IRS Pushed to Offer Free Online Tax Filing

[jebmke]

Quote:

Originally Posted by Al18 I’ll continue to spend a total of $25 to prepare federal and state returns on my computer.

Same. I use HRB desktop. It works for me and I can usually get it for $20-25.

[RE2Boys]

Here is an non-paywall article that gives a bit of history and current standing of this topic:

https://apnews.com/article/irs-incom...966bc0b356d342

I did not vote in the poll as it does not allow for multiple selections. I would choose both prepare my own and use a pro.

I've worked for HRB for five years, a CPA firm for 12 years, and for the IRS VITA program for the last five years. All software packages I've ever used had some limitations and assumed some level of operator tax knowledge and competency. For many years I participated in the Intuit Community Forum answering tax theory and software questions.

I feel that the IRS can come up with a system that will meet the needs of maybe 75% of filers, but that will have many limitations or out of scope situations where a more knowledgeable person will be needed or desirable, many folks will cheat themselves by what they do not know.

[Sunset]

Quote:

Originally Posted by scrabbler1 Same here, since 1985. I have gradually, over the years, done some things to help make the overall filing a little easier: getting a PC so I could design a spreadsheet which mimics the tax form's calculations, using the free fillable forms, and making payments and receiving refunds electronically, to name three. I have also been doing the tax returns for 3 other people: my snake-bit friend, my ladyfriend, and, most recently, my dad. The worst instance of wasting time and effort is including Schedule 3 to copy the excess APTC credit from form 8962 only to copy it again onto form 1040. That, and the repayment of excess APTC credit, used to be part of form 1040.

I do a few tax returns as well each year.

To simplify I use H&R Block software ~$20/yr. It takes care of all the automatic transfer of information across forms and recalculations if something changes.

No way would I manually do returns anymore here in the USA.

[Alex The Great]

During the last 10+ years I do tax return with TurboTax. It is not perfect but it is evolving and finally it does a critical part: import data from Fidelity and Schwab brokerage accounts. We will yet to see how IRS software handle this part and will use it once it prove itself to be as accurate and robust as TurboTax.

[Midpack]

Quote:

Originally Posted by Al18 I’ll continue to spend a total of $25 to prepare federal and state returns on my computer. Quote: Originally Posted by 11522914 +1 Don't see any reason to change this.

While I sorta enjoy completing my tax return, whenever I do mine it occurs to me how many taxpayers may not be able to do their own because of the convoluted tax code. It should not be that way IMO. Many are forced to pay someone, buy software they don't really understand, or rely on a friendly relative. This is a (relatively small) community of unusually knowledgeable folks when it comes to investing, planning and all things financial - think about every else.

[MichaelB]

Being able to prepare and file simple tax returns using IRS SW is a good idea.

Turbotax just settled a case where they pushed people who qualified for free tax prep into paid products, and they have a checkered history.

In addition, many taxpayers meet the income requirement but don’t qualify, at least for TT, because they have child tax credits or itemize deductions.

The tax code is complex and this punishes many taxpayers. It’s unreasonable to expect people with simple situations to have to pay to prepare and file.

[Midpack]

Quote:

Originally Posted by MichaelB Being able to prepare and file simple tax returns using IRS SW is a good idea. Turbotax just settled a case where they pushed people who qualified for free tax prep into paid products, and they have a checkered history. In addition, many taxpayers meet the income requirement but don’t qualify, at least for TT, because they have child tax credits or itemize deductions. The tax code is complex and this punishes many taxpayers. It’s unreasonable to expect people with simple situations to have to pay to prepare and file.

Amen, well said.

[Teacher Terry]

My son does mine so it’s up to him. I am back to consulting so more complicated than the past two years.

[cathy63]

It will be interesting to see whatever they end up with. The government contracts out most software development nowadays, and I'm pretty sure the IRS does not have a dev team capable of building a public-facing tax prep and filing system.

Currently they have contracts with OLT to provide Free Fillable Forms; with TaxSlayer to provide software to the VITA and TCE groups, including AARP Tax-Aide; and with a bunch of e-file aggregators. They also have the Free File Alliance, which gives lower income people with simple returns access to commercial software.

I'm not sure who they can hire that can build them a whole new system without infringing on anyone else's IP. It'll probably end up as some huge contract with companies like Microsoft, IBM, Amazon and Booz Allen all getting pieces of the pie that have to be glued together; and then it won't work as well as the apps that are already on the market.

[braumeister]

Wouldn't it be cheaper and simpler to just simplify the tax code so it's easily understandable?

Not gonna happen of course.

[frayne]

There is an industry built around keeping the US tax code as complex and convoluted as possible and it ain't changing anytime soon.

[MichaelB]

Quote:

Originally Posted by braumeister Wouldn't it be cheaper and simpler to just simplify the tax code so it's easily understandable? Not gonna happen of course.

That depends on how you go about it. It’s easy and inexpensive to simplify if you don’t care how the new tax burden is distributed across the economy. To simplify while all taxpayers keep their current tax contribution would be quite complex.

I think the greatest benefit to simplification is the potential increase in economic productivity resulting from the thousands of brilliant minds that currently are dedicated to tax avoidance and would then use their intelligence to take on challenges that benefit the economy, and society.

[foxfirev5]

I would try the free IRS option. If not, it's back to paper and crayon. Intuit or any other vendor will not see a penny of my money if I can help it. Actually I would prefer auto billing from my 1099's but that's a bit too much to ask.

[RetMD21]

It looks like importing data will come later if at all according to NPR's free link:

https://www.npr.org/2023/05/16/11764...ntuit-tax-prep

Brokerage 1099 is the import is the main value I get from software presently

This seems reasonable :

Quote:

"The best way to be successful is to begin with a limited scope pilot that allows the IRS to test functionality for some taxpayers, evaluate success, and use lessons learned to inform the growth of the tool," Deputy Treasury Secretary Wally Adeyemo wrote, in a letter authorizing the test.

Even if I don't end up using the IRS system I'd like to see more competition

[Walt34]

I checked the box for "use IRS option" but that's with the caveat that it's at least as easy as TurboTax, which I think is highly unlikely for at least a decade, if ever, after they first offer it.

[MichaelB]

Some updates on this very timely thread.

First, the IRS announced a pilot program to test this idea. From the WSJ https://www.wsj.com/articles/irs-wil...-2024-b5e19525

Quote:

The Internal Revenue Service will begin a pilot program next year to help some taxpayers fill out and file their income tax returns for free online, taking the first step toward building a government-run competitor to TurboTax and H&R Block.

Here’s a link to a Reuters report not being a paywall https://www.reuters.com/world/us/irs...24-2023-05-16/

Second, yesterday the IRS also released a report to Congress on this topic. It can be found here and gives us a thorough analysis, including cost estimates.

[cathy63]

Quote:

Originally Posted by MichaelB Some updates on this very timely thread. First, the IRS announced a pilot program to test this idea. From the WSJ https://www.wsj.com/articles/irs-wil...-2024-b5e19525 Here’s a link to a Reuters report not being a paywall https://www.reuters.com/world/us/irs...24-2023-05-16/ Second, yesterday the IRS also released a report to Congress on this topic. It can be found here and gives us a thorough analysis, including cost estimates.

That report is interesting. They have apparently already built a functioning prototype system that allows non-programmers to configure the workflow for simple tax returns.

My own experience in software engineering and government contracting tells me they are underestimating the costs though. They think they can implement the VITA scope* and serve 25M people for $221M per year, but implementing something like TCJA (or its provisions ending in 2026) is going to blow that right out of the water. Not to mention all the mid-year changes we dealt with during the pandemic that couldn't be planned and budgeted for; even the mileage rate changed in the middle of 2022 requiring double entries.

*VITA scope can be found on pages 6-20 of pub 4012 here: https://www.irs.gov/pub/irs-pdf/p4012.pdf

[rk911]

Quote:

Originally Posted by RetireBy90 I read yesterday online and read n the WSJ this morning that IRS is considering a free online tax file option. Would you continue to use your favorite software or use the IRS option ? Would you continue to pay a pro to prepare and submit your return, if that is your practice today ?

We have far more confidence in private enterprise than in government (thinking back to the ObamaCare website rollout). So, yes, we'll continue to use either tax software (TT) or a tax pro (depending on our specific circumstances in that year).

[harley]

I'm not going with the IRS version unless I find out it's not written in COBOL like most of the rest of their systems.

[donheff]

Quote:

Originally Posted by harley I'm not going with the IRS version unless I find out it's not written in COBOL like most of the rest of their systems.

What the heck, the kids can use Visual COBOL. Lets face it, it isn't just the Feds, banks are chock full of legacy COBOL and I read that virtually all of our online financial transactions still depend on it for some components. It will still be hanging arond in dusty corners when our grandkids ER (unless AI can do it in).

About 23 years ago we were testing out commercial online auction systems for GSA Auctions. The possibilities were all endlessly expensive. The supporting legacy COBOL systems were running on a mainframe with room to spare and a good team who had been building Web based front ends to the old stuff. The team proposed building a mainframe based auctions system largely in COBOL that would replicate the functionality in the commercial systems for a fraction of the cost. I had to jump through and around architectural hoops before I could approve it but we finally built it on time and on (cheap) budget. It is still running at: gsaauctions.gov. Try it, you can get some weird junk. It's like browsing a funky government surplus store.