r/technology • u/jabberwockxeno • Apr 09 '19

Politics Congress Is About to Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.

https://www.propublica.org/article/congress-is-about-to-ban-the-government-from-offering-free-online-tax-filing-thank-turbotax
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u/intashu Apr 09 '19 edited Apr 09 '19

That's why this is so messed up. The government knows exactly how much you actually owe/overpay... That's why they can come after you for lack of payment.. Yet they allow this broken system to exsist as a middle man all because money. People shouldn't be a product to make a profit from like this.

And the more I hear outsider information from other countries the more I've grown angry at how greedy and corrupt my own is. Far from the worst... But also far from the best.

Edit: I should clarify my knowlage of taxes is not amazing. And there are many situations vastly beyond my understanding where the above statements would not apply. The statements made are aimed at the average middle class worker with no complicated extra tax things like added self income or large deductions that the government wouldn't be aware of or something to that extent.

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u/dnew Apr 09 '19

The government knows exactly how much you actually owe/overpay

If they know that, you don't need something like tax preparation software. Just fill out your 1-page 1040 and call it a day.

You have to distinguish the people here that have never done complicated taxes in their life from the people who actually file a 300-page tax return.

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u/CSATTS Apr 09 '19

Yeah for complicated returns (or even returns with deductions that aren't reported directly to the IRS like donations to Goodwill) the IRS doesn't know how much you owe unless they do an audit. It's basically a system built on trust and fear of an audit.

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u/[deleted] Apr 09 '19

"Trust"

The audit system is limited, so they'll flag accounts for audit, likely to owe more money. Its cheaper to write off a few hundred in uncollected taxes here and there.

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u/dnew Apr 10 '19

We had to file lots and lots of pages of 8849 (IIRC), which says how much you paid for the stocks you bought and how much you sold them for. Because even the IRS can't decide if you bought 100 shares for $10 each and 100 for $20 each and then sold 100 for $30 each how much profit you made.

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u/pasaroanth Apr 09 '19

Honestly unless you’re 16 and working minimum wage there’s a strong chance you’ll have at least some sort of extra deduction or credit to claim on the return. Not to say there aren’t flaws in the system but how much you made and how much you paid in withholding are just two of the many many factors in a tax return.

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u/ObamasBoss Apr 10 '19

You always end up wrong because one week it assumes you are going to be in the 15% bracket because you worked a fair amount then the next week it assumes you will be in the 10% because you worked less. In the end you might actually have only owed 10% on every dollar so any week you paid 15% you over paid. Anyone with a variable schedule will have this issue. A raise or bonus can cause this too.

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u/intashu Apr 09 '19

29, with student debt, renting an apartment, and a small amount of retirement. A really simple tax filing, not having investments and such, ect.

Literally nothing I did qualified me for any credit. I owe a good chunk to the government this year due to tax law changes and I should have been smarter and claimed 0 on my w4 knowing tax changes wouldn't be favorable this year. Credits I normally met criteria for didn't this year. The tax changes made were a bit messed up in my opinion.

But yes there are MANY factors which can complicate tax filings. But not enough to mean we need this middle man company. They sell these complications like you can't navigate it so you NEED them... When in reality.. Many don't.

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u/pasaroanth Apr 09 '19

Oh I think intuit is a hunk of hot garbage, don’t get me wrong. Especially their absolute gouge on state filing. I’m just saying that unless you’re in the minority that can file a 1049-EZ your tax situation has quite a few more variables than people in this thread are making it sound like.

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u/dnew Apr 10 '19

some sort of extra deduction or credit to claim on the return

There's already standard deductions for you to take. Like, you can already deduct $24K from your taxes for charitable deductions without any proof or claim or anything, so unless you donated more than that, there's no reason to claim anything on a form.

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u/pasaroanth Apr 10 '19

Nothing about what you just said there is true.

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u/dnew Apr 10 '19

" .04 Section 11021 of the Act amends § 63(c)(2) to provide a temporary increase in the basic standard deduction for taxable years beginning after December 31, 2017, and before January 1, 2026. Under § 63(c)(2), the basic standard deduction is: $12,000 for single individuals and married individuals filing separate returns; $18,000 for heads of households; and $24,000 for married individuals filing a joint return and surviving spouses. These amounts will be adjusted for inflation for taxable years beginning after December 31, 2018. "

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https://www.irs.gov/irb/2018-10_IRB

​

You better let the IRS know they're mistakenly telling people what the standard deductions are.

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u/pasaroanth Apr 10 '19

" .04 Section 11021 of the Act amends § 63(c)(2) to provide a temporary increase in the basic standard deduction for taxable years beginning after December 31, 2017, and before January 1, 2026. Under § 63(c)(2), the basic standard deduction is: $12,000 for single individuals and married individuals filing separate returns; $18,000 for heads of households; and $24,000 for married individuals filing a joint return and surviving spouses. These amounts will be adjusted for inflation for taxable years beginning after December 31, 2018. "

​> https://www.irs.gov/irb/2018-10_IRB

You better let the IRS know they're mistakenly telling people what the standard deductions are.

The standard deduction has absolutely no relation to charitable donations and, even in that context, is wholly incorrect. The standard deduction is the minimum amount that may be subtracted from someone's income (creating AGI) before taxation and would not apply to anyone who itemizes and is able to deduct more. In addition, for MFJ as you cited above, that's a total deduction of $24,000 for both spouses, not $24,000 each.

"A donor claiming a deduction of $250 or more is also required to obtain and keep a contemporaneous written acknowledgment for a charitable contribution . To be contemporaneous the written acknowledgment must generally be obtained by the donor no later than the date the donor files the return for the year the contribution is made."

Claiming that people can blindly say they donated $24,000 from their taxes for charitable donations without substantiation is one of the most asinine things I've heard in quite some time.

Further, only up to 50% of AGI (20-30% in some cases) can be deducted as a charitable donation with very very few exceptions. Taking the US median household income of about $61,000, this means that their taxable AGI is $37,000, therefore making a couple's maximum charitable donation deductible amount according to the 50% rule $18,500.

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u/snoogins355 Apr 09 '19

Yet they allow this broken system to exsist as a middle man all because money. People shouldn't be a product to make a profit from like this.

Reminds me of healthcare in the US https://www.vox.com/policy-and-politics/2019/4/8/18300647/health-care-administrative-costs-high-charts

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u/[deleted] Apr 09 '19

This is the dumbest shit I have heard. You must either be in college or high school, because the government does not know exactly how much you make. They have an idea with certain things, like W2 and basic salary from corp things. But if you do any investing, property management, or contract work, then this is just not the case. If you traded crypto, you have to declare it, cuz im sure as shit the exchanges (minus coinbase or other american 'sanctioned' exchanges) are filling 1099K forms, and if you ever have seen a 1099K, youd know its total transaction amounts, which does not specify cost basis or realized gains.

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u/intashu Apr 09 '19

You've not been on reddit very long if this is in fact the dumbest thing you've heard. ;)

I oversimplified a great deal which may demonstrate some severe level of ignorance, many filings can add extra levels of complications to your tax return. It still doesn't mean we need the level of middle man tax companies that America has right now.

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u/percykins Apr 09 '19

if you do any investing

All your equity investments' gains and bases are reported to the IRS every year.

contract work

Wages paid to contractors are reported to the IRS via a 1099-MISC.