IRS Pushed to Offer Free Online Tax Filing

[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 ?

 

[old medic]

Our credit union did taxes as a service till last year. We qualified for the IRS free tax service this year, used it and got our refunds in short order... just cost $19 for the state stuff...

 

[frayne]

I've done my own taxes since 1974, so no reason to change now. Add to equation I did post retirement part time work with H&RB for five years and then worked the VITA program for two years.

 

[Al18]

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

 

[bobandsherry]

I'd have to see what they develop and its functionality. Based on other government developed systems I'd expect it to fall short of what the private sector offers.

 

[freedomatlast]

It's about time. I've always thought the government should send a prefilled out version of their own software to you with what they already know, already filled in. Then the taxpayer just modifies or adds what's needed, and done! This is way overdue.

 

[Gumby]

As I have since 1976, I will continue to do my own taxes at home (though now with software to help fill out the forms) and then mail them in. I am 100% certain that whatever the IRS produces for online filing, it will not work properly for me and will just cause agita. My way is simple and effective.

 

[georgemoe]

I'll continue to do my own taxes.

 

[Midpack]

I have done my own with TurboTax desktop for about 20 years, and I enjoy doing it.

Many countries have exact withholding tax systems so returns aren’t necessary for most taxpayers. But they can file returns for exceptions.

Some countries send their taxpayers a tax return already filled in, and the taxpayers need only approve or recommend changes. Since the IRS has most of our info, that’s what I’d like to see.

Free from the IRS would be great, but I suspect it would be like the free Turbo Tax return - only free for the simplest returns, not applicable for most taxpayers.

The fundamental problem with the US tax code is the unnecessary complexity. All that code and there are still loopholes galore, it’s ridiculous. Simplifying would be easy, but it will never happen…

At last count, 36 countries, including Germany, Japan, and the United Kingdom, permit return-free filing for some taxpayers.

Nearly all countries that offer return-free systems have “exact-withholding” systems, of which there are two types: “cumulative” systems (used in the United Kingdom and Russia) and “final-withholding” systems (used in Germany and Japan). Some countries combine one of these approaches with other requirements. In Chile, for example, taxpayers are not eligible if they wish to file for refunds of excess withholdings.

Denmark and Sweden, both small countries, operate tax agency reconciliation systems. About 87 percent of Denmark’s taxpayers and 74 percent of Sweden’s had their returns filled out by the tax authorities in 1999. Spain, Estonia, Finland, Norway, and Iceland have also implemented tax agency reconciliation systems.

https://www.taxpolicycenter.org/briefing-book/what-other-countries-use-return-free-filing

 

[RetireBy90]

The fundamental problem with the US tax code is the unnecessary complexity. All that code and there are still loopholes galore, it’s ridiculous. Simplifying would be easy, but it will never happen…

A couple years ago there was talk of simplification, postcard sized for simple returns. I did taxes while in the Army and most of the forms just required entering income from W2, any interest income, and tax withheld. Then a simple lookup for tax obligation and enter either refund or owed. I did them in the lobby of the PX one year with a card table and a stack of forms.



Alas, when I went to print 2022 return it was 72 pages. About 1/2 were empty pages, others had one or 2 numbers for an entire page. YMMV, on another post there was a subscriber that only has $15K in income each year so pays no taxes. Gotta hope that is only 10-15 pages

 

[ShokWaveRider]

I already use it. Turbo Tax is fighting it! They do not want it to happen.

You still do your own taxes; it is just free to do so. I have done it for the last 3 years.

 

[pjigar]

I've done my own taxes since 1974, so no reason to change now. Add to equation I did post retirement part time work with H&RB for five years and then worked the VITA program for two years.

Same here. Since 1998 (first time I made any money). Although I use tax software now (so much easier than doing paper returns back in the days). Depending on what IRS ends up offering, I still may have to use a commercial software since my return is now over 100 pages long (business income, rentals, etc.).

 

[Venturer]

Well since we have retired now I'll keep letting the good people at the AARP free tax filing people do ours. I can do it myself but why. Kinda on the same line as I can mow my own yard but why, when I can help out the economy by paying my yard guy, less sweat for me.

 

[braumeister]

As I read the article, it only refers to filing the return for free, which most people already get with current tax software (at least for federal). It does not refer to preparation of the return.

 

[donheff]

Like others I am skeptical but you should have provided a wait and see option. Our taxes are pretty simple in my opinion, but it does require dividends, CGs, a retirement K1. I doubt IRS wants to be responsible for maintaining a complex tax prep code base. More likely, they will offer a free EZ system for very simple returns with no complexity and point us back to commercial outfits for anything more. I want Federal and state efile, nothing less will suffice.

 

[Gumby]

.....

Alas, when I went to print 2022 return it was 72 pages. About 1/2 were empty pages, others had one or 2 numbers for an entire page. ....

You might consider simplifying your life. Our 2022 return was 6 pages - 2 for the Form 1040 and 2 each for our two form 8606's (because we have a basis in our IRAs). 2021 was slightly larger, at 10 pages, because the young wife earned $300 making theatrical costumes, so we had to also file Schedule 1, Schedule C and Form 8995. She donated all the money back to the theater troupe, so she finally convinced them not to pay her in the first place, and we're back down to 6 pages.

 

[Aerides]

I'll continue to use TaxAct and file myself. It's super convenient in that it remembers and reminds me if I don't include something I had the year prior, and all the history is easy to access. I always find a discount for it, we have use the basic version.

I'd have a look at the free IRS one but it would have to be quite good, which would be unlikely in its first or second iteration.

 

[Midpack]

As I read the article, it only refers to filing the return for free, which most people already get with current tax software (at least for federal). It does not refer to preparation of the return.

Well that changes the thread considerably…

 

[scrabbler1]

I've done my own taxes since 1974, so no reason to change now. Add to equation I did post retirement part time work with H&RB for five years and then worked the VITA program for two years.

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.

 

[11522914]

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

+1

Don't see any reason to change this.

 

[jebmke]

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-inco...iling-option-700e54251a39791091966bc0b356d342

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]

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]

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

+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.