this post was submitted on 28 Jan 2024
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  • Some taxpayers will soon qualify for Direct File, a free tax-filing option from the IRS.
  • The pilot will begin as an invitation-only service before rolling out to certain taxpayers in 12 states by mid-March.
  • In 2023, individual U.S. taxpayers spent an average of $150 to prepare and file returns, according to the IRS.

Eligible states will include Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

...

Who qualifies for IRS Direct File

Residents of eligible states with a simple, straightforward return can qualify. The pilot will start with limited types of income, credits and deductions, IRS officials said.

While only certain taxpayers can use Direct File, the bilingual software includes built-in live chat support with IRS assistors.

The pilot will only accept Form W-2 wages, Social Security retirement income, unemployment earnings and interest of $1,500 or less. This means the pilot won’t include anyone with gig economy work or business income.

You must claim the standard deduction to use the Direct File pilot and the system only accepts a few credits — the earned income tax credit, child tax credit and credit for other dependents. The software also accepts tax breaks for student loan interest and educator expenses.

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[–] [email protected] 81 points 9 months ago (5 children)

This is how taxation should work in the U.S. if we were sane:

  1. The IRS sends you a bill or a refund.
  2. You pay it or deposit it.

The end.

The IRS should be calculating what we owe. We shouldn't be doing that ourselves or hiring people to do it for us. Maybe we could finally get the wealthy to pay their fair share.

[–] [email protected] 35 points 9 months ago (2 children)

The IRS should be calculating what we owe.

They do. That's why you occasionally get bills saying "hey you miscalculated by 70 bucks." They already do the work, they just still make us do it too for.... Reasons.

[–] [email protected] 18 points 9 months ago

Reasons

AKA Intuit lobbyists

[–] [email protected] 10 points 9 months ago

Once for a whole year I would get a letter saying "You underpaid by $30, plz pay." So I would pay. Then I would get a letter saying "You overpaid by $30, here is check." So I would cash it. Then I would get a letter saying "You underpaid by $30, plz pay..." There were six or seven of those exchanges. I didn't cash the last check and the letters stopped coming. 🤷‍♂️

[–] [email protected] 29 points 9 months ago (1 children)

Or dispute it . This is how it's done almost everywhere else but the tax lobby have a best interest in this not working this way.

Or....you know bring back home ec classes that teach kids how to survive in the world instead of assuming parents will be able to do it

[–] [email protected] 15 points 9 months ago

Sure, bring back home ec classes like that regardless, but that should also have no bearing on a saner taxation system. The one we have is ludicrous.

[–] [email protected] 8 points 9 months ago* (last edited 9 months ago) (1 children)

As an example of how this could work based on how it does where I live;

  • When you get a job, open a bank account or a shareholding account you fill in a form telling them your IRD number and tax code. There is a flow chart on the back of the form to help you work out what your code is, but it is derived from the amount of income you expect to earn throughout the year and if you have any special statuses that significantly change how you pay tax (eg, of you have a student loan or owe child support)
  • Before you are paid (your income, dividends, interest, profit from share sales etc), the party paying you uses your tax code to determine the percentage tax you owe, then sends the tax plus a filing directly to the IRD on your behalf
  • At the end of the tax year, IRD looks at all the filings, totals up all your income, totals up all the tax you've paid, checks if you are eligible for certain tax credit, and works out if you've paid the right amount of tax
  • You get notified of the outcome, and get a chance to correct it (eg, if you've made charitable donations and want to claim a credit based on that etc)
  • Once the filing is finalised (which happens automatically if you do nothing) you either get a bill in the post, a cheque, or the money deposited directly into your bank account if you've nominated one - unless you owe them less that $10, in which case you get a letter saying that they've written the debt off and you owe nothing

No muss, no fuss. If you've got an interest in a trust or own a company then it gets a bit more complicated and you might need an accountant to file for you, but for 95% of people it's free, happens automatically, and they aren't stuck with a big bill at the end of the year

[–] [email protected] 3 points 9 months ago

yup. we should all be recieving a 2040x with the left hand side filled out already and we can optionally make the changes in the right hand side if we think its wrong.

[–] [email protected] 6 points 9 months ago

Agree. Then TurboTax and other tax preparers wouldn't be able to rip us off to the tune of billions of $ too.

[–] [email protected] 1 points 9 months ago (2 children)

A bill for what? How do they know what to bill you for if you don't tell them where and how you made and spent your money?

[–] [email protected] 5 points 9 months ago* (last edited 9 months ago)

All info on the tax forms you use for your taxes could just be sent to the government instead, and they can calculate your taxes. That is how it works in most other countries.

[–] [email protected] 4 points 9 months ago (1 children)

Are you saying your taxes aren't taken out of your paychecks? Because they've always been taken out of mine. Seems like it's pretty easy for them to bill you based on that. And they can send the bill to whatever address is on your W-2.

[–] [email protected] 1 points 9 months ago* (last edited 9 months ago) (1 children)

I mean I'm not a W2 employee so no.

But when I was, this process typically only took about 15 minutes where you import the info from your tax form you're provided by your employer and they ask additional questions that they don't have answers to like what kind of healthcare you received or if you gained any children/dependents.

[–] [email protected] 10 points 9 months ago (1 children)

Even if it only took you 15 minutes, and it sure takes a lot of people who get W-2s a lot more than 15 minutes... that's 15 minutes too long. Why should you have to do the government's job for it?

[–] [email protected] 1 points 9 months ago (1 children)

and it sure takes a lot of people who get W-2s a lot more than 15 minutes...

To do what, exactly?

that's 15 minutes too long. Why should you have to do the government's job for it?

I don't know how else you expect them to get the relevant information.

[–] [email protected] 6 points 9 months ago (1 children)

The government should already have a record of how much you've been paid every year. Why do they not have that record in your case? Do you not declare your income in whatever job you have?

[–] [email protected] -2 points 9 months ago (1 children)

The government should already have a record of how much you've been paid every year.

And where would they get that information?

Do you not declare your income in whatever job you have?

I already told you I don't have a job. I'm self-employed.

[–] [email protected] 6 points 9 months ago (1 children)

Oh well. Guess you don't get to benefit from something everyone who isn't self-employed should benefit from.

Nah, let's leave the tax code impossibly complicated and easy for rich people to game on behalf of the handful of self-employed people in this country.

Tell you what, you keep doing your 15-minute taxes and the rest of us won't have to waste those 15 minutes. How's that?

[–] [email protected] -4 points 9 months ago (1 children)

You keep complaining instead of answering my question.

[–] [email protected] 7 points 9 months ago (1 children)

No. I answered your question. They bill you based on your W-2. Except for the handful of self-employed people like yourself who will have to do it the hard way.

[–] [email protected] -3 points 9 months ago* (last edited 9 months ago) (1 children)

I answered your question. They bill you based on your W-2

Why does it take you "a lot more than 15 minutes" to enter your income?

Except for the handful of self-employed people like yourself

You mean 10M Americans?

[–] [email protected] 6 points 9 months ago (1 children)

Why does it take a lot more than 15 minutes? I'll let this 30-page document from the IRS explain. https://www.irs.gov/pub/irs-pdf/p501.pdf

And the U.S. population is 339.1 million, so you expect the tax code to revolve around less than 1% of taxpayers.

[–] [email protected] -3 points 9 months ago (1 children)

That was a Socratic question. I know the answer. It's because they need information they don't have to properly assess your taxes.

you expect the tax code to revolve around less than 1% of taxpayers.

I don't expect it to "revolve around" anyone. You were the one who brought my personal taxes into question.

[–] [email protected] 5 points 9 months ago (1 children)

It’s because they need information they don’t have to properly assess your taxes.

What information?

And how is it that many other countries are able to accomplish what I'm talking about?

https://en.wikipedia.org/wiki/Pay-as-you-earn_tax

[–] [email protected] -2 points 9 months ago (1 children)

What information?

The information you give them when you complete your taxes. Have you not paid taxes before?

And how is it that many other countries are able to accomplish what I'm talking about?

I've no idea, that's a good question for someone who lives in those places.

[–] [email protected] 2 points 9 months ago (1 children)

I like how you've gone from 'we can't possibly do this' to 'other countries do it, but I don't know how, so we can't possibly do this.'

[–] [email protected] 1 points 9 months ago (1 children)

Well when you literally just fabricate things that I've said, it can be very easy to confuse yourself.

[–] [email protected] 1 points 9 months ago (1 children)

Okay, if you weren't saying this wasn't doable, what on Earth was your point?

[–] [email protected] 1 points 9 months ago* (last edited 9 months ago) (1 children)

I just said I don't know how they do it so I can't comment on it. I can only comment on the American tax system as an American taxpayer.

[–] [email protected] 2 points 9 months ago (1 children)

Yes, I know, you suggested that it couldn't be done in the U.S. but your only answer as to why it can't be done in the in the U.S. when it can be done in other countries is "I don't know how it works there," which is a cop-out. Your ignorance of how it works in other countries doesn't mean it can't work in the U.S.

[–] [email protected] 1 points 9 months ago (1 children)

you suggested that it couldn't be done in the U.S.

Nope, you're just making shit up again.

[–] [email protected] 1 points 9 months ago (1 children)

You: "A bill for what? How do they know what to bill you for if you don’t tell them where and how you made and spent your money?"

Me: Here is a link to show you how other countries do it.

You: "I just said I don’t know how they do it so I can’t comment on it. I can only comment on the American tax system as an American taxpayer."

If that is not implying that it can't be done in the U.S., what did you mean? You apparently didn't even bother to look at the link to find out how it could be done.

[–] [email protected] 0 points 9 months ago* (last edited 9 months ago)

Sorry I missed your link. The US already has that system. It's listed under "Similar systems" in your link. That's why you have "tax refunds", because they typically overestimate what you owe and then give you the difference back in the following year. The only time you have to declare your income is when you are self-employed. It sounds like you are not very familiar with the US tax system.

Have you ever looked at your paycheck? It's usually the default unless you choose to opt out of it.

But that's only for income and not the other information I previously listed.

You're obviously conflating "I don't know how they do it" with "it can't be done".