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Tax Filing Should Be Free and Simple

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    Tax Day is right around the corner and I am happy to say that my wife and I set a record this year by filing our taxes in mid-March. However, filing them early only shifted the stress of filing our taxes from April to March.

    Why in the world do we make it so difficult (and expensive!) to file our taxes properly in this country? My wife hails from Ireland where, like nearly every other industrialized westernized society, they have a streamlined tax system that doesn't cause their citizens to have panic attacks or develop stomach ulcers. We can make it that simple in the United States, but don't. Why is that?

    Unfortunately, the answer is quite simple - the tax code discourages (and will soon criminalize) the Federal government from developing free tax-filing software that Americans could use to file their income taxes. This is because for profit tax filing companies have spent a lot of money lobbying both parties in Congress to stay out of the tax filing "business" and to let them take care of things.

    Currently, you can file your Federal taxes for free on any number of for profit tax filing sites if you earn less than $66,000 a year, but only 3% of Americans actually take advantage of that option because they are inundated with additional "features" to confuse them into paying for tax filing services when they don't really need it. If the IRS were able to develop their own tax filing system then individuals who earn $66,000 or less would be able to file their taxes easily and without being tricked into paying for anything.

    The sad truth is that we are going in the opposite direction and that unfortunately means that filing your taxes will continue to be stressful (and expensive) for the foreseeable future.

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    JaredS Wrote:

    Unfortunately, the answer is quite simple - the tax code discourages (and will soon criminalize) the Federal government from developing free tax-filing software that Americans could use to file their income taxes. This is because for profit tax filing companies have spent a lot of money lobbying both parties in Congress to stay out of the tax filing "business" and to let them take care of things.

    That's amazing. Thanks for making me aware of that development.

    So what, the argument is TurboTax and the like will lose a ton of business to the govt tax portal for free filing, making companies unable to also offer free services to the same group of filers?

    Ok. That's just not true. It could operate in a free market still just like anything else. Let the govt offer it for free AND companies can offer the same service for free as well. And see which portals the tax filers by and large prefer.

    I really hate the cottage industry that is the tax filing software companies. For all the reasons you pointed out -- filing taxes is too damn stressful and complicated. So now we pay for convenience and we pay so we don't screw things up and possibly get audited or worse.

    But what's really going on here in my estimation is that these companies are upset because they want to offer 'free' services to 'customers' and at the last second UPSALE them on 'audit protection' or identify fraud protection or whatever bundle service they come up with. Similar to insurance companies, but you know, for taxes..

    Having the govt offer free filing services makes perfect sense as a govt program and its really transparently uncool for tax companies to push them out of offering the service.