not a high one) for income taxation.
If this figure is true, do you see the symbolism of it as I do? It's not 49%, where the individual will still work mostly for themselves but 51%, where the state owns the majority of the labor for each individual. I find this number chilling.
The figure is not true, it used to be 51% for income above a certain amount (I think 60000?) but now it's 49,50% for income above 68000. Even when it was 51%, you would have to make more than 500,000 for the total taxes to be exceed 50%.
Anyway, what's chilling about it? You're phrasing it in a very weird way, the state doesn't own labor. It is due taxes for its services rendered.
The Netherlands is ridiculously rich and the government takes very good care of its citizens. I think it's hard to imagine for Americans how much value we get from our government. Traveling from The Netherlands to the states. Even your richest cities have poor people hungry, suffering and distressed just camping around everywhere. I'm not saying we've got it perfect, but I'm pretty happy with the deal we got.
Anyway, what's chilling about it? You're phrasing it in a very weird way, the state doesn't own labor. It is due taxes for its services rendered.
The Netherlands is ridiculously rich and the government takes very good care of its citizens. I think it's hard to imagine for Americans how much value we get from our government. Traveling from The Netherlands to the states. Even your richest cities have poor people hungry, suffering and distressed just camping around everywhere. I'm not saying we've got it perfect, but I'm pretty happy with the deal we got.
The 500k figure is quite misleading. Sure that’s for 51%, but anything over 100k, it already exceeds 40%. That’s still a huge number.
There are tons of poor and hungry people in NL, and the gov is actively hostile to homelessness. There’s lots of municipal corruption, and central inefficiency. I know lots of Dutch citizens who are in student debt, and very few families who can afford to buy a home before 35.
It’s a fallacy that somehow this is the /the/ tax rate that can provide for citizens. There is no magic number, and we can always demand more efficiency.
There are tons of poor and hungry people in NL, and the gov is actively hostile to homelessness. There’s lots of municipal corruption, and central inefficiency. I know lots of Dutch citizens who are in student debt, and very few families who can afford to buy a home before 35.
It’s a fallacy that somehow this is the /the/ tax rate that can provide for citizens. There is no magic number, and we can always demand more efficiency.
To me it's simple. My tax as someone trying to get a startup to work is about 30%, it would be 22% in the US. That means I pay 8% extra to be largely abstracted from the harsh reality of the suffering of the unlucky and disadvantaged.
Check this video out: https://www.youtube.com/watch?v=rKo8Sv99MkM That's about Skid Row, it's how one of the US's richest cities deals with the disadvantaged.
Dutch citizens with student debt.. that's a joke right?
Check this video out: https://www.youtube.com/watch?v=rKo8Sv99MkM That's about Skid Row, it's how one of the US's richest cities deals with the disadvantaged.
Dutch citizens with student debt.. that's a joke right?
To add on to my other comment -
Student debt:
https://nltimes.nl/2020/10/27/average-student-loan-eu700-per...
“An average loan of 700 euros per month means that study debts of 50,000 euros are no longer an exception. (…) It makes sense that students work more due to higher costs of room rent and tuition fees and less income thanks to the lack of the basic grant.”
Home ownership:
https://en.m.wikipedia.org/wiki/List_of_countries_by_home_ow...
The NL and USA differ in home ownership by ~4% (69 vs 65.3). That’s not statistically significant to be honest.
—-
There’s a lot of myths in Dutch society, and the majority of people are not aware of reality.
Student debt:
https://nltimes.nl/2020/10/27/average-student-loan-eu700-per...
“An average loan of 700 euros per month means that study debts of 50,000 euros are no longer an exception. (…) It makes sense that students work more due to higher costs of room rent and tuition fees and less income thanks to the lack of the basic grant.”
Home ownership:
https://en.m.wikipedia.org/wiki/List_of_countries_by_home_ow...
The NL and USA differ in home ownership by ~4% (69 vs 65.3). That’s not statistically significant to be honest.
—-
There’s a lot of myths in Dutch society, and the majority of people are not aware of reality.
I have a student debt of over 40,000 euro. Because I have a job I pay 250 euros per month on it. My partner has a similar debt, but because she does not have a job she doesn't make any payments. Does it suck, yeah. Does it make us poor or hurt us in any significant way? No.
It's a joke, because student debt is a sign of wealth, not of poverty. My government invested almost 50,000 euro into giving me plenty of time and space to study. I was able to live as a student for 7 years, usually working less than 12 hours per week to supplement the loan. I leveraged that loan into getting an education is super valuable, if I wanted to I could take a job double my current salary and live very comfortably in Amsterdam.
Different story for my partner perhaps, but if she never makes income, after a certain amount of time her loan will be forgiven even without her ever making payments.
I don't know how home ownership is correlated to poverty. It's tied to wealth, sure, and it's a very bad thing that it's so low. But the average renting person in The Netherlands lives very comfortably, so not owning a home is not a strong indicator for poverty.
Homelessness, that's the indicator you're looking for. But you are right, it seems I am living in a bubble, because there's a severe problem with homelessness in The Netherlands right now. https://nltimes.nl/2020/02/17/homelessness-netherlands-doubl...
According to wikipedia there's more registered homeless people in The Netherlands than there are in the states, I don't know how to make sense of that because the scenes I saw in SF, Portland and SLC were unlike anything I've seen in any wealthy European country. It made me think of Hungary and Romania.
It's a joke, because student debt is a sign of wealth, not of poverty. My government invested almost 50,000 euro into giving me plenty of time and space to study. I was able to live as a student for 7 years, usually working less than 12 hours per week to supplement the loan. I leveraged that loan into getting an education is super valuable, if I wanted to I could take a job double my current salary and live very comfortably in Amsterdam.
Different story for my partner perhaps, but if she never makes income, after a certain amount of time her loan will be forgiven even without her ever making payments.
I don't know how home ownership is correlated to poverty. It's tied to wealth, sure, and it's a very bad thing that it's so low. But the average renting person in The Netherlands lives very comfortably, so not owning a home is not a strong indicator for poverty.
Homelessness, that's the indicator you're looking for. But you are right, it seems I am living in a bubble, because there's a severe problem with homelessness in The Netherlands right now. https://nltimes.nl/2020/02/17/homelessness-netherlands-doubl...
According to wikipedia there's more registered homeless people in The Netherlands than there are in the states, I don't know how to make sense of that because the scenes I saw in SF, Portland and SLC were unlike anything I've seen in any wealthy European country. It made me think of Hungary and Romania.
The reason it seems so bad in those particular cities is because they actually attract and retain homeless. One due to weather and two, as poor as the services are for the homeless in those cities, they are better than many other cities.
You wouldn't last long living on the streets of Fargo North Dakota.
You wouldn't last long living on the streets of Fargo North Dakota.
> abstracted from the harsh reality of the suffering of the unlucky and disadvantaged
> Dutch citizens with student debt.. that's a joke right?
To be brutally honest, both these statements lead me to believe that you live in a bubble within NL.
I personally know tons of Dutchies in both situations, and I have a feeling you might (unknowningly) as well. Might be worth expanding your social circle if not.
> Dutch citizens with student debt.. that's a joke right?
To be brutally honest, both these statements lead me to believe that you live in a bubble within NL.
I personally know tons of Dutchies in both situations, and I have a feeling you might (unknowningly) as well. Might be worth expanding your social circle if not.
> very few families who can afford to buy a home before 35
So, imagine knowing very few families who can afford to buy a home. Like, at all. So long as we're still comparing the Netherlands and the US, I don't think there's much of a contest.
That said, the central thrust of your comment holds true; always room for improvement.
So, imagine knowing very few families who can afford to buy a home. Like, at all. So long as we're still comparing the Netherlands and the US, I don't think there's much of a contest.
That said, the central thrust of your comment holds true; always room for improvement.
> I don't think there's much of a contest.
Now, this may surprise you, since you haven’t bothered to research it (1), but NL and USA differ in home ownership by ~4% (69 vs 65.3). That’s not statistically significant to be honest.
(1) https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...
Now, this may surprise you, since you haven’t bothered to research it (1), but NL and USA differ in home ownership by ~4% (69 vs 65.3). That’s not statistically significant to be honest.
(1) https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...
> where the state owns the majority of the labor for each individual
I guess that it all depends what do you get back. To live in a well functioning society is worth a kingdom.
In many places your landlord owns more than half of your income, that could be more worrisome. At least I can vote for my representants in the government.
Finally, I pay over 50% on part of my salary in Sweden, with what I have left I have an awesome live and extra to save, so I will not complain.
I guess that it all depends what do you get back. To live in a well functioning society is worth a kingdom.
In many places your landlord owns more than half of your income, that could be more worrisome. At least I can vote for my representants in the government.
Finally, I pay over 50% on part of my salary in Sweden, with what I have left I have an awesome live and extra to save, so I will not complain.
> In many places your landlord owns more than half of your income
My understanding of rent in both Sweden and the Netherlands, is that of any EU capital: easily 30-50% of your monthly income goes to landlords.
Could you clarify your view on this?
My understanding of rent in both Sweden and the Netherlands, is that of any EU capital: easily 30-50% of your monthly income goes to landlords.
Could you clarify your view on this?
Meanwhile other markets were heavenly corrected around 2009-2015 after the housing crush Sweden came out quite unscratched. Low interest rates also have created an incentive to invest in housing for the average citizen. On the other side construction companies in Sweden are quite shy to build new housing as investment goes to other more profitable industries, Sweden is below EU average in construction. Finally Sweden population have grown more than the EU average.
So, the swedish housing availability is insufficient and prices reflect that. It is an imbalance that is difficult to solve short term. And probably also overpriced as the interest rates are low and predicted to be low.
So, the swedish housing availability is insufficient and prices reflect that. It is an imbalance that is difficult to solve short term. And probably also overpriced as the interest rates are low and predicted to be low.
I read your comment twice, but I still don’t see any agreement about the high rents going to landlords in Sweden. Perhaps you bought a house a while ago, and have been insulated from this crisis. Either way, you can’t deny reality…
Marginal tax rates in California also reach this level. Health insurance is not included.
The reason your taxes are simpler though is because the Dutch government doesn’t use the tax system to implement policy like the US does. The US Congress uses the tax system to influence social policy as well as to deliver benefits for specific groups and industries. And over time all of these legislative additions have turned a simple revenue raising system into a complex mess of deductions and credits.
Now I am not defending turbo tax’s predatory actions in the past but it’s not complicating the tax system just taking advantage of it being complicated.
Now I am not defending turbo tax’s predatory actions in the past but it’s not complicating the tax system just taking advantage of it being complicated.
To add to this even further:
In europe we just directly regulate behaviour either by directly taxing it or making it illegal.
In the US they set tax levels much higher and then offer breaks as incentives.
The latter has the philosophical virtue of making behaviour "expensive but not illegal" (ie., in europe you cannot legally avoid the tax).
However it dramatically complicates government and makes US citizens dramatically "overtaxed" absent these breaks. What we in europe often miss is that the US anti-tax lobby is reacting to a very different tax environment that is, on paper, very extreme.
In europe we just directly regulate behaviour either by directly taxing it or making it illegal.
In the US they set tax levels much higher and then offer breaks as incentives.
The latter has the philosophical virtue of making behaviour "expensive but not illegal" (ie., in europe you cannot legally avoid the tax).
However it dramatically complicates government and makes US citizens dramatically "overtaxed" absent these breaks. What we in europe often miss is that the US anti-tax lobby is reacting to a very different tax environment that is, on paper, very extreme.
Aren't like >70% of the populations taxes extremely simple tho? Most people are just taking the standard deduction and not much else.
Most of the complications in tax policy are affecting a small minority of people and corporations.
Most of the complications in tax policy are affecting a small minority of people and corporations.
Yeah if you work a W-2 job and the company is making tax deductions from your paycheck, your taxes are pretty simple. If you have a mortgage, you can deduct the interest. I think most people are in this category. Taxes just start getting complicated proportionate to the creative compensation some jobs offer - deferred stock purchase programs, etc., - or if you have some complicated deduction or third-party income sources.
> If you have a mortgage, you can deduct the interest. I think most people are in this category
That's true, but you need to have other deductions or a fairly large mortgage for it to be worth taking that deduction instead of the standard deduction. Most people are better off with the standard deduction.
That's true, but you need to have other deductions or a fairly large mortgage for it to be worth taking that deduction instead of the standard deduction. Most people are better off with the standard deduction.
This is true, especially after the standard deduction nearly doubled for most in 2017.
Sweden uses tax policy to influence things and our taxes are just as easy. The state knows most stuff and then we just go in and adjust the default.
So, no, the reason is that they have all the information already and for most people just need you to verify it. In the US, the tax companies are lobbying the government to keep it difficult. The subject has been covered on HN every year during tax season.
So, no, the reason is that they have all the information already and for most people just need you to verify it. In the US, the tax companies are lobbying the government to keep it difficult. The subject has been covered on HN every year during tax season.
What does neutral social policy taxation look like? Which countries should the USA emulate?
Here in the UK I don't need to file taxes at all as an employee.
You employer doesn't know your deductibles in the Netherlands due to privacy concerns (and other rules as well), which you definitely want to file in most cases since you pay less money or get some back. You are also responsible for your taxes, if the employer screws up you should check it. This is probably different from the UK. It is not a "can't do" but more or less a "won't do".
edit: so it's not that different, just a different method of doing so. Good to know.
edit: so it's not that different, just a different method of doing so. Good to know.
You tell the tax office of any unusual deductibles, and they give your employers a 'tax code' which tells them how much allowance to give you (but critically not why, to better protect your privacy).
Even this isn't needed in most cases; things are either done employer side (paid from pre-tax income, like pensions) or directly by the government (basic rate tax is semi-automatically added to charitable donations, so only higher rate taxpayers need to declare it, and they all fill in a short return anyway).
Even this isn't needed in most cases; things are either done employer side (paid from pre-tax income, like pensions) or directly by the government (basic rate tax is semi-automatically added to charitable donations, so only higher rate taxpayers need to declare it, and they all fill in a short return anyway).
Your employer doesn't need to know what your deductibles are (also the deductibles are much more limited here). If you, for example, make a large one off pension contribution, HMRC will adjust your tax code, which your employer will just apply to your payroll.
I wouldn't know what I would be able to get tax relief for as an employee. What kind of deductibles?
Guess, I could claim that £6 per week for Covid work from home stuff. Wish you could claim the cost of repairing your bike, or public transport costs.
Guess, I could claim that £6 per week for Covid work from home stuff. Wish you could claim the cost of repairing your bike, or public transport costs.
Most of the big ones can be done without a self assessment. If you make a pension contribution for example, you can call hmrc and tell them and they'll adjust your tax code
Doesn't that more or less equate to doing your taxes, just in little updates for each thing, rather than one big update at the end of the year?
Not at all. The list of things you can claim for is very limited, and the majority of them are automatically applied. Having to actually contact HMRC is a rarity. If you are salaried employee with no extra cash coming in, you don't need to do anything.
Another example of how the system works - if you are working two jobs, both as a regular employee, HRMC will instruct your employer as to what your tax deduction should be for that paycheck to make sure that things are balanced. For <some large number>% of people, this will be correct, and if it's not, it will rectify itself over 2 or 3 pay periods. If that's _still_ not enough, a phone call to HMRC (usually taking less than 10 minuts for the two times in a decade I've had to do it) will resolve the issue in your next check.
Another example of how the system works - if you are working two jobs, both as a regular employee, HRMC will instruct your employer as to what your tax deduction should be for that paycheck to make sure that things are balanced. For <some large number>% of people, this will be correct, and if it's not, it will rectify itself over 2 or 3 pay periods. If that's _still_ not enough, a phone call to HMRC (usually taking less than 10 minuts for the two times in a decade I've had to do it) will resolve the issue in your next check.
You can claim those, if you use the transport as part of your work but notably not for travelling to and from work, 20p per mile for the bike.
Charitable contributions? How are those treated?
If I want to give (say) £100 to a charity, I give £75 and sign something agreeing to allow the charity to get the rest from the income taxes I already paid.
(I forget the exact percentage.)
(I forget the exact percentage.)
Those are claimed by the recipient under a programme called Gift Aid.
Do I understand correctly that charities report contributions to the government, which then adjusts the taxes due from the donors? That seems like a good system.
The tax relief goes to the charity itself, rather than the donor. They can claim a top-up of up to 25% of your donation from the government, as long as the total amount claimed by all donation recipients does not exceed the total annual income tax paid by the donor. So if you donate £100 and fill out a declaration saying that you 'Gift Aid' that donation, the charity can claim an additional £25 from the government, as long as you paid at least £25 in income taxes that financial year.
Note that if you're paying in the 40% and/or 45% income tax brackets, the charity doesn't know about that, and still only gets the 25% topup (equivalent to the 20% income tax most people pay).
You can either:
* Gift that remaining amount to HMRC by doing nothing (it will not go to the charity)
* Claim it back (I don't know any other way to do this other than filing a self assessment)
You can either:
* Gift that remaining amount to HMRC by doing nothing (it will not go to the charity)
* Claim it back (I don't know any other way to do this other than filing a self assessment)
But when you get it back you think - I can give that to charity - thus begining a never-ending loop.
I did not know until now that the other 20% could be reclaimed by the donor as well, if they paid 40% tax.
If the donor donates that amount as well and we loop infinitely, the final amount received by the charity would be exactly 1.5625x the originally-donated amount (assuming that the HMRC allows arbitrary small fractions of a penny to be claimed).
Explanation: if you donate an amount x, the final amount would be the infinite series x + sigma(0.25*0.2^(k-1) + 0.2^k, k=1, k=inf), which is the sum of two separate geometric series, so for each one, we can use the formula a/(1-r), where 'a' is the first term (0.25 for the first series, 0.2 for the second) and 'r' is the ratio between each term (0.2 in both cases).
If the donor donates that amount as well and we loop infinitely, the final amount received by the charity would be exactly 1.5625x the originally-donated amount (assuming that the HMRC allows arbitrary small fractions of a penny to be claimed).
Explanation: if you donate an amount x, the final amount would be the infinite series x + sigma(0.25*0.2^(k-1) + 0.2^k, k=1, k=inf), which is the sum of two separate geometric series, so for each one, we can use the formula a/(1-r), where 'a' is the first term (0.25 for the first series, 0.2 for the second) and 'r' is the ratio between each term (0.2 in both cases).
> The tax relief goes to the charity itself, rather than the donor.
Half goes to the charity, and half to the donor.
Half goes to the charity, and half to the donor.
[deleted]
Right they can claim 25% but you can also claim another 20% back!
We can deduct far less than you can in the Netherlands - mortgage interest for example is deductible for you, but not in the UK.
Someone on PAYE will have most of the deductibles handled by their employer (pension, any salary sacrifice schemes etc).
Someone on PAYE will have most of the deductibles handled by their employer (pension, any salary sacrifice schemes etc).
In the UK, deductibles on mortgage interest payments (known as MIRAS[0]) was abolished for private home owners in 2000. As a renter this kind of always stuck in my craw that homeowners got this preferential treatment and was quite glad it was abolished (even after becoming a "homeowner").
Oddly, buy-to-let landlords do retain this deductible, though HMRC have fiddled around with how this works over recent times[1].
[0]: https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...
[1]: https://www.gov.uk/government/publications/restricting-finan...
Oddly, buy-to-let landlords do retain this deductible, though HMRC have fiddled around with how this works over recent times[1].
[0]: https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...
[1]: https://www.gov.uk/government/publications/restricting-finan...
Yes, the BTL sort of makes sense though if you view the mortgage as a business expense, but BTL has had a distorting effect on the UK housing market for too long - changes are desperately needed here, but with so many Tory donors being housing firms, it's unlikely to happen.
That's likely true because like the majority of people, you don't make enough money, or wont see enough benefit from the effort involved. Anyone earning over £100k a year is required to file a self assessment, and if you've reached that point, you also likely have a bunch of tax deductible expenses, that even if the £-value is low, you're going to include in your filing since you're doing it anyway.
This is only true for people earning below a threshold - most professionals in the UK will need to file taxes, but accountants are very cheap here.
This is only true for people earning below a threshold - most professionals in the UK will need to file taxes
That simply isn't true. An income of £80,000 puts you in the top 4% of adult earners. A salary of £100,000 is probably in the top 2 or 3%.
This was discussed extensively at the last election when Labout proposed a new tax rate for people earning over £125k https://election2019.ifs.org.uk/article/labour-s-proposed-in...
That simply isn't true. An income of £80,000 puts you in the top 4% of adult earners. A salary of £100,000 is probably in the top 2 or 3%.
This was discussed extensively at the last election when Labout proposed a new tax rate for people earning over £125k https://election2019.ifs.org.uk/article/labour-s-proposed-in...
Worth noting that if someone is a contractor they'll need to file taxes, even if they pay themselves a lower wage (and thus wouldn't show up in the high earners stats). If they're an NHS doctor/nurse who also does some private work, same. Or anyone who has more than one employer, or is in the gig economy. It's not vast swathes of people, but I think it'd be more than 2 or 3%.
No. I don't like paperwork. So, I don't do paperwork.
It can be more tax efficient to file tax paperwork, but I don't want to do paperwork, so I just had an umbrella employ me when somebody insisted on hiring me as a "contractor" and the umbrella handled the paperwork for which of course they keep a fee. As far as the government is concerned I just had two PAYE employers, the umbrella and my "real" job.
Having multiple employers also does not require filing taxes. One of the employers gets given a zero tax code and they tax all your pay at full rate, the other one gets a normal tax code which reflects your personal allowance and other considerations. My tax code was oscillating all over the place - but that's not a problem it's all automated.
If you love paperwork you can choose to do all the paperwork. Or if you love money and don't hate paperwork maybe you can save a few hundred quid by filing and I hope it makes you happy. I hate paperwork, and I have plenty of money. So, no, despite earning a lot of money and having worked as a contractor I preferred to stick with PAYE.
It can be more tax efficient to file tax paperwork, but I don't want to do paperwork, so I just had an umbrella employ me when somebody insisted on hiring me as a "contractor" and the umbrella handled the paperwork for which of course they keep a fee. As far as the government is concerned I just had two PAYE employers, the umbrella and my "real" job.
Having multiple employers also does not require filing taxes. One of the employers gets given a zero tax code and they tax all your pay at full rate, the other one gets a normal tax code which reflects your personal allowance and other considerations. My tax code was oscillating all over the place - but that's not a problem it's all automated.
If you love paperwork you can choose to do all the paperwork. Or if you love money and don't hate paperwork maybe you can save a few hundred quid by filing and I hope it makes you happy. I hate paperwork, and I have plenty of money. So, no, despite earning a lot of money and having worked as a contractor I preferred to stick with PAYE.
I don't think you need to love paperwork or money. Just employ an accountant for a few hours a year.
Filling out paperwork for the accountant to look at is still paperwork.
The HMRC will take a fair cut of my gross income, which is fine, and then leave me alone whereas an accountant earns money by bothering me with more paperwork.
The HMRC will take a fair cut of my gross income, which is fine, and then leave me alone whereas an accountant earns money by bothering me with more paperwork.
> The HMRC will take a fair cut of my gross income
How do you know it's fair?
How do you know it's fair?
The accountant fills out the paperwork for you.
Accountants don’t bother you - once a year they ask you to sign your accounts.
Accountants don’t bother you - once a year they ask you to sign your accounts.
> most professionals in the UK will need to file taxes, but accountants are very cheap here
I'm guessing you're conflating professionals with contractors, as most high earning professionals I know do not need an accountant to file their taxes, as it's all just done on a self assessment, which is extremely straight forward, and there's little opportunity to game that system effectively.
Meanwhile contractors operating through Ltd entities (now may be hamstrung somewhat with IR35) absolutely should be leveraging an accountant to take advantage of the various ways to reduce their taxable earnings.
I'm guessing you're conflating professionals with contractors, as most high earning professionals I know do not need an accountant to file their taxes, as it's all just done on a self assessment, which is extremely straight forward, and there's little opportunity to game that system effectively.
Meanwhile contractors operating through Ltd entities (now may be hamstrung somewhat with IR35) absolutely should be leveraging an accountant to take advantage of the various ways to reduce their taxable earnings.
> most high earning professionals I know do not need an accountant to file their taxes
Yes you don't need an accountant (and I didn't say that you did) but if you want one instead of doing it yourself they just about £100 rather than I don't know how many thousand that would cost you in the US.
Yes you don't need an accountant (and I didn't say that you did) but if you want one instead of doing it yourself they just about £100 rather than I don't know how many thousand that would cost you in the US.
Likely hundreds rather than thousands through a tax preparation service (they’re not real accountants.) I just use one of the less expensive tax filing websites. It’s somewhat more complex than filing self assessment online in the U.K.
You would need to if you earned 6 figures. So copying our system for the American posters here wouldn't solve their problem.
You can file for self assessment online through HMRC’s website. It was substantially less complex than the online tax filing website I pay in the US.
How complicated were your taxes? Did you work overseas for an extended period of time (outside of the EU)? Did you have special tax credits to claim, business profits to add, or anything else unusual? Simple taxes are relatively easy to file in America, too.
That's awesome! In 2006 I did the same thing with Turbotax for free at my PC at my desk in 15 minutes. I'm sure I could have started doing it on my phone once I got a smartphone but opted not to.
Same in Norway, and the rest of Scandinavia I think. For most people there is nothing to do.
Pretty much yeah. I guess there are some deductions which need to be filed manually as the government would have no way of knowing about them. Like if you have a really long commute to work you get to deduct a certain amount per KM from your taxes.
But mostly these days, unless you run a company, you don't really have to change much about your pre-filled tax statement. Only once have I experienced that my housing association made addendums to the yearly tax report that needed to be changed in my tax statement.
I also lost some money on micro loans last year that apparently I had to file deductions for myself, but it amounted to so little money that I just let the state keep that money.
But mostly these days, unless you run a company, you don't really have to change much about your pre-filled tax statement. Only once have I experienced that my housing association made addendums to the yearly tax report that needed to be changed in my tax statement.
I also lost some money on micro loans last year that apparently I had to file deductions for myself, but it amounted to so little money that I just let the state keep that money.
Here in Hungary I filed my taxes with the government provided Java application, on my Linux computer. No problems whatsoever.
[deleted]
US has twenty times more people than Netherlands.
A fairer comparison would be with the tax system of a small US state or a large city in the US.
Edit: Downvoted as it goes against the narrative, lol.
A fairer comparison would be with the tax system of a small US state or a large city in the US.
Edit: Downvoted as it goes against the narrative, lol.
People always gloss over the massive scale differences when comparing the US to European countries, whether it’s prisons, taxes, healthcare, etc. It’s like, show me the system operating as well with 5x the population before even joking that it should work as efficiently at 10x, much less 20x. Call me when you’re filing EU taxes as individuals in addition to your nation-state taxes.
That should just make it easier to afford an automated system because you can spread out the cost across more people.
Its not the predatory companies that are the problem its the US tax system. If it was possible for people to "check the numbers from the government" on an app, it would happen here too.
It absolutely is a problem of predatory companies spending money on lobbying against simpler tax code. An equal share of the blame is on the politicians accepting these “legal” bribes against the interests of their constituents.
Lobbyists were supposed to be for promoting the interests of small groups that might not have the representation among a politicians constituents to warrant paying attention to. Instead we have rampant and excessive spending by corporations that lobby to keep their monopolies over segments of the market that harm American citizens.
- https://www.nbcnews.com/business/taxes/turbotax-h-r-block-sp... - https://www.propublica.org/article/filing-taxes-could-be-fre... - https://abcnews.go.com/Business/turbotax-lobbies-lawmakers-t...
Lobbyists were supposed to be for promoting the interests of small groups that might not have the representation among a politicians constituents to warrant paying attention to. Instead we have rampant and excessive spending by corporations that lobby to keep their monopolies over segments of the market that harm American citizens.
- https://www.nbcnews.com/business/taxes/turbotax-h-r-block-sp... - https://www.propublica.org/article/filing-taxes-could-be-fre... - https://abcnews.go.com/Business/turbotax-lobbies-lawmakers-t...
> In 2016 alone, Intuit, the makers of TurboTax, spent $2 million on lobbying, ProPublica reports. H&R Block spent $3 million, some of it on the same efforts.
I'm not convinced $5m a year would make such a big impact.
I'm not convinced $5m a year would make such a big impact.
I strongly suspect that it's not the $5m/yr these companies are spending that's doing it; there's basically three other camps who push (directly or indirectly) for this:
* Special-interest groups whose preferential tax treatment might be threatened if there's a push to simplify the tax code (as having the government do the taxes for you kind of requires the taxes be simpler to do so).
* Ideologues who hate government spending but don't think that tax cuts count as spending.
* Anti-tax crusaders who want to make filing taxes painful so there's more grassroots support for cutting taxes. (Think Grover Norquist here).
* Special-interest groups whose preferential tax treatment might be threatened if there's a push to simplify the tax code (as having the government do the taxes for you kind of requires the taxes be simpler to do so).
* Ideologues who hate government spending but don't think that tax cuts count as spending.
* Anti-tax crusaders who want to make filing taxes painful so there's more grassroots support for cutting taxes. (Think Grover Norquist here).
TurboTax is buying influence...who is selling? They are the problem.
The companies spend an enormous amount of money lobbying to ensure that this sort of thing doesn't happen, so yeah, they're culpable.
Of course it's possible. The government will charge you if you filled out the forms wrong, so they have a lot available - instead they could prefill a lot of the information.
It is somewhat known that these companies continue to lobby to keep it complicated enough to require their services.
With all the wrongs about Turbo Tax and monopolizing tax filing - criticisms are appropriate. That said, I much prefer the US system. The US IRS already knows what how much tax an indiviual owes just like the Dutch government. Having to manually file taxes is a feature, not a bug IMO. The only difference is that the US IRS assumes you'd want to itemize and customize your tax return by default whereas the Dutch government makes standard deductions the default. I wouldn't want the government to just send me a number of what I owe. Sure you can challenge it, but I prefer the default to be that the citizen files taxes and the government can tally up the proposed taxes against the data they have and either accept or challenge it.
However, this Turbo Tax monopoly needs to go. There should be a free (OSS) software that can file the taxes.
However, this Turbo Tax monopoly needs to go. There should be a free (OSS) software that can file the taxes.
In Norway the system is similar to the Netherlands. I think you are missing the part where it is mind numbingly easy to go in and add your own deductions. Also, you aren't challenging the amount you owe, you are simply adjusting it.
Having filed taxes in America and Norway, the American system is designed to make you fail and to use paid for nonsense to do something that is incredibly easy.
Having filed taxes in America and Norway, the American system is designed to make you fail and to use paid for nonsense to do something that is incredibly easy.
I spent a year working in Norway and forgot to tell the tax authorities to give me my return in English. Made do by typing stuff into Google translate. Still took less time than filing my US taxes does now.
> Sure you can challenge it, but I prefer the default to be that the citizen files taxes and the government can tally up the proposed taxes against the data they have and either accept or challenge it.
But why? Both have the same outcome but one is more work and costs more as well as has a greater chance of you getting it wrong and being fined in the process.
Would you also prefer supermarkets to make you calculate the total amount you owe when you get to the cashier, making sure you applied all promotions and frequent shopper deductions manually?
But why? Both have the same outcome but one is more work and costs more as well as has a greater chance of you getting it wrong and being fined in the process.
Would you also prefer supermarkets to make you calculate the total amount you owe when you get to the cashier, making sure you applied all promotions and frequent shopper deductions manually?
You don’t seem to understand how things work. The government would send you a pre-filled tax return that contains everything they already know. You would check that and could then make amendments as needed. It doesn’t make sense to view it as a feature to have to put in the work to fill a tax return from scratch while the government already knows what should be there and will check it.
Like In every negotiation the advantage is on the side of the party who has the most information. The government first disclosing what they know gives you as taxpayer an advantage.
Like In every negotiation the advantage is on the side of the party who has the most information. The government first disclosing what they know gives you as taxpayer an advantage.
There's no advantage though as you have to pay the same taxes in any case. It's about convenience.
Yes. And overall the country saves a lot of unnecessary work.
Have you ever been to a DMV in the USA and see how dysfunction it is?
So many reasons why I don't support this. Ease of filing is one of the aspects, rather small for me.
1) USA's government is far more incompetent than Dutch
2) If US IRS sends me a prefilled tax form with erroneous income, say off by 10%, sure I can correct it and file it but now the onus of proof is on the citizen to disprove the error. You might say 'Ok, it is just prefiling it, you can always correct it' - future laws will ask for proof.
3) For a small and nimble country like Netherlands it works very well. Voicing concerns in Netherlands is direct and easy. Not here, USA would mess this up big time.
4) Ideologically, I have issues. It would be extremely orweillian and big-brotherish to get a tax bill from the government - yes I know its just 'pre-filling the boxes' but it will creep up from there.
5) I hate paying for Turbo Tax but there is no denying - it works extremely well. USA's federal system with 100% gaurantee would not be as good. We need to go open source, not put more power in the hands of the massively incompetent IRS and more generally Federal Government.
6) Local and State taxes - this would mean absolutely a patch work of systems that are supplied by shitty software companies to local and state governments. Hard pass.
7) Laws would creep up and change to not just say pre-fill the tax forms but would require massive effort from the citizen to disprove the government. If the filing process initiates from the citizen, the government has to go out on a limb to prove that it's incorrect which is how it should be.
8) I would support ease of filing taxes. But hey! We have that. It is called 1040EZ which takes no more than 10 mins for simple taxes. No software required.
9) I prefer totally offline tax filing. I use Turbo Tax but always print out the tax forms. You might think this is old fashioned but I like doing things old fashioned way. I don't want to digitize anything especially when it comes to automated shitty SaaS hired by the government, I have zero confidence.
10) Even without OSS, I just think that $79 + $____ owed taxes is the marginal rate. $79 -> goes to private industry (Turbo Tax, which does a great job) and $_____ owed to the government. I don't want tax payer money to fund a massive national 'prefiling' tax program. I would support getting rid of $79 effective flat tax that only goes to Turbo Tax.
If the only advantage is the 'pre-filling' part, then I much prefer assembling the data (W2, 1099s, etc) myself and file taxes. Period.
So many reasons why I don't support this. Ease of filing is one of the aspects, rather small for me.
1) USA's government is far more incompetent than Dutch
2) If US IRS sends me a prefilled tax form with erroneous income, say off by 10%, sure I can correct it and file it but now the onus of proof is on the citizen to disprove the error. You might say 'Ok, it is just prefiling it, you can always correct it' - future laws will ask for proof.
3) For a small and nimble country like Netherlands it works very well. Voicing concerns in Netherlands is direct and easy. Not here, USA would mess this up big time.
4) Ideologically, I have issues. It would be extremely orweillian and big-brotherish to get a tax bill from the government - yes I know its just 'pre-filling the boxes' but it will creep up from there.
5) I hate paying for Turbo Tax but there is no denying - it works extremely well. USA's federal system with 100% gaurantee would not be as good. We need to go open source, not put more power in the hands of the massively incompetent IRS and more generally Federal Government.
6) Local and State taxes - this would mean absolutely a patch work of systems that are supplied by shitty software companies to local and state governments. Hard pass.
7) Laws would creep up and change to not just say pre-fill the tax forms but would require massive effort from the citizen to disprove the government. If the filing process initiates from the citizen, the government has to go out on a limb to prove that it's incorrect which is how it should be.
8) I would support ease of filing taxes. But hey! We have that. It is called 1040EZ which takes no more than 10 mins for simple taxes. No software required.
9) I prefer totally offline tax filing. I use Turbo Tax but always print out the tax forms. You might think this is old fashioned but I like doing things old fashioned way. I don't want to digitize anything especially when it comes to automated shitty SaaS hired by the government, I have zero confidence.
10) Even without OSS, I just think that $79 + $____ owed taxes is the marginal rate. $79 -> goes to private industry (Turbo Tax, which does a great job) and $_____ owed to the government. I don't want tax payer money to fund a massive national 'prefiling' tax program. I would support getting rid of $79 effective flat tax that only goes to Turbo Tax.
If the only advantage is the 'pre-filling' part, then I much prefer assembling the data (W2, 1099s, etc) myself and file taxes. Period.
“If the only advantage is the 'pre-filling' part, then I much prefer assembling the data (W2, 1099s, etc) myself and file taxes. Period.”
Why? The government gives you all they know and you can then accept, amend or totally rewrite the return. I don’t see the downside to this.
“2) If US IRS sends me a prefilled tax form with erroneous income, say off by 10%, sure I can correct it and file it but now the onus of proof is on the citizen to disprove the error. You might say 'Ok, it is just prefiling it, you can always correct it' - future laws will ask for proof.”
The burden of proof is on you already when you write your return from scratch. It gets compared to what they know already which is the data a prefilled return would contain.
Why? The government gives you all they know and you can then accept, amend or totally rewrite the return. I don’t see the downside to this.
“2) If US IRS sends me a prefilled tax form with erroneous income, say off by 10%, sure I can correct it and file it but now the onus of proof is on the citizen to disprove the error. You might say 'Ok, it is just prefiling it, you can always correct it' - future laws will ask for proof.”
The burden of proof is on you already when you write your return from scratch. It gets compared to what they know already which is the data a prefilled return would contain.
It's more of an oligopoly than a monopoly as you can pay TaxAct or TaxSlayer or H&R Block, etc if you don't want to pay TurboTax. The issue is that the IRS could relatively easily provide online federal tax filing as a free service but they choose not to compete with the tax prep industry.
[deleted]
Not sure why this comment is getting downvoted. Seems like a rational opinion? What am I missing?
That the word challange is overly dramatic plus technically incorrect (adding a deduction that the government could not possibly know of is not a challenge). In actuality you just add any missing deductions, double check the numbers and then submit. His proposed system is just busy work.
That said I did not downvote.
That said I did not downvote.
I've outlined the reasons here: https://news.ycombinator.com/item?id=27908298
The problem is that I am not a tax expert and but it rings a lot of alarm bells of expansion of government power.
We're effectively bandwagoning behind Netherland's system while ignoring the massive differences between levels of government, size of population and scale, and the overall law making process.
All for a stupendous reason = Ease of filing. Filing taxes on a bus while on vacation is such a outrageously insignificant 'feature'.
The problem is that I am not a tax expert and but it rings a lot of alarm bells of expansion of government power.
We're effectively bandwagoning behind Netherland's system while ignoring the massive differences between levels of government, size of population and scale, and the overall law making process.
All for a stupendous reason = Ease of filing. Filing taxes on a bus while on vacation is such a outrageously insignificant 'feature'.
It’s not a rational opinion. It’s based on not understanding how the process works in other countries.
"disagree, lets downvote"
Probably? I don't really agree with gp, but up-voted, as it reads like a reasonable argument. Normally I'd probably neither up or down vote, but I generally browse with "show dead" - and it's sad to see comments down voted to oblivion when users offer an opinion that's just slightly against the consensus. Without dissenting opinions there's not much debate left. /meta
Yup. I have come to realize that not seeing any dissenting opinions is scary and terrifying. So thanks for being charitable in this pursuit. There are a lot of ideas on HN that get no pushback and mob mentality that I want to challenge and contest. I don't think tax filing process is that bad but it is magnetizing to say "I filed my taxes while on a bus on a vacation" than to dig into the deeper implications of what that means.
To be honest, I objectively like Dutch system for simple taxes similar to 1040EZ form in USA. I philosophically and ideologically oppose it. And, furthermore, I have no faith in our government and its ability to run efficiently.
To be honest, I objectively like Dutch system for simple taxes similar to 1040EZ form in USA. I philosophically and ideologically oppose it. And, furthermore, I have no faith in our government and its ability to run efficiently.
Well put! Ah well, I don't believe in "karma" anyway ...
> The US IRS already knows what how much tax an indiviual owes just like the Dutch government.
Citation very much needed; that’s not true for anyone running a business (even a side business), for anyone with shares of stock purchased before Jan 1, 2011 or mutual funds before Jan 1, 2012, and many other not uncommon situations.
Citation very much needed; that’s not true for anyone running a business (even a side business), for anyone with shares of stock purchased before Jan 1, 2011 or mutual funds before Jan 1, 2012, and many other not uncommon situations.
Did the parent comment about the Netherlands also apply to business owners? I have dealt with business taxes in other countries besides the US (though not Netherlands) and you absolutely are expected to hire an accountant to do it. It may well be impossible to file them otherwise. In the US for the most common businesses you can do pass-through taxation and just add a schedule to your regular return.
Even in a pass-through business that can use schedule C or E, this part is still almost always false: “IRS already knows what how much tax an [individual] owes”. They almost never have enough information to correctly and completely fill out schedule C or E for you.
Sure but the point was the comparison to the Dutch system, hence the "...like the Dutch government" part of that sentence. So while its great to make sure people are clear about describing tax laws here on the internets, it may not be an aspect of the argument that is relevant.
I read that sentence most plainly as having two claims: The IRS has enough information to prepare returns for US individuals. This is similar to the Dutch ability claimed above.
Rather than as “the IRS has the same limitations in individual tax return preparation as the Dutch system”.
(GP then goes on to claim that while the IRS has this ability, they are philosophically opposed to this becoming the standard method of tax preparation, which further biases me to thinking that the first reading was their intent.)
Rather than as “the IRS has the same limitations in individual tax return preparation as the Dutch system”.
(GP then goes on to claim that while the IRS has this ability, they are philosophically opposed to this becoming the standard method of tax preparation, which further biases me to thinking that the first reading was their intent.)
"I always feel like somebody's watching me
And I have no privacy (ooh ooh)
I always feel like somebody's watching me
Who's playing tricks on me?
And I don't feel safe anymore, oh, what a mess
I wonder who's watching me now (who?), the IRS?"
And I have no privacy (ooh ooh)
I always feel like somebody's watching me
Who's playing tricks on me?
And I don't feel safe anymore, oh, what a mess
I wonder who's watching me now (who?), the IRS?"
TurboTax recently tricked me using some dark UI patterns into spending 30+ minutes painstakingly filling out my tax forms in a way that made it seem like it was for the free filing.
Only at the very end, did they reveal that it was in fact for the paid version, with no way to change it to the free version and also keep the work. Essentially holding my work hostage.
So I had to redo it again in the hard-to-find free version. I am now anti-TurboTax for life.
Only at the very end, did they reveal that it was in fact for the paid version, with no way to change it to the free version and also keep the work. Essentially holding my work hostage.
So I had to redo it again in the hard-to-find free version. I am now anti-TurboTax for life.
The same thing happened to me a few years ago. I wanted so badly to stick it to them on principle, but I didn't want to waste anymore of my time. I put my tongue to their boot and paid them for the privilege of getting scammed. Real 1984 shit.
1984? People throw that reference around that have never read the book.
What do a private company's payflow dark patterns have to do with mass surveillance by a totalitarian state? Everything slightly dystopian isn't "real 1984 shit."
What do a private company's payflow dark patterns have to do with mass surveillance by a totalitarian state? Everything slightly dystopian isn't "real 1984 shit."
Nice username. My comment triggered you hard enough to make another account? I suppose it's good cover for avoiding responsible posting.
To help you out since you won't help yourself: the end of 1984 shows how psychological torture brings hard, rational people to doublethink. "I will not pay for my tax return. I will pay for my tax return."
To help you out since you won't help yourself: the end of 1984 shows how psychological torture brings hard, rational people to doublethink. "I will not pay for my tax return. I will pay for my tax return."
I don't reuse usernames on sites with no privacy controls. I haven't seen someone desperate enough to use the "triggered" cliché the way you did on this site in a while. (Popular on reddit though!)
I asked you a question in earnest, which part of that was not "responsible?" You tried to answer, but we both know it wasn't good. You're stretching "doublethink" to include falling for their dark pattern? In the context of 1984 doublethink regards indoctrination. Further proof you've never read it.
I asked you a question in earnest, which part of that was not "responsible?" You tried to answer, but we both know it wasn't good. You're stretching "doublethink" to include falling for their dark pattern? In the context of 1984 doublethink regards indoctrination. Further proof you've never read it.
If I were as interested in lying and as bad at it as you are I'd probably go out of my way for anonymity too.
I think something by Kafka would be far more apt. It seems that 1984 has become a shorthand for anything vaguely dystopian.
I'm a vocal anti advocate. Hope you do too.
> Real 1984 shit
???
Hypothetical scenario - Real 1984 shit would be to get a tax bill prefilled from the government to get you to sign on a dotted line. If you want to contest it, you'll need to hire lawyers but most refuse to work with you. Average citizen is left to defend themselves which is an impossibility. Sign on the dotted line or get arrested.
Folks, we need to go towards an open source route. Not put more power in the hands of a massively incompetent government.
???
Hypothetical scenario - Real 1984 shit would be to get a tax bill prefilled from the government to get you to sign on a dotted line. If you want to contest it, you'll need to hire lawyers but most refuse to work with you. Average citizen is left to defend themselves which is an impossibility. Sign on the dotted line or get arrested.
Folks, we need to go towards an open source route. Not put more power in the hands of a massively incompetent government.
Did something similar. I didn't care if the fee was like $30. But I needed their investment/small business tier and it was in the multiple hundreds of dollars.
Switched to a different service.
I know people want privacy, but I'd sell my income and personal company finances for $500. Where is that tax company?
Switched to a different service.
I know people want privacy, but I'd sell my income and personal company finances for $500. Where is that tax company?
IIRC, they advertise it is free to "fill out", not to actually file.
>In 2019, ProPublica reported that Intuit added lines of code to the free version of its TurboTax website so that the site would not appear in search results on Google.
It's almost refreshing to see such an obvious "fuck you" move, without having it be covered by tons of PR and legalese.
It's almost refreshing to see such an obvious "fuck you" move, without having it be covered by tons of PR and legalese.
What I don't understand is, if I make a mistake (e.g. missing a schedule or wrong number) in the form 1040 and send it to IRS, I'll be guaranteed to receive a CP notice from them later asking me to pay the missing tax and penalty. Clearly IRS has their own algorithm to calculate everything based on what they got (which is exactly the same as what I have, W-2, 1099, etc., for most Americans) anyways.
If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year? Why not just send me a pre-filled 1040 that their internal algorithm calculates and ask for my approval, like those Europeans do? How is this more "prone to raise tax"?
If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year? Why not just send me a pre-filled 1040 that their internal algorithm calculates and ask for my approval, like those Europeans do? How is this more "prone to raise tax"?
> If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year?
The tax preparation industry has successfully lobbied to stop the IRS from being able to do this.
The tax preparation industry has successfully lobbied to stop the IRS from being able to do this.
In the UK it's possible to see a running estimate of your current tax position and the estimate for the end of the year. HMRC issues you a tax code which is used by your employer to determine how much tax they should be deducting each pay period. This means that in most cases you get no nasty surprises at the end of the year.
I've always found the US tax system bizarre.
I've always found the US tax system bizarre.
They don’t know everything. They automatically compare your return against information they’ve received from other parties (W-2s, 1099s, other tax returns’ dependents’ social security numbers, mostly) so you will get a notification if your return contradicts those in an obvious way. Beyond that, you need to be audited to get a notice. Audits range in their degree of inspection so most people just get a letter, but those kinds of audits usually just focus on one/two easy-to-discover issues.
They certainly could develop the ability to do your return for you, but it would be an effort.
They certainly could develop the ability to do your return for you, but it would be an effort.
They do not know everything here in Sweden either but they still give you prefilled forms with what they do know (based on what other parties like employers and banks have submitted) and then you can add the rest yourself plus add corrections if you disagree with them. Seems less work and less back and forth.
Most Americans are pretty close to that level right now with autofill from their previous year. Granted, it’s provided by private companies in partnership with the IRS.
What would happen is that tons of people would want to know exactly what that algorithm is: they would want to know what exact rules are being applied to the information they have submitted, and they would want to validate the calculations themselves. Just in the name of transparency.
Still, it would be a good option for those who don't want to know. I.e. have the option of doing a return which you calculate yourself (which is then corrected, based on the input values in it). Or the option of just submitting the inputs and having them do everything.
Still, it would be a good option for those who don't want to know. I.e. have the option of doing a return which you calculate yourself (which is then corrected, based on the input values in it). Or the option of just submitting the inputs and having them do everything.
[deleted]
I see it as a trust thing: Doing the taxes myself, I know why I owe (or get returned) as much as I do.
Then again, I don't use TurboTax/etc, I do it by hand every year so it isn't a black box for me.
Then again, I don't use TurboTax/etc, I do it by hand every year so it isn't a black box for me.
Let's not forget the US and Eritrea are the only countries still taxing citizens abroad. You can escape the country and still have this tax bullshit, but now it's even more complicated because you're filing from abroad. Then a lot of the free options become unavailable strictly from filing from a non-US location.
Pretty ironic given the countries creators were fleeing the British to escape this bullshit
All that's coming to mind is "no taxation without representation".
US citizens can still vote absentee while abroad, so no, not the same thing.
US citizens can still vote absentee while abroad, so no, not the same thing.
I don't even owe anything and I still have to waste time and money filing! And they just keep making getting rid of citizenship more and more expensive! So authoritarian.
The threshold is > ~100k living abroad to pay taxes.
Almost nobody pays this. Moreover, it's not ridiculous that if you're a tycoon traveling the world and you're implicitly using US citizenship as your escape card, you should pay taxes.
Anyone who has lived abroad knows most countries don't want to jail/detain other country nationals.
Almost nobody pays this. Moreover, it's not ridiculous that if you're a tycoon traveling the world and you're implicitly using US citizenship as your escape card, you should pay taxes.
Anyone who has lived abroad knows most countries don't want to jail/detain other country nationals.
That's if you take the expatriot exemption. Doing so has many implications including not being able to legally contribute to an IRA or SEP account. Even with the exemption, you still owe taxes on Social Security and Medicare. Social Security checks ship abroad, but the Medicare is not redeemable nor are there any exemptions for it. There's been years of editorials of regular Joe retirees not realizing this til late that they paid Medicare their whole lives to get in a big medical bind in another country.
> if you're a tycoon traveling the world
You've got a biased view here. This is not a tycoon level of earnings. That's a standard citizen who moved abroad and works as a (senior) software engineer.
You've got a biased view here. This is not a tycoon level of earnings. That's a standard citizen who moved abroad and works as a (senior) software engineer.
> Almost nobody pays this.
Do you have statistics to back this bold claim?
There is an additional problem in the form of FBAR/FATCA requirements, which impose a huge burden on taxpayers abroad. Ever tried to report the exact max amounts and interest in all of your accounts? It's not fun, it takes a lot of time and effort, and it costs money.
Do you have statistics to back this bold claim?
There is an additional problem in the form of FBAR/FATCA requirements, which impose a huge burden on taxpayers abroad. Ever tried to report the exact max amounts and interest in all of your accounts? It's not fun, it takes a lot of time and effort, and it costs money.
The FBAR issue means you have to report if at any time you had more than $10k, a number that hasn't changed since the 80s I think, as if you are a criminal for keeping a reasonable amount of money in savings for a place you reside. I know Democrats Abroad has been trying to push to remove the FBAR requirement at least to some extent for banks in the same country you filed your taxes from in. It's not a tax haven if you spend all of your time living there.
Not only this but it's difficult to open accounts abroad as an American because foreign banks really don't want to deal with filing all of this paperwork for the IRS.
Not only this but it's difficult to open accounts abroad as an American because foreign banks really don't want to deal with filing all of this paperwork for the IRS.
Every time this is brought up I will ask the same question.
Has anyone personally had to pay taxes to the US while living abroad? Not talking about a stock sale or business sale. Talking about making income abroad and owning the US for it. I don’t want to hear about your friend of a friend, you personally.
I’ve known people living in places like Costa Rica, China, and all over Europe. No one had to pay a cent ever.
Has anyone personally had to pay taxes to the US while living abroad? Not talking about a stock sale or business sale. Talking about making income abroad and owning the US for it. I don’t want to hear about your friend of a friend, you personally.
I’ve known people living in places like Costa Rica, China, and all over Europe. No one had to pay a cent ever.
Yes, I pay taxes living abroad. Any US citizen overseas that earns over $107,600 in 2020 (changes slightly every year) may be liable to pay US taxes (depending on what other deduction they may have, etc)[1].
There is the direct financial cost of paying US taxes when living abroad, but it is also a significant cost in time and energy to file taxes for 2 countries. It can get pretty complex, so many need to hire a tax service to handle it properly.
Then there are the additional reporting requirements for any banks that you have accounts with, so some banks will not allow you to have an account with them because you are a US citizen.
The point is that there are some real downsides to maintaining US citizenship when living overseas.
There are many upsides of course, like being able to return to the US at any time and live and work there. If there were an emergency situation, I could probably count on the US embassy to help me evacuate if necessary.
Overall, it's a cost/benefit evaluation. If you have citizenship in another advantageous country (or country in a powerful union like the EU) and significant resources, I can see why it would be tempting for some to drop the US citizenship.
[1] https://www.irs.gov/individuals/international-taxpayers/figu...
There is the direct financial cost of paying US taxes when living abroad, but it is also a significant cost in time and energy to file taxes for 2 countries. It can get pretty complex, so many need to hire a tax service to handle it properly.
Then there are the additional reporting requirements for any banks that you have accounts with, so some banks will not allow you to have an account with them because you are a US citizen.
The point is that there are some real downsides to maintaining US citizenship when living overseas.
There are many upsides of course, like being able to return to the US at any time and live and work there. If there were an emergency situation, I could probably count on the US embassy to help me evacuate if necessary.
Overall, it's a cost/benefit evaluation. If you have citizenship in another advantageous country (or country in a powerful union like the EU) and significant resources, I can see why it would be tempting for some to drop the US citizenship.
[1] https://www.irs.gov/individuals/international-taxpayers/figu...
How much taxes do you pay to the US?
Yes the US will help get you out when you need to. Hostage rescue by special forces in Nigeria[1]. State Department Wuhan evacuation in Jan 2020[2]. 100,000 people evacuated by State Department as of June 2020.[3]
[1] https://www.militarytimes.com/news/your-military/2020/10/31/...
[2] https://www.state.gov/the-untold-coronavirus-story
[3] https://washdiplomat.com/as-coronavirus-spread-state-departm...
Yes the US will help get you out when you need to. Hostage rescue by special forces in Nigeria[1]. State Department Wuhan evacuation in Jan 2020[2]. 100,000 people evacuated by State Department as of June 2020.[3]
[1] https://www.militarytimes.com/news/your-military/2020/10/31/...
[2] https://www.state.gov/the-untold-coronavirus-story
[3] https://washdiplomat.com/as-coronavirus-spread-state-departm...
> I’ve known people living in places like Costa Rica, China, and all over Europe. No one had to pay a cent ever.
> How much taxes do you pay to the US?
Anecdata won't get us very far in understanding.
The point is there are plenty (no idea the exact number) of US citizens abroad that pay taxes. If you're making much over ~$110K and don't have significant deductions, you are paying US taxes. As you can imagine these people are typically experienced technical engineers, executives, business owners, etc. True, most US citizens abroad won't go over the ~$110K, but many do.
Either way, you still have the burden of filing taxes in the complex US tax system which is a non-trivial cost in time and resources - in addition to filing taxes in your host country. Is it worth it? Yes, for most, but simplifying the overly complex tax requirements would make it a lot less burdensome for all US citizens at home and abroad.
> How much taxes do you pay to the US?
Anecdata won't get us very far in understanding.
The point is there are plenty (no idea the exact number) of US citizens abroad that pay taxes. If you're making much over ~$110K and don't have significant deductions, you are paying US taxes. As you can imagine these people are typically experienced technical engineers, executives, business owners, etc. True, most US citizens abroad won't go over the ~$110K, but many do.
Either way, you still have the burden of filing taxes in the complex US tax system which is a non-trivial cost in time and resources - in addition to filing taxes in your host country. Is it worth it? Yes, for most, but simplifying the overly complex tax requirements would make it a lot less burdensome for all US citizens at home and abroad.
Except dropping your us citizenship may prevent you from ever stepping foot in the US again, if things like the SAFER Act [0] were to actually pass. Additionally, renouncing puts your name in criminal databases, and probably has lots of other downsides compared to someone that just never had citizenship in the first place. Not to mention all the accidental Americans that never stepped foot in the US!
[0] https://en.wikipedia.org/wiki/Reed_Amendment_(immigration)?w...
[0] https://en.wikipedia.org/wiki/Reed_Amendment_(immigration)?w...
If you've never stepped foot in America would you really consider yourself American?
I met someone running an AirBnB in London who was in the process of revoking his US citizenship because he was being taxed by the US despite not working there or having any business there. What blew me away is that he was having to pay thousands of pounds to _revoke_ his citizenship. From an admittedly naïve standpoint that seems like a real rort.
I was a dual us / Canadian citizen who have *never lived or worked in the US*.
I revoked my citizenship 2 years ago, after going through a stock sale here in Canada.
The process:
- cost me around $20,000 for the lawyer, accountants (had to go back and do 5-6 years of taxes), another $3,000 (I think?) to the US for the revocation process
- had to go to the Bahamas in order to get an appointment at an embassy, I never got a response from the ones here (this was the best part, nice little vacation during Canadian winter xD)
- cost more tens of thousands in Canadian tax as I couldn’t claim all of my tax deductions in Canada for the year of the sale of it would’ve pushed me over 25,000 owing on the US side and meant I’d have had to pay (there’s a program for clearing up to 25,000 owing taxes when you revoke now)
- the IRS fucked up and came back to me this year as owing so I’m continuing to pay the accountants to deal with that for me
- caused untold amounts of stress for myself and my wife
I had previously basically ignored the whole situation as it seemed entirely ridiculous that I should have to deal with this, however the US has started forcing foreign banks to ask their customers about their citizenship status. It didn’t seem smart to lie about this to my bank (who also happens to be my wife’s employer), so it seemed like I may have been ending up on the IRS radar at some point regardless.
All in all an entirely SHIT situation even though technically I probably never would’ve owed outside of your caveats about a stock sale. Had I been compliant it would’ve cost me in money and time each year.
I revoked my citizenship 2 years ago, after going through a stock sale here in Canada.
The process:
- cost me around $20,000 for the lawyer, accountants (had to go back and do 5-6 years of taxes), another $3,000 (I think?) to the US for the revocation process
- had to go to the Bahamas in order to get an appointment at an embassy, I never got a response from the ones here (this was the best part, nice little vacation during Canadian winter xD)
- cost more tens of thousands in Canadian tax as I couldn’t claim all of my tax deductions in Canada for the year of the sale of it would’ve pushed me over 25,000 owing on the US side and meant I’d have had to pay (there’s a program for clearing up to 25,000 owing taxes when you revoke now)
- the IRS fucked up and came back to me this year as owing so I’m continuing to pay the accountants to deal with that for me
- caused untold amounts of stress for myself and my wife
I had previously basically ignored the whole situation as it seemed entirely ridiculous that I should have to deal with this, however the US has started forcing foreign banks to ask their customers about their citizenship status. It didn’t seem smart to lie about this to my bank (who also happens to be my wife’s employer), so it seemed like I may have been ending up on the IRS radar at some point regardless.
All in all an entirely SHIT situation even though technically I probably never would’ve owed outside of your caveats about a stock sale. Had I been compliant it would’ve cost me in money and time each year.
I know if you're born from a US parent you get citizenship, but what's stopping them from only filing for the birth of a Canadian child in Canada and never acknowledging they have American citizenship? As long as you don't get a birth certificate and SSN in the US, the IRS will never know.
I had a birth certificate, my parents thought it would be potentially helpful for me (this was also almost 40 years ago so a lot of these extra compliance requirements didn’t exist back then).
We were concerned that my kids would also potentially be US citizens but it seems like I would have to have lived there for some amount of time for that to kick in.
We were concerned that my kids would also potentially be US citizens but it seems like I would have to have lived there for some amount of time for that to kick in.
You do have to apply for an acknowledgement of US citizenship for your kids, and when they're 18, they have the choice of renouncing US citizenship without all the bullshit hassle adults face.
> Has anyone personally had to pay taxes to the US while living abroad?
Yes, I'm living in Iceland at the moment and paying income taxes in the US.
Iceland has a teleworker visa that lets you live here tax-free while working remotely for your current employer. That's a fantastic deal for most countries, but I'm not saving any money while we're here. (We're not doing it to save money, just doing it to social distance and enjoy the scenery.)
Yes, I'm living in Iceland at the moment and paying income taxes in the US.
Iceland has a teleworker visa that lets you live here tax-free while working remotely for your current employer. That's a fantastic deal for most countries, but I'm not saving any money while we're here. (We're not doing it to save money, just doing it to social distance and enjoy the scenery.)
That’s not the same you are still considered as working in the US. You just happen to be staying in a foreign country.
Yes. Most of my tax is covered by reciprocal tax treaties between my country of residence (Canada) and the US, but I still have to file, and differences in tax regimes mean that there are decisions my family has to take that other families, in the same situation but without a US citizen, don't. For instance, if we sell our house, I will have to pay capital gains in the US, but not in Canada (it's our primary residence and gains from that sale are not taxable in Canada).
It's a minor inconvenience for me, but that's because we pay an accountant to handle a relatively complicated tax picture already.
It's a minor inconvenience for me, but that's because we pay an accountant to handle a relatively complicated tax picture already.
The US also recognizes RRSP in the tax treaty but not TFSA so that’s a pretty major retirement planning tool that’s off the table.
Yep.
Yes I hit the minimum taxation rate in the US. And I just had a green card.
We need the IRS to simply file on behalf of the user and they just have to sign off.
I've seen this so many times.
US Tax law is far too nuanced and complex for this. Just simple things like donations create issues.
Donations to registered 501(c)(3) charities are tax exempt. But how does the IRS know if you gave the Salvation Army bell ringer $20? You have to tell them. On your tax return.
Medical expenses in excess of 7.5% of your income are also exempt. And the IRS has no clue which of your expenses were medical. So you have to tell them.
It's far more involved and complex than even just this. Did you move? Are you a member of the military? Costs related to your move are not taxable.
There are probably thousands of potential exemptions. Few of which could be automatically identified and credited without massive privacy issues. And even then couldn't be perfect.
That cardboard box you bought at the local big-box store? Was it a tax exempt moving expense?
Oh, and the IRS has been sitting on my return for 2 months now and I did all the work for them. Could only imagine what it would look like if they had to track all of this.
US Tax law is far too nuanced and complex for this. Just simple things like donations create issues.
Donations to registered 501(c)(3) charities are tax exempt. But how does the IRS know if you gave the Salvation Army bell ringer $20? You have to tell them. On your tax return.
Medical expenses in excess of 7.5% of your income are also exempt. And the IRS has no clue which of your expenses were medical. So you have to tell them.
It's far more involved and complex than even just this. Did you move? Are you a member of the military? Costs related to your move are not taxable.
There are probably thousands of potential exemptions. Few of which could be automatically identified and credited without massive privacy issues. And even then couldn't be perfect.
That cardboard box you bought at the local big-box store? Was it a tax exempt moving expense?
Oh, and the IRS has been sitting on my return for 2 months now and I did all the work for them. Could only imagine what it would look like if they had to track all of this.
There are many possible deductions, however a lot of people can’t/shouldn’t use them because of the large standard deduction. The question is how many people file taxes which are basically W2 plus standard deduction? My bet is quite a lot.
Don’t let the perfect be the enemy of the good.
Don’t let the perfect be the enemy of the good.
The figures I’ve seen have around 80% of taxpayers taking the standard deduction:
https://taxfoundation.org/standard-deduction-itemized-deduct...
https://taxfoundation.org/standard-deduction-itemized-deduct...
I feel like that is about right, especially with the higher standard deduction.
I bought a house early last year for 250k. Including all the interest, fees, taxes, etc, plus all my family's medical expenses, and even things that I'm not sure I could include, I still couldn't reach the standard deduction. It really is a lot of money for most people.
I bought a house early last year for 250k. Including all the interest, fees, taxes, etc, plus all my family's medical expenses, and even things that I'm not sure I could include, I still couldn't reach the standard deduction. It really is a lot of money for most people.
The vast majority of Americans take the standard deduction. Those that don't can afford an accountant.
It's not that hard really. You can get everything prefilled as if none of those points applied. Then you make changes which apply to you.
Various levels of deduction exist in other countries too - for example in Australia. But I get 95% of the form prefilled from employers/banks/insurance and only add what's missing.
Various levels of deduction exist in other countries too - for example in Australia. But I get 95% of the form prefilled from employers/banks/insurance and only add what's missing.
1040EZ is basically what you describe. It may not be pre filled but it’s something like two pages, and there’s not much to it.
My understanding is that this is precisely how it works in many other developed nations - the US is a bit of an outlier in this regard.
Im Denmark that pretty much how it works. If you have complex scenarios you might need to adjust the numbers a bit, for example if you have stocks abroad or income from gigs.
Many trading platforms in Denmark do automated reporting, and some gig-economy apps do automated reporting too. But if you setup a lemonade stand, well, reporting is in you :)
The tax authorities also have pretty good phone support. It's a bit overloaded around filing season (but getting through is possible), but if come home from an internship abroad and call them, they are happy to tell you where and how to report income and taxes paid in Canada for example.
I bet it's expensive to offer phone support. But if you want people to pay taxes the best way to do it is to make it easy to do the right thing.
This advice goes pretty much everywhere, if you make it easy to do something, people will do it :)
Many trading platforms in Denmark do automated reporting, and some gig-economy apps do automated reporting too. But if you setup a lemonade stand, well, reporting is in you :)
The tax authorities also have pretty good phone support. It's a bit overloaded around filing season (but getting through is possible), but if come home from an internship abroad and call them, they are happy to tell you where and how to report income and taxes paid in Canada for example.
I bet it's expensive to offer phone support. But if you want people to pay taxes the best way to do it is to make it easy to do the right thing.
This advice goes pretty much everywhere, if you make it easy to do something, people will do it :)
I fill out my Danish one in like 10 minutes. First year in DK I had help but after that it's kind of easy. Most what it takes time is filling out the deductible for travel where you have to indicate days traveled.
I guess in the US is deliberately complicated or get's changed a lot as for the ordinary folk this shouldn't take a lot of time, even if you had to input all your income.
In the UK, it is like this for the vast majority of tax payers. Certain criteria, like earning over £100k, mean you need to file a return. The government will usually send you a letter informing you that you've met the criteria too, as they know how much you earn each month.
At any time, you can log in and easily see how much the government thinks you have earned and from who, and which tax rate (tax code) is being applied to you. You can correct this as well if it is wrong.
Having lived in Australia, the US and UK, I've found the UK system to be the easiest to understand and navigate. Australia isn't too far behind. The US is just a mess.
At any time, you can log in and easily see how much the government thinks you have earned and from who, and which tax rate (tax code) is being applied to you. You can correct this as well if it is wrong.
Having lived in Australia, the US and UK, I've found the UK system to be the easiest to understand and navigate. Australia isn't too far behind. The US is just a mess.
In Australia we have something of an in-between approach. Essential tax data (e.g. total income and withheld tax) is sent directly to Government by your employer and it is pre-filled into the relevant fields of tax filing software developed and maintained by the Government.
However it is not a "one click to accept the default" system because there's still a lot of important information it does not know.
However it is not a "one click to accept the default" system because there's still a lot of important information it does not know.
They have some awesome tools built in to the tax form. The asset calculator lets you put in stuff like “I paid this much for an office table” and it tells you that the expected lifetime is 10 years and it will automatically insert the deduction for the next 10 years without you having to think about anything.
Also in some underdeveloped nations (e.g. India). The US is truly the third world of the western hemisphere.
Not in Switzerland. Bank accounts and salary information are not accessible to either level of government (communal, cantonal, federal), due to strong privacy legislation and a traditional distrust for central data collection and authority.
But nevertheless the yearly filing process is rather straightforward, as the tax authorities provide their own free web app for this purpose. It hasn't always been great but it improved significantly over the last few years.
But nevertheless the yearly filing process is rather straightforward, as the tax authorities provide their own free web app for this purpose. It hasn't always been great but it improved significantly over the last few years.
In Romania if you're a salaried employee you don't even need to sign off, they do everything for you.
There are no deductions, for a lot of stuff you just get money directly from the government, as an incentive.
There are no deductions, for a lot of stuff you just get money directly from the government, as an incentive.
A big part of that is the complexity of the tax code.
Not sure how IRS is going to know how many dependents I have living in my house or whether I've lost my hearing and am now deaf.
Not sure how IRS is going to know how many dependents I have living in my house or whether I've lost my hearing and am now deaf.
None of that changes very often. For most Americans filling out tax forms or paying someone to do so is simply economic dead weight.
The IRS could use easily use last years data plus what was submitted by companies to pre fill most Americans taxes accurately and people could amend those forms as needed with less effort than starting from scratch.
The IRS could use easily use last years data plus what was submitted by companies to pre fill most Americans taxes accurately and people could amend those forms as needed with less effort than starting from scratch.
If your taxes are simple enough that the gov't can just fill them out for you, then the EZ file should work pretty well too?
Sure, but then why not just roll it into the IRS’ own web portal instead of letting every service roll their own and potentially screw with it (like Intuit did when it prevented Google from indexing its Free File tier)? The result is far more consumer friendly and potentially allows for greater integration with and prepopulation from other government services.
So then the right question to ask is "why is the tax code so complicated?"
Yes, EZ file should work for 99.9% of the US. But it doesn't, because the tax code is horrendously complex
Yes, EZ file should work for 99.9% of the US. But it doesn't, because the tax code is horrendously complex
Usually, you dependents have an SSN and requirement to maintain an address on record, as well as a birth certificate indicating who their parents are.
IRS could possibly reach into some of that. Or it simply relies on what you reported last year.
But sure, you'll have to correct some details every few years. This might also be the case if you have income from bitcoin, etc.
IRS could possibly reach into some of that. Or it simply relies on what you reported last year.
But sure, you'll have to correct some details every few years. This might also be the case if you have income from bitcoin, etc.
This works if your tax situation is W-2 income and investment income from mainstream investments. You start to run into issues for anything you have to report, like small business income. There are also privacy concerns. Mortgage interest is tax is tax deductible, but should the lender be obligated to tell the government it has a relationship with you? In the case of an employer, it makes more sense because the government is taking what it's owed. For deductions, it's what you're owed, so the onus can be more on the individual.
> Mortgage interest is tax is tax deductible, but should the lender be obligated to tell the government it has a relationship with you?
Yes, the govt has an interest in knowing the source of revenue for banks. Not only for money laundering and tax fraud, but ensuring the banks have stable income sources to avoid bank failures.
Yes, the govt has an interest in knowing the source of revenue for banks. Not only for money laundering and tax fraud, but ensuring the banks have stable income sources to avoid bank failures.
Mortgage interest is already reported to the IRS on Form 1098 and that form is required to be filed by the lender if you paid more than $600 in interest for the year.
The US taxpayers, thru their government, could just do a
buy out of Intuit/TurboTax for under $4 billion, and make
the software free to use as part of a transition process.
Any Intuit employees who at competent at tax preparation could be employed by the IRS, which takes in 4-6 dollars for every 1 dollar it costs. Win/win. Would never happen.
Any Intuit employees who at competent at tax preparation could be employed by the IRS, which takes in 4-6 dollars for every 1 dollar it costs. Win/win. Would never happen.
I trust Intuit more than the US government to provide a service like that. Have you ever used a US government web form? Who do you trust more, UPS or USPS?
Don't get me wrong, I don't support their monopoly. The only real solution is to move away from such a complex tax system and do things European style (no tax return).
Don't get me wrong, I don't support their monopoly. The only real solution is to move away from such a complex tax system and do things European style (no tax return).
I actually trust USPS a lot more than UPS. They're a fantastic service, and my opinion isn't unique. The USPS is America's most trusted federal service and 74% of people think they do an "excellent" job. [1] I agree.
In fact, USPS is ranked as a "more trusted brand" than UPS in surveys (#1 vs #8 nationwide respectively). [2]
[1] https://news.gallup.com/poll/257510/postal-service-americans...
[2] https://www.marketwatch.com/story/people-trust-amazon-and-go...
In fact, USPS is ranked as a "more trusted brand" than UPS in surveys (#1 vs #8 nationwide respectively). [2]
[1] https://news.gallup.com/poll/257510/postal-service-americans...
[2] https://www.marketwatch.com/story/people-trust-amazon-and-go...
Whenever someone says USPS is great, my mind immediately jumps to Newman trying to indict Seinfeld for mail fraud.
Also, "Because the mail never stops..."
Also, "Because the mail never stops..."
It is easy to cherry pick, how about the DMV? https://www.nytimes.com/2020/10/20/nyregion/nj-mvc-lines-dmv...
Have you ever been to USCIS or the US SSA?
Have you ever been to USCIS or the US SSA?
DMV in WA is fine, more private companies should run that way.
It doesn't matter, as it seems you'll just keep throwing three letter agencies at the wall until something sticks.
It doesn't matter, as it seems you'll just keep throwing three letter agencies at the wall until something sticks.
Yeah, my personal experience lines up with that - it varies a lot from place to place. Los Gatos DMV isn't half bad. Downtown SF on the other hand is an experience all its own.
USCIS is a fun one, I've actually had nothing but great experiences with them in person. It's clear they're underfunded and under-resourced, likely because (as with the patent office and state department) they operate on a cost recover basis. As such, they are required to make up 100% of their budget from user fees and there's only so much blood you can squeeze from that stone.
They're clearly not set up for success, between their funding model and their role as a bureaucratic obstacle course to keep prospective immigrants out of America. That however isn't their fault (the blame lies with Congress in defining their mandate) and I've found the people I've met in person both friendly and effective civil servants.
They're clearly not set up for success, between their funding model and their role as a bureaucratic obstacle course to keep prospective immigrants out of America. That however isn't their fault (the blame lies with Congress in defining their mandate) and I've found the people I've met in person both friendly and effective civil servants.
Here in Australia (as in other countries mentioned in this thread) filing taxes on the government-provided website is super easy. Wait a few weeks to a couple of months after the start of the financial year and most of the fields will be pre-filled from employers, banks, investment accounts, and IIRC private health (if any). Just need to fill in deductions and hit Submit.
I don't see any technical reason the US government couldn't build something similar.
The MA state free online tax forms are about as easy to use as Turbotax.
US Digital Service and GSA 18f have been doing good stuff for the government for over a decade.
US Digital Service and GSA 18f have been doing good stuff for the government for over a decade.
[deleted]
Planet Money/Pricenomics had a fascinating story about California's trial of a streamlined system that was incredibly well-received. However, Intuit's lobbyists teamed up with the small-government movement to sink it. https://priceonomics.com/the-stanford-professor-who-fought-t...
Use the government's official web app, https://freefilefillableforms.com
It's the sketchiest URL ever
It's the sketchiest URL ever
Correct link:
https://www.freefilefillableforms.com/
Yours doesn't load. For those wondering, you can find the link to this site on IRS's website. https://www.irs.gov/e-file-providers/free-file-fillable-form...
Reading some more, that site was created by Intuit. Checking the ToS:
> These Terms of Service ("Agreement") is a legal agreement between you ("you", "your", "licensee"), and Intuit Inc. ("we", "our" or "us").
Yours doesn't load. For those wondering, you can find the link to this site on IRS's website. https://www.irs.gov/e-file-providers/free-file-fillable-form...
Reading some more, that site was created by Intuit. Checking the ToS:
> These Terms of Service ("Agreement") is a legal agreement between you ("you", "your", "licensee"), and Intuit Inc. ("we", "our" or "us").
I remember reading something recently that this site was designed to be ugly and scary so that people just go back to using turbotax.
This is run by Intuit (and requires the www, https://www.freefilefillableforms.com/ )
Looks like their AppDynamics RUM js config is leaking their internal hostnames in the page source too.
Looks like their AppDynamics RUM js config is leaking their internal hostnames in the page source too.
Link's broken because you need the www. It's one of those sites that doesn't auto-forward to it. (Again, not helping with the impression of the site.)
Shows how powerful lobbying is.
In the UK, unless you're a special case (e.g. Lloyds Name) you simply file on the HMRC website.
Then again, we can deduct far less, don't have state AND federal tax, so it's somewhat simpler.
In the UK, unless you're a special case (e.g. Lloyds Name) you simply file on the HMRC website.
Then again, we can deduct far less, don't have state AND federal tax, so it's somewhat simpler.
I found submitting my tax in "Third World" South Africa so easy. Just log on to the website and submit. Most of the information is already there provided by the employer.
100% agree. The argument presented in many other threads seems to reason that the easy tax filing systems do not allow for custom deductions or are easy because the tax system is simplistic.
I think that in the South African case the tax system isn't simplistic and I can add all kinds of details that might be specific to my tax requirements.
I'm surprised by how many people seem to be defending the lack of a government provided system on the basis that somehow the citizen will get a worse deal as a result.
I think that in the South African case the tax system isn't simplistic and I can add all kinds of details that might be specific to my tax requirements.
I'm surprised by how many people seem to be defending the lack of a government provided system on the basis that somehow the citizen will get a worse deal as a result.
Brazil has a tax program that has always been multi-platform for well over a decade. This year, when filing my taxes, that there was also a simplified online/mobile version for folks without computers.
To be fair, US's tax code is a wild collection of tax breaks and exemptions so it's very complicated but still...
To be fair, US's tax code is a wild collection of tax breaks and exemptions so it's very complicated but still...
Didn't read the article (paywalled) but I'm commenting on the context of the title.
People have been saying this for years, but Intuit has invested billions in fighting the idea off.
https://www.propublica.org/article/inside-turbotax-20-year-f...
Not only that, for a lot of people, Turbo Tax "feels like" a great thing. If you have a simple tax situation, it takes minutes to go through, you pay 10$ and get your refund very quickly. The free alternative is to fill out a 1040EZ and wait a few months.
For the comparisons to Europe, I'm living in Iceland now, and the tax filing system is incredibly easy simply because the tax system is incredibly easy - there is only one tier of taxation, everyone pays the same percentage. That's the core of the problem. The tax code in the US is incredibly complex, and that's why software like turbo tax exists.
People have been saying this for years, but Intuit has invested billions in fighting the idea off.
https://www.propublica.org/article/inside-turbotax-20-year-f...
Not only that, for a lot of people, Turbo Tax "feels like" a great thing. If you have a simple tax situation, it takes minutes to go through, you pay 10$ and get your refund very quickly. The free alternative is to fill out a 1040EZ and wait a few months.
For the comparisons to Europe, I'm living in Iceland now, and the tax filing system is incredibly easy simply because the tax system is incredibly easy - there is only one tier of taxation, everyone pays the same percentage. That's the core of the problem. The tax code in the US is incredibly complex, and that's why software like turbo tax exists.
I've use TurboTax before, but this year I used freetaxusa.com and it worked really well. I actually did my taxes in both of them to verify the numbers were the same (in TurboTax, you only pay to submit your return and by exploring the UI you can find a preview of your full return before paying). The numbers matched, so I submitted via freetaxusa.com for $0.
I think the anti-TurboTax argument makes sense, but with a free alternative like freetaxusa.com the idea that the IRS should prepare on our behalf is slightly less compelling.
I think the anti-TurboTax argument makes sense, but with a free alternative like freetaxusa.com the idea that the IRS should prepare on our behalf is slightly less compelling.
I went into freetaxusa this year from turbotax expecting clunky ui, but I was surprised how nicely it looked and worked. Moreover, there is this sense of they want you to succeed in filing and understanding your taxes versus bying the next tier.
Been using them for about a decade with no issues. Highly recommend them. I will also happily pay them the ~$14 for the State Income tax filing as well (Federal is free).
Intuit is a middleman, pure and simple. Collecting taxes is 100% a government issue, not a private one.
There's zero reason why the government shouldn't guide you through a government program.
Except, of course, profits for the middleman.
I agree that sometimes getting a professional to help is useful--I've hired people when my taxes were extra complex.
But if your taxes are no more complex than W2+itemized deductions+home owner+passthrough LLC, you can easily do them yourself today. And if you're not sure what to do, ask an accountant and then you'll know for next year.
What would make it trivial is if the government would set up a website to guide you through it. But for some idiotic reason (cough lobbyists cough) they haven't done it.
Every time you pay Intuit, you're making taxes even harder for posterity and guaranteeing your own future expenses.
There's zero reason why the government shouldn't guide you through a government program.
Except, of course, profits for the middleman.
I agree that sometimes getting a professional to help is useful--I've hired people when my taxes were extra complex.
But if your taxes are no more complex than W2+itemized deductions+home owner+passthrough LLC, you can easily do them yourself today. And if you're not sure what to do, ask an accountant and then you'll know for next year.
What would make it trivial is if the government would set up a website to guide you through it. But for some idiotic reason (cough lobbyists cough) they haven't done it.
Every time you pay Intuit, you're making taxes even harder for posterity and guaranteeing your own future expenses.
Here in the Philippines, filing tax returns are not a problem.
If you're an employee, your employer does it for you.
The employer just deducts the tax owed by each employee, and pays it to the government every quarter.
The total tax amount owed per month may vary from 10k USD (10 to 20 employees) to 20K USD (20 to 50 employees).
But the catch is: If the taxman is corrupt (highly likely), and the officer-in-charge of the remittance of such withheld taxes is also corrupt (not improbable), do not expect that the full tax amount will end up in government's coffers. Both parties will pocket a "small" percentage of it, per quarter, every year.
This scenario is highly likely for offshore companies, where the real owners are outside (e.g. US, Europe) and there's a "trusted" individual (or group of people) that does the "administrative" stuff for the company.
Crazy.
If you're an employee, your employer does it for you.
The employer just deducts the tax owed by each employee, and pays it to the government every quarter.
The total tax amount owed per month may vary from 10k USD (10 to 20 employees) to 20K USD (20 to 50 employees).
But the catch is: If the taxman is corrupt (highly likely), and the officer-in-charge of the remittance of such withheld taxes is also corrupt (not improbable), do not expect that the full tax amount will end up in government's coffers. Both parties will pocket a "small" percentage of it, per quarter, every year.
This scenario is highly likely for offshore companies, where the real owners are outside (e.g. US, Europe) and there's a "trusted" individual (or group of people) that does the "administrative" stuff for the company.
Crazy.
Intuit is to blame for much of our current US tax fiasco, as are politicians, and key to the bs is this guy: https://en.m.wikipedia.org/wiki/Grover_Norquist
I contend that Americans need to rise up and require a government that makes federal legislative and tax "code" visible through a read-only fossil[1] repository. Maybe a state can lead the way.
For non-classified matters, the fact that we are paying customers and aren't privy to the who/what/where/when/why of these important decisions is just last-century.
[1] https://fossil-scm.org/home/doc/trunk/www/index.wiki
For non-classified matters, the fact that we are paying customers and aren't privy to the who/what/where/when/why of these important decisions is just last-century.
[1] https://fossil-scm.org/home/doc/trunk/www/index.wiki
Americans (and citizens of other countries) need a society where they don't have to spend any time worrying about how to navigate the byzantine maze of tax deductibles and special cases. The income tax code should be "pay x% of your annual income". Just one line is enough. All else is just introducing inefficiency and creates loopholes.
I wonder if it would be possible for the government to specify the logic of the tax code in computer readable form. (I would say "source code" but maybe there's a better way). A company like TurboTax could still exist, but could compete on the basis of their user interface and optimizations.
What would it take to develop a piece of Open Source software that makes it easy for accountants/tax attorneys to build TurboTax form equivalents? Basically a CMS for tax forms to be translated into plain english, and then the inputs to be put back into the correct places on the forms.
A bigger question is: What does it take to update it constantly? The problem is that US Tax law is incredibly complicated and changes in impactful ways nearly annually (last tax year and next tax year in particular will require tons of updates, due to COVID-bill related programs).
I think Open Source works well when the underlying work is fun and the software is somewhat timeless to minimize ongoing workload. Tax software by its very nature is none of those things.
Honestly I think OSS is great but this is more fitting for the IRS to do itself rather than hoping that a bunch of lawyers/tax professionals/financial programmers suddenly decide they want to spend their evenings writing the most boring software imaginable.
I think Open Source works well when the underlying work is fun and the software is somewhat timeless to minimize ongoing workload. Tax software by its very nature is none of those things.
Honestly I think OSS is great but this is more fitting for the IRS to do itself rather than hoping that a bunch of lawyers/tax professionals/financial programmers suddenly decide they want to spend their evenings writing the most boring software imaginable.
That’s why I suggested building the infrastructure for the tax tool (CMS) to make it easy and fast to build the questionnaire for the forms. Since the forms are going to change, what we need is to make it so that it takes very little time to build a TurboTax competitor each year.
There is no way I am going to get a bunch of accountants and tax lawyers to write a ton of code each year for free, but ask them to build a plain English questionnaire for a form as easily as you would create a survey in SurveyMonkey? Maybe.
There is no way I am going to get a bunch of accountants and tax lawyers to write a ton of code each year for free, but ask them to build a plain English questionnaire for a form as easily as you would create a survey in SurveyMonkey? Maybe.
https://github.com/ustaxes/UsTaxes found via https://news.ycombinator.com/item?id=26330902
for an actual e-file it's a lot more complex, is called MEF https://www.irs.gov/e-file-providers/modernized-e-file-progr...
for an actual e-file it's a lot more complex, is called MEF https://www.irs.gov/e-file-providers/modernized-e-file-progr...
I'm an American and finally told TurboTax to go f itself this past year.
I was very happy to find https://www.freetaxusa.com on reddit. Great experience and it cost me $15
I was very happy to find https://www.freetaxusa.com on reddit. Great experience and it cost me $15
Not to cut Intuit any slack, but in my mind there already is a useful free file program. I've been totally satisfied with Free File Fillable Forms for many years. I wouldn't trust the guided programs even if they were free.
It's probably worth noting in this context that Free File Fillable Forms is also run by Intuit, despite not being branded as an Intuit product.
I used Turbo Tax Home and Business for my income and small business. The federal part is free the state filing cost costs money. Does this mean I have to pay to file federal taxes then when I next buy Turbo Tax?
If you pay for TurboTax, you’re paying to file— the cost to e-file is included in the price of the software.
Free File is a separate thing, and provides both free prep software and free filing for eligible returns. This is the program that Intuit left.
Free File is a separate thing, and provides both free prep software and free filing for eligible returns. This is the program that Intuit left.
I thought only the 1040ez version for individuals was free. The small business version always had a coat associated with it
Blocked by paywall, but I'm not asking for a workaround - I'm having trouble parsing the title because of the comma, so please answer me this question:
Is the article expressing joy about Intuit getting beat, or about Intuit beating something?
Is the article expressing joy about Intuit getting beat, or about Intuit beating something?
Do you have JavaScript turned on? No paywall here.
this is crazy..
The way the U.S. tax system is setup is impossibly stupid. The government already should have on record all sources of possible income you could be making since pretty much all places you could be making money are required to send it in anyways. So it's conceivably possible for the IRS to pre-fill your returns for you and have you just double check and add anything in that they missed -- but it does get complicated very easy outside of the trivial "here in my country they just take x% of my income". I'm going to guess that almost all of those comments are made by people who's earnings come almost entirely from salary/pay, but have no idea that lots of people make lots of money in ways that are not salary/pay. In some cases it's possible to make most of your earnings in ways that external to salary/pay and in some cases figuring out what that monetary amount is isn't totally trivial.
For example, this is all over the news right now, but suppose your company lets you drive a company car? If you only use it to drive from home to work or other business related meetings, you probably don't need to consider it "income". But what if you can use it for all manner of personal activities as well? Maybe then it needs to be considered for your taxes. So what's the taxable amount of the car? The MSRP x the percent you drive it to non-work activities which of course you keep dutifully and precisely logged? Why the MSRP? Most people try to negotiate car prices under the MSRP. Why not the Blue Book value? In the end, what does the government use to consider the car as income in order to tax you for it?
In other cases, property ownership, and the layered governmental system in the U.S. also complicated things. For example, you might get Federal deductions for taxes paid to local governments on property you own. But what about locales that don't tax property? More importantly, how does the Federal government know you own the property at all? What if you own it, but then "loan" it out to somebody who uses it exclusively? You're the title holder, but should they count it as income a la the previous example and now two people are paying taxes on one piece of property?
These kinds of scenarios are incredibly common and affect people in all socio-economic levels. These kinds of things extend to include retirement holdings, investments, cash transactions, different kinds of corporate bodies that can affect individuals, foreign business/income/investments/etc. and so on.
What Intuit did is take advantage of this messy system, and provide some level of organization on it so that people would stop seeing and paying for CPAs to do their taxes and could do it themselves. They then fed on this like a cancer and the tax system started to reflect and assume Intuit was a public service. Part of this was the fractured and uncoordinated nature of the Federal IRS, State Tax Departments, and local county and city level tax systems that don't cooperate at all even though tax laws that affect one may affect the others.
In effect, the IRS can't put out a complete tax system because the IRS can't process your local tax stuff - the locales need to. So the IRS has relied on external non-government organizations to do it for them.
For example, this is all over the news right now, but suppose your company lets you drive a company car? If you only use it to drive from home to work or other business related meetings, you probably don't need to consider it "income". But what if you can use it for all manner of personal activities as well? Maybe then it needs to be considered for your taxes. So what's the taxable amount of the car? The MSRP x the percent you drive it to non-work activities which of course you keep dutifully and precisely logged? Why the MSRP? Most people try to negotiate car prices under the MSRP. Why not the Blue Book value? In the end, what does the government use to consider the car as income in order to tax you for it?
In other cases, property ownership, and the layered governmental system in the U.S. also complicated things. For example, you might get Federal deductions for taxes paid to local governments on property you own. But what about locales that don't tax property? More importantly, how does the Federal government know you own the property at all? What if you own it, but then "loan" it out to somebody who uses it exclusively? You're the title holder, but should they count it as income a la the previous example and now two people are paying taxes on one piece of property?
These kinds of scenarios are incredibly common and affect people in all socio-economic levels. These kinds of things extend to include retirement holdings, investments, cash transactions, different kinds of corporate bodies that can affect individuals, foreign business/income/investments/etc. and so on.
What Intuit did is take advantage of this messy system, and provide some level of organization on it so that people would stop seeing and paying for CPAs to do their taxes and could do it themselves. They then fed on this like a cancer and the tax system started to reflect and assume Intuit was a public service. Part of this was the fractured and uncoordinated nature of the Federal IRS, State Tax Departments, and local county and city level tax systems that don't cooperate at all even though tax laws that affect one may affect the others.
In effect, the IRS can't put out a complete tax system because the IRS can't process your local tax stuff - the locales need to. So the IRS has relied on external non-government organizations to do it for them.
The article is behind a paywall for me. I love the irony here.
it seems a little bit strange to compare paying for journalism to paying for a piece of software that basically exists because of regulatory capture and lobbying.
Credit Karma (owned by Intuit) is totally free. FreeTaxUSA has been free for 15 years. There is no shortage of actually free ways to file taxes.
America's way behind in government digital services in comparison to Europe and China. It's almost impossible without a meeting. You'd have to make an appointment for anything, even though most of the time all you do is filing an document, and nothing else.
The Brazilian government has been providing such a program for ages now. The last version I used (moved from Brazil 5 years ago) was a Java program that ran well on my Linux box. It advises on how to better submit your deductibles - either as a full all-things-counted or as a simplified model.
There has been some constant pressure to provide it as open-source so we could improve it, but, last time I checked, the government was reluctant. There was one guy who reverse engineered the formats and wrote a GPL version that's compatible. I assume it's still maintained.
There has been some constant pressure to provide it as open-source so we could improve it, but, last time I checked, the government was reluctant. There was one guy who reverse engineered the formats and wrote a GPL version that's compatible. I assume it's still maintained.
For years I have seen the USA grab taxes from lottery winners - yet they do not allow people to claim the amounts they pay to buy lottery tickets. The same for gambling.
This is crooked on it's face, as we know the casino makes money and is taxed on that, so on the whole the bettors lose money. Same with the lottery. Strictly speaking the aggregate of deductions would exceed the winnings = zero tax due - but no, they tax one and not deduct the other. The US tax authority (IRS ~~= Inland Revenue in the UK) does this, yet the IR in the UK does not tax winnings or allow deductions of bets - this is simple fraud by fiat against the people, and the IRS has a huge infrastructure devoted to this. I suspect it is based on the so-called christian label 'evil' attached to lotteries/gambling?