It’s relatively easy to make a free 1040 file. The real problem comes from all. The. Edge. Cases.
1) do you support xyz state? 2) what if I lived in multiple states? 3) what if i…
And on and on.
And it’s not just one and done. Every year IRS and states are changing their shit so you have to go thru and make all kind of updates and verifications every year.
It takes an army to build and maintain. Generally not the kind of thing for open source (unless they’re paid). But then what’s the point? One may say it’s more transparent, but TurboTax etc are transparent with their formulas - you can check every box they fill in for you.
I think the only thing that can really disrupt this dynamic are “free” commercial software (like credit karma now cash app), or government provided.
The way we got this is interestingly twisted.
French citizens requested the software used by the administration, and they managed to get it!
But, it was written in Mlang, a proprietary language created by the french administration in the 90: https://github.com/MLanguage/mlang.
Someone then decided to create an OCaml compiler that takes mlang and emits python: https://arxiv.org/abs/2011.07966
As a result, we got Open Fisca. I now think there are other techs in the mix...
A slide of the story: https://www.slideshare.net/Etalab/opening-up-the-french-tax-...
But I believe it should be mandatory for the state to provide the source of every softwares they use internally to manage our lives. Also a test suite to allow any citizen to validate their own effort to comply with the law.
Just like laws should be published as diff of the previous laws, in a VCS repo.
This is not to day that the software is not useful (the API looks great after a quick reading), but it will be used by a very small population.
These add major complexities to the US tax code.
It all seems to be an absurd charade. Attempts to reduce the bureaucratic burden are opposed by the tax return return companies who bribe heavily to prevent any simplification.
Some other countries just tell you where you stand because for the vast majority of people a standard filing is all that's required. In those circumstances, only the edge cases need to deal with complexities. In the US, everyone does.
But I am of course pessimistic on tax reform since that general populace just accepts "oh yeah filing taxes sucks" at the same time that tax service providers lobby congress who, absent a strong outcry from their voters, just follow the corporate money trail.
I'd say that's the most appropriate place, really. It's a designed system, sort of. It's malleable, in that changes occur regularly. The obvious place for bug fixes is here.
I get your pessimism in the sense that the same dynamics, politics and systems that have shaped the present problem seem unlikely to have the desire/capability to fix it. OTOH, things stay the same until they don't. There have been a lot of tax systems invented over the last N thousand years. 99.N% of those tax codes are currently extinct.
Also... we're due a shift of reigning economic religion, periodically speaking. Maybe the next one will take a differing view on efficiency.
Stuff like taxes were always enigmas productivity-wise. For a mill, product-out/labour-in = labour productivity... or product-out/capital for capital efficiency. Either way, efficiency is self evident. For a tax code, legal system or whatnot, there's no way to measure output and no "economists agree" way to know the value of the output even if you could. It could be negative.
Well... This now also applies also to JPMorgan, Pfizer, Alphabet, FB and such. Just like it's not obvious that more legal procedures = more justice, measurements of most of the economy's output is increasingly ethereal and unrelated to obvious scarcities.
That don't mean nothing definite, but we are in times of change... which means don't bet on long term saminess of most things.
The U.S. doesn't make you do this, either. Most people don't itemize deductions. You just plug in the data from your W-2. The percentage of people itemizing was 30%, but with the Trump Tax Cut which capped state and local deductions (i.e. lowered the maximum allowable deduction, effectively increasing taxes on a large number of people) this was predicted to drop to 10%.
If you're itemizing, you're in a minority of tax payers, and in most cases a voluntary minority seeking to minimize your taxes in a way that simply wouldn't be possible elsewhere.
The U.S. also has one of the highest rates of voluntary tax compliance, and hypothetically that might have something to do with 1) ability to itemize and 2) having to sign on the dotted line every year.
That is not the hold back for tax reform, any efforts to simply the tax code gets push back from every special interest that to keep their deductions, and they point to "the others" as "unfair" deductions, so it never changes.
People with kids want to keep the massive deductions for having kids, even though childless people believe that is unfair, people with homes want to keep the deductions for home ownership even though renters believe that is unfair, and so it goes down the line for 1000's and 1000's of loop holes and deductions...
Never a one shall be expunged from the code
Sadly law makers don't know how to code. If they did they would see what bloated monstrosity of complexity a few simple sounding sentences with some simple sounding exceptions produce. Perhaps a large bill and months of delay could provide enough of a clue.
I agree with your sentiment, but not resolution. The truest resolution is in simplifying the tax code, which Intuit and co do not want.
Edit to add: When CreditKarma gave up on me, I tried FreeTaxUsa. It sounds like a scam I know, but they are top notch, and cheap. Highly recommend.
Ah! I remember FreeTaxUsa. They have this silly verification thing in their signup. Your email address must be on an "American" domain. Mine is self hosted on some other domain and they literally say it's "foreign". Just checked again and it's still there. Hah... sigh.
Perfect for open source - if decomposable, so each issue can be dealt with in isolation (or many can). e.g. using a "plug-in" architecture of some kind.
And somehow recruit non-dev folk - if you go to the trouble to understand some specific tax point, you often would like to share it, and also record it in some "easy to use" form, for next time (and a starting point for amendments).
Maybe a "tax DSL", "business rules"? Or a user specs it, and a dev codes it?
Not really.
The software as a whole needs to be verified across a wide range of everchanging rules, some of which are going to be a judgement call even among experienced accountants.
Why would people be interested in working on this project? It certainly doesn't break any new ground. It's just a long and ongoing grind to implement tax code rules. If for some reason, I have a lifelong ambition to work on accounting software, I'm sure Intuit, SAP, and Oracle pay reasonably well.
Sure it would be great if that was Open Source, but it does its job this way as well?
I then went and found out how many folks one of our competitors (a bit more mass market than us) had writing payroll software.
The answer was it was a six person team just to keep up with the government changes every year. We never bothered any more with that idea.
Payroll is surprisingly hard.
That flies in hte face of the usual comment torrent decrying centralized spying from any agency, government or otherwise.
In the 40 or so years I have been doing taxes I have not once seen the amount deducted as taxes match the amount owed. After various deductions (retirement savings, medical expenses, charitable donations, political contributions, governmental program incentives, etc) and jurisdictional disagreements (employer in one province, residence in another), I and those I do taxes for always get money coming back.
Requiring every financial (and otherwise) transaction I undertake to be registered with some central government authority to they can (in theory) correctly prefill my tax forms is anathema. Be careful what you wish for you might just get it.
I don't know if you're just not aware of this, or what, but most of the data on your taxes is stuff that already gets reported to the government. There's no reason for consumers to fill out a W2 every year, the government as it exists today already has that data. The same is the case for a lot of investment information, it already gets reported to the IRS today.
You don't need to build an expanded government surveillance program for the IRS to stop requiring filers to fill in information that the government already has. This has nothing to do with having a "nanny state", and everything to do with a coordinated campaign from bad-faith actors like Intuit to try and pretend that it's pro-freedom or pro-privacy or some crud to act like the government doesn't already have your W2.
The reality is that governments use taxation as one of their tools to reward certain behaviors and population segments and to discourage/punish others. Simplifying taxation is taking that power away from governments. Why would any government choose to divest itself of those powers?
OR… Intuit can keep shoveling money into campaign funds. We know what it’ll be.
I've been using excel1040.com for several years now (2017 iirc), and I think it's been around for awhile before that as well -- so I don't think it's fair to call it short lived.
It's pretty amazing how thorough it is. Not perfect, but I found it much more comprehensive and flexible than the free/cheap version of Turbotax.
That said, it is maintained by one crazy guy in Kansas. I doubt the project will survive after he stops working on it.
Any service you choose might be missing your edge case. But if you can see all the code and figure out where to plug in your edge case, then you can contribute it for all users in the future to enjoy.
We've already seen people show up and implement features we hadn't researched yet. I encourage you to check it out.
What happens if you fall under two different tax-breaks or if a payment was taken on a certain date which falls before or after a cut-off point? A lot of complexity, that the developers could solve but will not necessarily know how to handle. At least when you submit this to the relevant tax authority, they can spot alarms like this and decide in a reactionary way how to handle it, adjusting tax codes or providing rebates.
There are just way too many things that change too quickly.
That said, I am all for simplification but then you wouldn't need open-source software, you could just do it in a spreadsheet ;-)
Further, people don't know what the edge cases actually are at scale. If I go do my taxes and it doesn't account for some weird thing, I simply don't know that this weird thing even exists in the first place to justify a PR to the tax service.
Hard to know in advance, if OS communities can do something well or not. There are examples of taking on pretty sprawling problems successfully. On multi Language, portability and such they can often beat the "armies."
It's easy to have open source project where the stakes are "bad translation" or something that doesn't result in fines or problems with IRS/law.
It avoids the state problem by not supporting states at all.
It's done by a single retired person. I always donate a few bucks and I suspect he's making enough off the donations for it to be worthwhile for him.
But yes eventually it might be abandoned if he doesn't find some successor, but so far it's very alive.
You just pick the state that gives you the smallest tax.
Most countries don't tax expatriated citizens. Even with exemptions you still owe for social security and Medicare. It sounds good since many people will want pension in retirement, but Medicare offers vouchers or exemptions abroad. This was likely the precedence used for “historically, we do not offer any healthcare services to those abroad” when asked if overseas Americans would get access to the COVID-19 vaccine.
Some of the tax rules come down to "humans argued in court, and another human decided between their two arguments, because the law on paper was vague or poorly constructed".
That’s why it was worth $7B for Intuit to acquire Credit Karma. They’re pretty aggressive about buying up potential disruptors.
Propublica is the definitive outlet for reporting on this stuff. They've spent years digging into bills and the millions that Intuit and H&R block spend lobbying around tax reform.
> “For a decade proposals have sought to create IRS tax software or a ReturnFree Tax System; All were stopped,” reads a confidential 2007 PowerPoint presentation from an Intuit board of directors meeting. The company’s 2014-15 plan included manufacturing “3rd-party grass roots” support.[0]
...Which is important because if you start from anywhere else on their site, they'll begin hurling upsell dark patterns at the user, despite proclaiming "free" in copy in many places.
Right now, if I google "file taxes for free usa," the page "TurboTax Free Edition"[1] ranks higher – which is not the same software. And, of course, they do not link to the actual FreeFile page from there.[2]
Edit: turns out that Intuit will no longer be offering that government-sponsored Free File alternative after this year (disclosed in a blog post titled "Accelerating Technology Innovation," hah)[3]. Good riddance. The US Treasury Inspector General found that only 2.4% of taxpayers (2.5 million) actually used the free file software, whereas 5.5x that number could have filed for free, but were likely charged for it instead:
> TIGTA estimates that more than 14 million taxpayers met the Free File Program criteria and may have paid a fee to e-file their Federal tax return in the 2019 Filing Season.[4]
This should exist. 80% of US citizens can just have this done right now.
>> government program that develops this kind of software
This should not for the remaining 20%.
It should also be noted that the IRS already has all of the information about you anyway. Your bank, your brokers, etc all send copies of your financials to them. At that point, filling in a tax return by hand is basically a potential form of punishment for not doing your homework right.
The interface is responsive. I literally can send my taxes while I shit. The biggest hurdle is that the day the tax season starts servers can't deal with the load (because apparently everyone wants to be Ned Flanders and file their taxes the first day).
Thanks to the national ID e-card (which does have a chip with a private key and a certificate signed by the government's certificate authority) I don't even need a login/password to enter the tax agency web site, the card proves my identity.
This is not some advanced e-government shit, it's routine and every advanced country is expected to have it (just like universal healthcare, clean water or paved roads). Even development countries are starting to have these kind of web services.
At this point I suspect some people get paid to spread bullshit like this.
But I agree that almost for everyone it is a 30 seconds exercise to do the taxes.
Now with the website it's all much easier still though.
Our brand of conservatism is informed by Calvinism and hard core Capitalism.
Those in charge believe in using religion to control and the purpose of everything is to make someone money.
Eventually my taxes fell into the realm of forms that even CPAs can make mistakes on or are unfamiliar with. I am really conservative with this stuff and really make sure to pay what I owe. I, or my CPA, still make mistakes that result in the State or Federal government sending me small “you paid us too much” checks every so often. That’s been true when I’ve done it myself, used TurboTax, or used CPAs. I have a friend with similarly complicated taxes and she just got her first “you owe us $XX” letter for this TY2020 and another $XX check in her favor for TY2018 and TY2019 making the whole thing a wash.
If they can tell you that you paid the wrong amount a couple months after filing it feels like for those on a W2 and without unreported 1099 income they could just send a statement with an invoice if you owe and a check if you’re owed. The status quo for those individuals really is as you say. There’s enough complexity baked in that people throw their hands up in the air and just pay the $100 for basic tax prep that should be unnecessary in the first place and is not much more difficult than balancing a checking book.
Lmao no. Look at the number of people who eat out every day instead of cooking.
People go to H&R Block because filing taxes is tedious, boring and can land you in jail (or at least, serious legal hot water) if done wrong.
Yes, the IRS could do even this for you, but there's a myth that US taxes are always monstrously complicated that everyone likes to perpetuate:
1) The tax companies like it because it keeps people scared of doing it themselves
2) Tax reform advocates like it because it's they can cluck and shake their head at the corrupt government and tax companies
3) It _can_ get complicated if you have a complicated tax situation
Even when 1040-EZ was a thing (which it isn't any more), it was only relevant for filers with no dependents (e.g. no children), and given that something like 40% of households have children under 18 I am pretty sure that 90% is a bogus.
It’s possible to understand it well enough to get by, but you’re pretty much guaranteed to make mistakes in one way or another, and some of those mistakes are pretty much guaranteed to be criminal offences. You could live your whole life without that ever becoming an issue, but the gamble you’re taking isn’t that you’re never going to make a mistake (you will), it’s that the IRS will never commit any considerable resources to investigating your mistakes.
https://www.irs.gov/e-file-providers/free-file-fillable-form...
This is not a verbatim quote, but solar to what you have to do now to calculate health care insurance subsidies.
PDFs aren't exactly used in a standardized way, so trying to make this work for even a fraction of the numerous tax form issuers requires a lot of work, and a lot of ongoing maintenance. You'll need to prioritize the actual tax forms, and annual updates to those first.
The forms are not super straightforward but not incredibly complex either. For most normal people with a W-2 or 1099/self-employed income, retirement savings accounts, and some brokerage/investment accounts, you should be able to get it done in a weekend of research & work using resources on the internet, referencing the IRS's instructions for their forms, and using your previous year's return as a reference. And less time in future years once you've figured out how it works. You will need Adobe PDF software, but it's libre and a Windows virtual machine with the network connection disabled will solve that if you use Linux on your computer.
It's not for everyone, but if you don't want to support the evil tax industry in the US (there have been a number of posts on HN about this) then it's a good option.
Additionally, you can create an account on Turbotax and fill in all your information (but with fake name, SSN, employer tax numbers, etc.) and it'll tell you the amount of remaining tax obligation / tax return that it calculates. So you can use that to verify that you did everything properly. Turbotax only charges money to actually submit the return through them; even if you would normally require a paid TurboTax plan (e.g. for contractors, living in multiple states, etc.) you can still go through the process and get the final number without paying.
I did this for the first time this spring and was able to get it done in a weekend. I had W-2 and 1099 income/deductions and lived in multiple states last year. From what I can recall, basically the form 1040 is the 'root of the tree'; your W-2 income goes into that and every other taxable/deductible thing you do ends up aggregated into the 1040. The schedules (A,B,C,...) of the 1040 are like the first level child nodes; each one has a different topic(s) like self employment gains/losses, farming/fishing income, etc. so you can skim over them and see what applies to you, then fill out the ones you need to and enter their totals back into the 1040. The schedules will have lines into which you aggregate specific incomes/deductions, and the instructions for the schedules will have details on how to calculate all of that. And for other special deductions there are lines in the 1040/schedules that mention them. I'm not a CPA so don't blame me if you follow those instructions and something goes wrong.
The vast majority of people just want it to work like it works everywhere else. Computers handle it, and you overwrite anything that the computers can't know so that it's correct. That's what tax software is for, and that's what these projects try to accomplish in a FOSS way.
To me, the value proposition of tax software is that it walks you through all the topics interview style, so you can kind of relax and go with its flow. Otherwise you've got to create that structure yourself - determining what's relevant, sorting income into categories, figuring out what boxes it's supposed to go in, what schedules you need, etc.
I wonder if libre software that only did the interview portion would be more sustainable. It could create category tallies and supporting statements that don't really change every year, and direct you to fill those numbers in on the forms in the appropriate box. Then it wouldn't have the maintenance burden of creating print-ready forms that haven't even been released until taxes are due.
You can largely use it if you know what you are doing or have the most simplest tax case, but it won't offer you suggestions how to optimize taxes, and doesn't include large lists of items that you could possibly deduct. This service is offered by proprietary tax tools like WISO or QuickSteuer which offer questionnaires trying to cover more details of your tax situation to find out opportunities to optimize, and include large help files that contain examples and explanations.
Cost for these proprietary tools can be very low, they go on sale for like €5-€10 at discounters during tax season or are like €20 for the fully featured versions.
These tools also manage items like long-term deductions over the years, so that's their lock in effect.
The US assumes that all people who have anything to do with other countries are billionaire owners of multinationals with armies of lawyers to fill out paperwork.
- https://taxcalc.pslmodels.org/
- webapp here: compute.studio/PSLmodels/Tax-Brain/new/
- webapp here: https://uk.policyengine.org/
However this system isnt good at telling you which forms you need to file. You could miss an important one. For example sometimes you need a Schedule D and sometimes you dont. If you income reaches six figures you have to calculate the AMT and NIT forms to see whether they apply or not.
You can also hire an accountant. Our accountant does our taxes for just a tad more than what TurboTax's self employed tier costs. Even if we could get away with TurboTax's deluxe tier, I'd still argue the slight added cost of the accountant is well worth it.
It takes me like 5 minutes to file tax every year.
- https://imgur.com/a/NUZZlJM (file for tax returns)
- https://imgur.com/a/gUGf9wU (all income, automatically known by tax authority by electronic data exchange with my employer and broker)
- https://imgur.com/a/Nvh5RI8 (all my estates taxes, automatically calculated and sent as invoice to my bank)
Come to Brazil and the Receita Federal will suck you dry
These kinds of initiatives don't get everyone all the way there (see: other comments about edge cases) but they can go a long way towards educating folks about what filing looks like -- and at least some of them will give it a go themselves.
tldr: good post