I did do these last year to finally kick TurboTax to the curb. However, they’re shamefully complex especially considering how they’re already a piece of software. They barely do basic arithmetic.
The restrictions are entirely artificial, and the system is gamed so that you either spend a lot of time learning tax form rules and lingo or you just pay TurboTax to do it for you.
The IRS could very easily send a pre-filled tax form for most Americans to verify and sign like other countries do. All the relevant information is already reported to the IRS. Only business owners and people with exotic tax situations would ever have to fill anything out - especially considering our now-higher standard deduction that most people don’t hit.
Despite my complaints I still highly recommend everyone use free fillable forms. You’ll actually understand what is happening with your taxes by the end of it. And without that understanding you have no idea if TurboTax is doing it right.
Your point about how the IRS already has all of the relevant information is something that has always puzzled me. Why are we performing this bizarre, ever-changing ritual with the threat of IRS audits hanging over us if they already know everything?
I think that is part of why TurboTax has such a foothold. I use it because it walks me through the frankly byzantine process and explains a good deal of the arcane terminology for me.
The IRS doesn’t have all the relevant information though.
A lot of deductions and credits are based on events or transactions that aren’t reported to the IRS. State and local tax deduction, charity deduction, medical expense deduction, and so on. There are also various penalties that need to be self reported - the IRS can find them, but only if they do an audit and are looking through bank accounts and other stuff they normally don’t know about.
I’m not sure if the IRS even knows how many kids you have for the child tax credit. How would they?
> I’m not sure if the IRS even knows how many kids you have for the child tax credit. How would they?
You have to report the SSN of your dependents on your tax return, still open to fraud but it’s not like you just fill in a number. This was actually a huge issue for the IRS before they co-opted the SSN as a tax identifier, and pretty much the only reason people get one assigned at birth instead of when they begin working.
CGP Grey’s video on the US’ lack of a national ID covers a lot of this, worth a watch.
They'll have it from the previous year. So, for each dependent, you'll likely only send a correction to the IRS twice: the year you gain the dependent, and the year they stop being a dependent.
What about the free forms is painful? I have only ever filed via these forms - I've never used TurboTax, and my AGI exceeds the limits on the federal free file software.
To me, it's pretty simple: you read the instruction book and go through it line by line. If you have odd forms to complete, like paperwork for an HSA, a quick google search will set you in the right direction.
People with more complicated tax returns will always need a professional's expertise. But for 90% of people who have one income source for one household, the paper forms are very intuitive.
I think people think they are "painful" because they need to read and comprehend more.
('intuitive' is over used as a goal, but a form where you look up the instructions line by line in a separate book and where you occasionally have to search out how to fill out a subform is not intuitive at all.)
The first time I used FreeFillableForms, it was also my first time doing taxes manually. Reading all the instructions and then going off and computing whether or not the AMT applies to me, researching whether I was eligible for this and that deduction, etc was very time consuming. I estimate it must have taken me over 12 hours which was definitely not worth my time financially, but I did it anyway as a matter of principle.
THEN I ran into a nasty snag: I had put a "0" in a bunch of the fields that I'd decided didn't apply to me, but the IRS validation script expected those fields to be blank and repeatedly rejected my submissions with cryptic error messages about form validation errors. It takes at least a day to hear back after you submit, so it took me weeks after I was "done" with my taxes before I could figure out the problem and get all the fields changed from zeros to blanks that the IRS needed in order to actually accept my taxes.
>I think people think they are "painful" because they need to read and comprehend more.
That's part of it, but FreeFillableForms is not user-friendly at all. The whole federal tax process is an absolute mess. Doing my state taxes is so much easier, thanks to CalFile doing 99% of the work for me. It's a shining example of what our federal tax returns process should be like.
The painful bit is having to fill out anything at all. I lived and worked in the UK for 11 years and I didn't have to fill out a form once in all those 11 years.
My brother who had rental income only needed to fill out a small form for this additional rental income.
> The IRS could very easily send a pre-filled tax form for most Americans to verify and sign like other countries do. All the relevant information is already reported to the IRS.
One of the current problems is that the information is reported in parallel by those providers. Many small businesses print off their employees' W-2s at the same time they print their own tax returns.
Yes, the IRS knows eventually. They don't know by April 15th under the current set of filing deadlines, though. That's a solvable problem, but not as trivial as you make it sound.
I did do these last year to finally kick TurboTax to the curb. However, they’re shamefully complex especially considering how they’re already a piece of software. They barely do basic arithmetic.
The restrictions are entirely artificial, and the system is gamed so that you either spend a lot of time learning tax form rules and lingo or you just pay TurboTax to do it for you.
The IRS could very easily send a pre-filled tax form for most Americans to verify and sign like other countries do. All the relevant information is already reported to the IRS. Only business owners and people with exotic tax situations would ever have to fill anything out - especially considering our now-higher standard deduction that most people don’t hit.
Despite my complaints I still highly recommend everyone use free fillable forms. You’ll actually understand what is happening with your taxes by the end of it. And without that understanding you have no idea if TurboTax is doing it right.