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The 2017 tax overhaul vastly expanded the number of people who could file simplified tax returns, a boon to millions of Americans.
But the new law directly threatened the lucrative business of Intuit, the maker of TurboTax.
Although the company draws in customers with the promise of a "free" product, its fortunes depend on getting as many customers as possible to pay. It had been regularly charging $100 or more for returns that included itemized deductions for mortgage interest and charitable donations. Under the new law, many wealthier taxpayers would no longer be filing that form, qualifying them to use the company's free software.
Intuit executives came up with a way to preserve the company's hefty profit margins: It began charging more low-income people. Which ones? Individuals with disabilities, the unemployed and people who owe money on student loans, all of whom use tax forms that TurboTax previously included for free.
(Score: 4, Informative) by AthanasiusKircher on Wednesday July 17 2019, @10:56PM (3 children)
True. Multiple years and by multiple companies I've been ensnared by such a promise. You spend 30 minutes entering information only to discover some prompt that says, "Oh, actually we can't file for you with your current level -- you need to upgrade by paying us $20/$50/$100+ more." Sometimes the kind of weird exceptions that caused that were completely unpredictable based on the product description. I've wasted several days over the years getting that far with a piece of software only to abandon it and go looking for another cheaper option.
Oh, absolutely. But let me explain something, if you haven't done this. I have. It's been quite a few years since I filled out all the forms for my own return manually. But a couple years ago due to a stupid issue involving my son's income (he was about 6 years old at the time), I gave up trying to file using various software that promised to do it for anyone with income less than X, but then it wouldn't have the right forms or whatever. You see, my son had a very small amount of investment income due to some mutual funds sold or something. When he was only a year old or so, we transferred some money to him, but my wife got some bad advice in how she did it, and it's now stuck in a weird account that belongs to him.
Anyhow, point is that it wasn't a lot of income or a lot of money, but it was enough in some income category that it triggered the IRS threshold where he was required to file a return. He didn't owe tax, but he was legally required to file a return.
And after spending a couple hours trying to use free software and not getting anywhere, I said, "To heck with it!" and went to the IRS to just fill out the forms manually. Have you done this? Have you ever had to read the instructions to file a Schedule D (investment income) yourself? I'm a reasonably smart person with a lot of patience, but the way those instructions are written is absurd. Yes, I got it done, but it took much longer than if it had been reasonably written by a reasonable person.
Point is: The IRS should be legally required to offer simplified instructions that basically mirror the kind of simplified instructions TurboTax or similar products can offer. Yes, obviously there will always be exceptions that require some advanced stuff, but TurboTax somehow manages to handle almost all of that in a plain-language sort of way.
Software? I don't know if it's necessary if the IRS simply provided the kind of plain-language explanations for filling forms that tax prep companies do. And yes, that should be legally required. I have a Ph.D. and I found following the maze of forms and their instructions to be a pain in the ass. What are most Americans supposed to do? If we're effectively forcing people who are stupid to pay for tax prep, that's an additional tax on the stupid, and if we're going to do that, let's try actually instituting a tax on the stupid to pay for government-issued tax software... but I don't think that would go over too well, do you? No, because reasonable tax instructions available to all Americans should be a reasonable and required thing for the IRS to issue by law.
Oh, and as you might already see in links up this thread, apparently there was a deal struck between the IRS and the tax filing companies where they colluded and said the IRS wouldn't develop software as long as free filing is available with people with incomes under X. That sort of collusion is what you're arguing in favor of?
(Score: 2) by krishnoid on Thursday July 18 2019, @02:35AM (1 child)
Vote for income tax reform?
(Score: 0) by Anonymous Coward on Thursday July 18 2019, @08:36PM
reform? what the fuck is wrong with you people? only cowards, idiots and whores pay the income tax. what are you sheople so scared of? they can't enforce if you don't pay them to! Are you so dumb you think it's patriotic or that it helps the country do things it's supposed to be doing? do you not pay attention to the "news"? or maybe you're just another suited whore ruining this country? don't rock the boat as long as you get yours. fuck you own grandchildren's future like a real piece of shit. i hope you fucks remember what you did when you're going stupid from the Alzheimer's you caused yourself by eating and drinking poison your whole life like a good little slave.
(Score: 0) by Anonymous Coward on Thursday July 18 2019, @03:02PM
Grandparent AC here.
Yes, this does happen, and there should be better descriptions of what one can and cannot use free file for, and/or at what point you know you won't be able to use it. The government itself presents it like "Under 66K? It's FREEEEEEEEEEEE!" and it has never been that way. Fault the Government, who deflects the answer off to the free file preparers despite the fact they know it doesn't work that way. Could it become an absolute under $X no matter how you got them? Yep, but I'd expect to cut that back to under $40K total income then, maybe $30K. Someone who takes come about $3,300 a month can afford to set aside $8.33 per month of that for tax software IMO. Someone taking home $1650 a month ($30K / 12 * .66 taxes) probably still could, but I'd give them a clean break.
Yes I have. For fifteen years worth of returns starting from age 16, before I started using a paid product. I filed in years when I didn't have to because my income was low enough. The first few I got to file 1040-EZ, which I found laughably simple. And yes, the default understanding is that if you're able to have investment income then you probably should be paying for a filing product. Even though that unfairly swept you up I don't have a problem with that aspect of the program. People who have investment income can pay for their tax filing.
I'm not a Ph.D., but the last time I chose to file on paper I didn't have much of a problem working through it all. Involved? Yep. Because tax code. But the instructions were a lot simpler than many other multistage products I've had to engage with in my life. Can one replicate guides similar to what the programs do? Yeah, but the real advantage of the tax prep software is that it asks you a string of questions, "Do you A,B,C,D, OR E? Yes? OK, we'll take you through all five. No? We'll skip all of them, then...." The point is that it costs to develop that, and I don't think the system is broken. Right now people pay for convenience and/or because their return is complex, and if return is simple and you don't mind the complications you do it for free. You might have a problem with that, and that's fine. I don't.
Yep. That's the sort of partnership I'm in favor of. Those who need the assistance to be free because they cannot afford $100 of software per year get it for free. Everyone else can pay based on the complexity of their return for the product they need. For example... if you own your own business - you can pay for your tax filing software out of your own money. If you're living off dividends - you can pay for your tax filing software out of your own money.
The alternative is not the Federal Government wasting billions on duplicating that system. The alternative is EVERYBODY gets to pay, period. I'd accept an alternative that under a certain amount of AGI gets to deduct a further fixed amount ($100 or $150 is fine) automatically for what the cost of the software is if they can prove they purchased it, even though that's also a burden to all equally. So yeah, I'll take the system that we have now, and pay my money every year for my copy of tax filing software, and expect anyone else with any complexity to their return to do the same.