IRS Will Pilot Free, Direct Tax Filing In 2024 (techcrunch.com) 88
An anonymous reader quotes a report from TechCrunch: The IRS will test a free tax filing service in 2024 for a subset of lucky taxpayers in as many as 13 states, the agency announced today. Direct File, as the service is called, is a shot across the bows of Turbotax, H&R Block, and other paid tax prep services, whose owners have resisted free and simple tax filing for decades. "This is a critical step forward for this innovative effort that will test the feasibility of providing taxpayers a new option to file their returns for free directly with the IRS," said IRS Commissioner Danny Werfel in a press release announcing the news.
Over the last year and a half, the IRS has been building out the pilot program, which it characterizes as being "one more potential option" on the continuum from self-managed Free File, to commercial products like Turbotax, to a tax prep professional. The IRS describes Direct File as "a mobile-friendly, interview-based service" available in English and Spanish, intended for people with simpler tax situations like W-2s and common income credits and deductions. Whether the interviews are with actual people or some kind of automated or semi-automated process is unclear. But this, like many of its specifics, will likely change as the agency receives feedback from this limited scale pilot.
Arizona, California, Massachusetts, and New York are the four states that are integrating with Direct File for 2024 (i.e. the 2023 tax year); Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming "may also be eligible," due to not having state income tax, but it is not final. Every state was given the opportunity to participate in the Direct File program, but not all were "in a position to join." Among the residents of these states, a limited number of individuals with "relatively simple returns" will have the opportunity to try Direct File. This will in turn "allow the IRS to evaluate the costs, benefits and operational challenges associated with providing a voluntary Direct File option to taxpayers." In software terms, we'd probably call this an alpha.
Over the last year and a half, the IRS has been building out the pilot program, which it characterizes as being "one more potential option" on the continuum from self-managed Free File, to commercial products like Turbotax, to a tax prep professional. The IRS describes Direct File as "a mobile-friendly, interview-based service" available in English and Spanish, intended for people with simpler tax situations like W-2s and common income credits and deductions. Whether the interviews are with actual people or some kind of automated or semi-automated process is unclear. But this, like many of its specifics, will likely change as the agency receives feedback from this limited scale pilot.
Arizona, California, Massachusetts, and New York are the four states that are integrating with Direct File for 2024 (i.e. the 2023 tax year); Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming "may also be eligible," due to not having state income tax, but it is not final. Every state was given the opportunity to participate in the Direct File program, but not all were "in a position to join." Among the residents of these states, a limited number of individuals with "relatively simple returns" will have the opportunity to try Direct File. This will in turn "allow the IRS to evaluate the costs, benefits and operational challenges associated with providing a voluntary Direct File option to taxpayers." In software terms, we'd probably call this an alpha.
Overly complex tax system is overly complex (Score:1)
They already know how much you owe them, or how much they owe you. Just send an invoice or a check and be done with it.
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The standard deduction should be increased high enough that only a small fraction of the population would benefit from itemizing.
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Owning a rental property means that it's business income, which if you're not smart enough to create a LLC for it, still means business deductions, which work differently.
Even if the standard deduction still applies, you're going to hit it quick with a rental property.
Deductions involving a rental (my mom's the accountant, I was only volunteer tax prep, so I did poorer people, not the complex stuff, and rentals get complex):
1. Depreciations: Unlike your home, rental properties are considered depreciating
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1. Depreciations: Unlike your home, rental properties are considered depreciating assets. So you write off a percentage of the property's value each year. This alone can pop you over the standard deduction.
This statement shows that you don't understand how taxes on rental properties work. The rental income and costs (including depreciation) are a separate calculation that doesn't affect whether or not you should take the standard deduction. Go ask your mom. Source: I have rental properties and I do my own taxes using Taxact -- following the way my now retired accountant used to do it.
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This statement shows that you don't understand how taxes on rental properties work.
This statement indicates that you didn't fully read my post. I covered that: "Even if the standard deduction still applies"
You'd be filling out your taxes rather poorly if you counted business expenses as replacing the standard deduction, but there are people who do it.
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Your post is incoherent.
The costs involved in running a rental property simply have no bearing on whether you should itemize or not. This statement:
So you write off a percentage of the property's value each year. This alone can pop you over the standard deduction.
is simply false. It's false whether or not "the standard deduction still applies."
You can try to BS your way around this, bring up irrelevant issues, but that statement will still remain false and a clear demonstration that you don't understand how taxes work in the USA.
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You can try to BS your way around this, bring up irrelevant issues, but that statement will still remain false and a clear demonstration that you don't understand how taxes work in the USA.
You're not actually countering my point. You're just asserting that it's BS, presumably because you can't come up with a better argument. I know more than you seem to think.
Of course my understanding of how taxes work in the USA is incomplete; nobody knows how they work completely. I mean, that's why I put the disclaimer up top. I'm not an expert.
You say my post is "incoherent", if so, how can you pull conclusions from it?
I mean, on a computer website, I'd think that you'd understand: " still means busi
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You still don't get it. Or you do and are simply lying to try to hide your demonstrated ignorance. It's not good enough to say: "what I meant was", when you didn't originally say that and then criticized me for calling you out on your ignorance.
You stated that rental expenses, when not run through an LLC, could be counted as itemized deductions. This wasn't presented as a hypothetical. And it is simply not true.
I am not trying to assuage my feelings. I am wasting my time arguing with an ignorant liar. I'm
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You still don't get it. Or you do and are simply lying to try to hide your demonstrated ignorance. It's not good enough to say: "what I meant was", when you didn't originally say that and then criticized me for calling you out on your ignorance.
I cited my phrasing showing that I knew that, you're just not accepting it. Just accept that you were wrong, I'll accept that I didn't phrase it the best.
My point is that you're still wrong on calling me ignorant.
Owning a rental property means that it's business income, which if you're not smart enough to create a LLC for it, still means business deductions, which work differently.
Breaking this sentence down:
1. Rental property leads to business income, and you can deduct business expenses from it (yes, it's very shorthand)
2. The "smart" normal way to do this would be to create an LLC. I didn't get into the reasons why (that's at least a few pages to explain)
3. Even if y
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Firethorn was replying to the post by Ichijo who stated "The standard deduction should be increased high enough that only a small fraction of the population would benefit from itemizing." in response to a post by b0s0z0ku about how the IRS doesn't already know about itemiz
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About 10% of tax returns itemize.
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March 20, 2023: Only 22% of Americans Plan To Take the Standard Deduction [yahoo.com]
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They already did that. Even before then I hadn't itemized since 2003 or so.
Now form 8606 on the other hand...
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Goes back to the overly complex tax code. In theory the idea is that you can encourage certain things via the tax code, like people starting small businesses (tax deduction) or buying homes (mortgage deduction) or donating to charity (charitable deduction).
The reality is that there are unintended consequences for all the good stuff. AND the people who really benefit from the insanely complicated tax code are the super-rich and large corporations. They keep the rest of us sated by the "Hee hee, I deducte
Re:Overly complex tax system is overly complex (Score:5, Informative)
Re:Overly complex tax system is overly complex (Score:4, Interesting)
Even with a simplified tax code, you'd have to calculate net income for something like a rental property - otherwise you'd be hit with tax even if it's not profitable immediately.
I think that's a huge problem with our respective societies.
People want the extra income without knowing anything about how to plan and manage it, and I'm not just talking about tax.
So you get the older generations who can buy up the cheap property and rent it out feeling entitled to do that and have no thought as to paying taxes on it. You see the compo faces in the Daily Mail all the time when the tax man comes calling for "their" rental income. Usually these are the same people who are skimping on maintenance, have out of date gas certificates, making unannounced visits to the property and charge the tenants for everything they can. However the Daily Mail will be full of how they're providing an essential service and the government is coming for their "hard earned" money.
You literally have people who feel entitled to be a slumlord and shouldn't have to be taxed on it.
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When you take into account state taxes like sales tax then your "flat" taxes end up hitting lower incomes much harder and they have a much larger percentage of their income taxed. Having a progressive tax structure is simple enough and a fairer way to collect money without harming people that will probably then need government services to make up for it.
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Only tax profit.
I make 50k a year, but I have to spend 44k a year to live, well then you can tax the 6k left over.
How do we do this? No fucking clue.
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How do we do this? No fucking clue.
You do it with a graduated tax system with tables! Because the alternative is to do it with a formula, and that is not realistic, especially while we are still asking people to do their own taxes instead of just reporting everything to the IRS and letting them sort it out.
Yes, people who have special circumstances will wind up paying a bit more or less taxes than they should, but for the most part it works out well. Also, I don't want to have to report every single thing I buy to the IRS, nor do I want it d
Re: Overly complex tax system is overly complex (Score:2)
No, there should just not be multiple minimum wages. If they are increasing the wage for fast food workers to $20 they should do that by increasing it that much for everyone. A shitload of people doing not just more difficult but also more critical jobs than that are still making a lot less.
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Or only tax gross income, for both people and the corporations that are people, too.
Would be much simpler, uses a much lower %, incentivizes cutting out middlemen, and is easy to forecast the cost of it.
Maybe still include a standard deduction for individuals and, to preclude people ranting about double taxation, let corporations deduct salaries, wages, and dividends.
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Flat freakin tax please. 15% on all income, 22% on corporate.
Ditch all the loopholes, and giveaways from mortgage deductions on first and second homes to child care credits
Your plan is explicitly unfair to low income taxpayers, who spend a larger percentage of their income on necessities. This is why a flat tax is inherently regressive. It's not fair to charge the poor 15% on the money they spend buying clothes and then also charge the rich 15% on the money they spend buying yachts.
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Flat freakin tax please. 15% on all income, 22% on corporate.
Ditch all the loopholes, and giveaways from mortgage deductions on first and second homes to child care credits
Your plan is explicitly unfair to low income taxpayers, who spend a larger percentage of their income on necessities. This is why a flat tax is inherently regressive. It's not fair to charge the poor 15% on the money they spend buying clothes and then also charge the rich 15% on the money they spend buying yachts.
FWIW, most of the "flat tax" proposals I have seen involve a minimum income threshold or a "prebate."
Re: Overly complex tax system is overly complex (Score:2)
That's not a flat tax system though, is it? The argument for a flat tax is that it simplifies things. If you have to add complexities to it because it doesn't do that then there's no benefit to it.
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So ban local taxes or otherwise make it so the redistribution of taxes gives a percentages to the locale you live in. Feds collect 15% on your wages and 1% goes back to your locale, 4% to the state and 10% to the Feds.
Obviously we can adjust those percentages but that would be very easy. Of course, businesses couldn't wiggle out of paying taxes, so we can't have that.
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No they don't. They may know how much you made, but can't tell the difference between things you use for yourself or those things are used for business that qualify for a deduction.
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Everything I read about the US tax system makes me think "they found a way to make it even worse?". Where I live we have PAYE, the tax office tells my employer how much tax I should pay, and my employer pays it, and I get the net of my salary. That's 99% of my interactions with the tax system right there.
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Unless you tell it, the IRS doesn't know your marital status or number and ages of your dependents, all of which is important to calculate your tax liability. That said, the IRS could do the calculations for you if you submit the data. Years ago they would do that for returns with the earned income credit.
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None of that should even matter for taxation. Stop with all the exceptions, write offs, credit and deductions. You make X amount, you pay Y amount. Simple. It's not remotely even FAIR that married people get better tax rates then singles. Heck, living alone cost a lot more then living with another person. If anything, DINKS should pay more!
Remember.. (Score:1, Funny)
Remember, if you keep voting Republican, this kind of nonsense will be stopped and you will be forced to pay a company to file your taxes for you, like god intended!
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Even Trump was proposing to make taxes so simple that it would be done on a "postcard".
If you really think he would have done that, without a boatload of loopholes for the wealthy, I have a bridge to sell you.
Let's not forget that a flat tax benefits the wealthy. Do you really like paying more taxes, while the wealthy pay less?
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Whenever the former alleged president prefers some policy or law, look closely at how he will benefit from it. That's how he judges everything, i.e., what's in it for me.
Re:Remember.. (Score:5, Insightful)
Let's not forget that a flat tax benefits the wealthy. Do you really like paying more taxes, while the wealthy pay less?
That's a democrat talking point, and like all others it'a patently false. There's enough tax cuts, loopholes and so on that the wealthy pay zero tax in practice. A law like: "The tax is $WHATEVER%. Period. No cuts, no deductions, no nothing" would increase the amount they pay dramatically.
Right. Until it came time for the law to define what "income" is.
Re: Remember.. (Score:4, Insightful)
So let me see if I have this straight...
The people paying virtually zero tax now want to *increase* their tax bill because uh...reasons?
You do realize these are the folks desperately trying to keep the system as idiotic and complex as possible so they can take advantage of it, yeah?
No deduction for my dancing horse? OH THE INHUMANITY.
Sorry, what was that about a lack of education again?
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the problem with a flat tax is that, well, honestly, for the majority of us tax payers it will increase the amount of taxes that we pay
Not if done correctly. The "one amazing trick" is to take income, subtract a base number (like say the poverty line), then flat tax on the remaining amout. If you think about it, that's sort of what the "standard deduction" does or helps with.
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So instead of a "flat tax" you do a tiered tax by certain thresholds but still axe all the write offs, deductions and credits. It should be painfully simple in fact. You make X%, you pay y%. Put it on a slope. We literally already do this. We just add in a bazillion ways for the rich to get out of paying taxes.
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Re:Remember.. (Score:4, Insightful)
Republicans had the power to do that and instead decided to...cut taxes for the wealthy (with a short term tax break for everyone else). After a while it starts to look like Peanuts with Charlie Brown (Republican voters) missing the football that Lucy (Republicans) pull away. How many times does it have to happen to believe they're not going to let you kick it?
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Reminds me of how the Democrats could of gave us universal healthcare but instead gave us ACA instead. Gee. Thanks.
Guess this means both parties still suck ass.
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Yeah that was a step in the right direction, but they tried too hard to compromise with the Republicans and ended up with a bit of a disappointing half measure.
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I guess I don't see the point in that compromise because it didn't give them a single Republican vote. Then for the next 6 years the Republicans did their best blocking anything and everything. While that has its advantages, it doesn't really move us forward on any of the supposed problems the country was and are still facing today.
Both parties have a bad habit of offering up solutions for problems, getting elected, then not fixing anything. Then they did it all over again, typically every 2 years. Both par
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In hindsight it was clearly a mistake, but part of what Obama ran on was working together to find solutions that everyone would like.
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"Proposing" requires an actual proposal, which Trump and his administration never made, it was just pie-in-the-sky noise about simpler taxes.
Re:Remember.. (Score:4, Insightful)
No, they wouldn't. The Rs reflexively oppose everything Biden supports because the Rs have no independent ideas of their own. Their only goal now is to destroy the U.S. government so that they can rebuild it into their own image of an authoritarian utopia where their rules are the only rules.
That doesn't prevent them from bellying up the bar to suck down government benefits like they are doing with the green initiative funds. The R's stand for nothing except themselves and hope for a dog-eat-dog society where they get to keep all their wealth and the poor get screwed because, well, they are poor and cannot fight back.
Re:Remember.. (Score:4, Interesting)
Interview based? (Score:4, Insightful)
Honestly, I don't want to play "100 questions."
Just fix Free File Fillable Forms and remove the bugs that throw cryptic error messages an hour after filing whenever a field contains a comma instead of all text.
FFFF could actually be a great tool if it immediately checked the form data for bugs before submitting to IRS, and if it auto-populated more fields (you shouldn't have to manually reenter your self-employment income on SE if you change something on Schedule C - it should auto-populate by default).
Re:Interview based? (Score:5, Informative)
Free Fillable Forms is run by Intuit under IRS contract - the IRS doesn't want to fix that, they want to kill it. Intuit doesn't really want to fix it either, they want you to be frustrated and then pay them for their software.
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Re:Interview based? (Score:5, Interesting)
Presumably they want to kill the Intuit version and have their own not run by a company with a severe conflict of interest
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But it will still have calls to googletagmanager, and FB pixels...
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Try OLT.com. I used it the last two years. My taxes are pretty simple so I'm not using all of the complexity and I can't report on how well it handles that stuff (I will kick it up one notch this year since I now have a pension) but in terms of the basic functionality I like it very much. It's simple, fast, and they send me one polite reminder email per year to find out if I want to come back and file again. And they filed my fed and CA returns without charge, and I got the checks back in no time at all eve
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remove the bugs that throw cryptic error messages an hour after filing whenever a field contains a comma instead of all text.
Hah! I used FFFF this year and ran into a handful of data validation errors. But I actually found it kind of fun to try and decipher what the XSD schema validation rules meant. I love (in a horrified way) that the site just vomits the schema validator's raw messages (including xpath!) right at the user and expects them to figure out what went wrong.
It's completely bonkers but also completely understandable, given that FFFF is run by Intuit. How many people have encountered
Business Rule X0000-005 - The X
about time (Score:3)
And cut the crap and just tell me how much I owe or how much you are sending me. Sure I need an opportunity to respond with my own version.
Taxes in the US could be a whole lot less complicated.
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Hey now the ruling class pays good money to have favorable loopholes written.
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I think that it's important that you are also presented with your total tax amount, not just the net after withholding. Otherwise you may not have a good idea of how much in taxes you're actually paying.
But yes, I think that taxes in the USA should be drastically simplified. Thing is, they actually are pretty simple for most people, but the tax prep companies have sold us on how complicated they are, so people not only go to them for preparation, they pay the "insurance" fees they charge in order to be "r
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And cut the crap and just tell me how much I owe or how much you are sending me.
They already do. The 1040EZ form is what is being automated away, because it requires nothing more than adding your W2's which you don't need to do, your employers already sent those to the IRS to add together.
Sure I need an opportunity to respond with my own version.
Taxes in the US could be a whole lot less complicated.
This is where you and most people fall off the cliff.
"Let me make up my own number that is not based on what I made" and "less complicated" can't go anywhere near each other.
The second you disagree with the number they give you, it is by definition "complicated"
You can have one or the other, not both
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It must seem crazy to you that the IRS could ever be wrong. There is a lot of space between not agreeing with the IRS and making up your own numbers.
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The IRS is not the problem, the tax code and the perfidy of a good part of the American people are the problem. Even if the tax code were simplified, a good portion of the American people think the former alleged president weaseling (my apologies to the honorable weasels) on his taxes somehow makes him smart. He's never been smart, he's just a bunko artist and a good portion the American people aspire to being bunko artists. That's why they cheat on their taxes. Currently, about $688 Billion
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From the article:
"We are adding focus and resources to areas of compliance concern, including high-income and high-wealth individuals, partnerships and corporations," Werfel said in a statement. "These steps are urgent in many ways, including adding more fairness to the tax system, protecting those who pay their taxes and working to combat the tax gap."
The people trying to cheat are the people that can hire accountants and attorneys, those with enough clout to keep the IRS away.
Once again, simplifying taxes
The Happy Taxpayer. (Score:2)
"The IRS will test a free tax filing service in 2024 for a subset of lucky taxpayers..."
The jokes in this one line enabled coffee to come from my nose in such a full-auto unregulated manner that the ATF may be knocking soon.
Not sure what's more funny; the tax collector providing "free" help on collecting, or someone in Government assuming there is such thing as a "lucky" taxpayer.
The fuck planet are they regulating from these days.
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"someone in Government assuming there is such thing as a "lucky" taxpayer."
Now there's an idea. A $10 raffle ticket to get out of taxes this year. Submit the winning ticket instead of your 1040.
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That might take some doing. You could rely on voluntary contributions to raise an army, but the pace of donations might not be to your satisfaction. Engaging in some enterprise to raise money for this endeavor seems like a reasonable solution. Ordinarily, businesses make profit for their owners; but in this case you are chartering a firm for the purpose of what you perceive to be a noble cause. One firm might still not raise enough money. You can only have so many bake sales, and since you're equipping
Direct Tax Filing already exists (Score:3, Informative)
All citizens have already been able to file their taxes for free directly with the IRS. All you have to do is download the forms from their website, fill them out by hand following the instructions on the forms, and mail them to the IRS. No software or licence fees required; only the cost of a postage stamp.
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That's fine if your taxes are very simple, and as mine have historically been that it has been easy for me to do that. But if they aren't, then there is literally not enough information on the forms or in the books that go with them to get the maximum return. Also, for the amount of time it would take the average person who needs to file a non-EZ return to learn all the things they need to know in order to accomplish that, they could take an odd job and make the money to pay a tax preparer in less time.
Re:Direct Tax Filing already exists (Score:4, Informative)
My taxes are far from simple (11 pages last year) but I find them quite doable. It does take time though.
And it takes time 5 times a year. The retirement planning people don't warn you about estimated taxes being quarterly. Schedule AI is my new friend.
But the free market and (Score:2)
US Catching up again (Score:2)
I've been doing this for years (Score:2)
Am I missing something? I've used https://www.freefilefillablefo... [freefilefi...eforms.com] for several years.
The Netherlands - Tax Year 1995 (Score:3)
turbotax (Score:2)
The worst thing about turbotax is that they forced me to get windows 10.
Abolish the 16th amendment (Score:2)
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We tried that too, twice. The Articles of Confederation failed primarily for that very reason, and the fund the government by tariffs system before the 16th couldn't keep up either.
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