Why can't we file taxes directly with the IRS?

Maryland has had free and easy online filing for several years now, at least for relatively uncomplicated returns. They even have a database which ties your W2 in with their employer files. I filed both federal and state online for free this year, had refunds back in about a week.

We’ve got a long way to go but it’s getting better. Maybe the more technologically proficient and pragmatic generations coming along will alter the tax code in such a way to maximize the electronic ease and efficiency of filing.

In Sweden you get sent a form with what the government thinks you paid and whether you owe or are owed. If you agree with the numbers you can file them with an SMS. I’m old school, I checked the numbers with the yearly statements I get, saw that they were correct (as usual) and then used the website to file. Took about ten minutes.

Then again, in the UK I never even saw a tax return. According to the authorities you probably don’t have to file anything.

So under that approach, the government would spend the billions of dollars Americans currently spend preparing taxes? Thank god the tax preparer lobby stopped it.

It would be one thing to actually simplify the tax code, but to put all the burden on the government seems ridiculous.

Pretty much what I do except I download fillable pdf forms, fill them out and save them, print them and sign them, and off they go in the mail. Save the pdf files for future reference, print a copy for the safe, and I’m good to go. No passwords to remember, nobody can hack it.

You know that the government already is doing that right? They have copies of your W-2s, 1099s and various other income forms that you use to file your taxes. They compare the number you report for the various lines to what they think it should be, and if there is a difference (I’m guessing there is a fudge factor in there), they send you a letter asking what’s up.

Here’s a Slate article talking about it.

I’ve used the IRS’s FreeFile option for years. You do have to fill out the forms directly instead of going through the private contractors’ endless lists of dumbed-down questions, though. And for some weird reason they make you look up your total tax in the tables instead of having the software do it. But it’s free, and doesn’t even cost you a stamp. There is no income limit involved, just the ability to read the instructions (free downloads too, btw). So the OP’s question is not based on a factual assumption.

The Massachusetts system is pretty easy and just as free, too. The software is better than the Feds’ in that regard, since it shows a running tally of your liability/refund as you enter information.

How about asking “What value do these private outfits bring to the process that’s worth giving them any money for it?”

IIRC, when the whole online thing happened, the IRS was put in the position of essentially going into competition with the entire tax preparation industry, which no one really wanted. As a compromise, the IRS doesn’t have its own tax preparation software, but various tax prep companies have to offer free filing options for low-income people.

When you get old enough to join AARP, you can just take all your tax information to an AARP tax volunteer (often a retired CPA) and he/she will do your taxes for free, along with your state taxes. We’ve done it this way for the past four years.

FreeFile is effectively just that.

Most of the work in taxpaying is just keeping the records together and compiled. The form-filling is easy. But that’s the part TurboTax charges for.

I normally pay H&R Block but this year i went to the IRS site to figure out how to efile myself. They have a link to several businesses that do it for free (probably with the income limit, I don’t recall) and H&R Block was one of them so i picked it. They walk you through every step, it seemed to be the same software that the tax person uses when I go to H&R Block, and it’s still backed by their audit guarantee. Everything was free. No printing, no looking up tax tables or anything. I don’t have state taxes though.

If by “no one” you mean, “The tax preparation industry and their lobbyists”, then I’ll agree with you.

There’s simply no reason for a taxpayer without a crazy complicated tax situation to pay H&R Block, when the IRS is doing the exact same calculations anyway. It’s only because Turbo Tax wants to keep getting paid – and too many Congressmen care more about H&R Block than taxpayers – that we have our current system.

I was asking the same thing this year, but as much from the IRS side of things as my side of things. Wouldn’t it make much more sense for the IRS to have an online site where I can file my taxes, so no one at the IRS has to look at a paper form? They could probably come close to paying for the new software with the savings in labor, and all those tax payers could save the filing fees.

The IRS does NOT owe HR Block or Turbo Tax a living.

There’s no age or income requirement to have your taxes done by the AARP.

I pay H&R Block to help me do my taxes because H&R Block insures their work if I ever get audited. Are there not enough IRS horror stories out there that people care about that?

I have never paid anyone to do my Federal tax return. I did it myself until about ten years ago, then switched to TaxAct, since it was free.

I did break down and pay for the state version of TaxAct the past two years, but I get so much money back from New York that the $15 was a reasonable amount.

The IRS doesn’t have a system that allows you to file your state return for free because the IRS has no control over the individual state revenue departments. For most states, there are tax preparers listed on the IRS website who will file your returns for free under a certain income limit. For many years I used this option and was able to file both my Federal and State (California) returns for free. Now I have crossed the income threshold, and my Federal return is still free, but my State return costs me $12.95. I think it’s a terrific deal in terms of time, money and ease of use. You should explore the options offered on the IRS site to find the one that will let you do your state return for free or the lowest cost.

When I started using my preparer of choice, they only covered about 30 states, but I just checked and they now offer all Federal returns for free, and all State returns for only $12.95.

I used to do my taxes myself, on paper with a pen. Then when e-filing became available, I used it, and immediately found myself getting back about $300 more, from some educational something-or-other I hadn’t known about. If that’s what working with the professional companies gets me, then I’m all for it.

Really, the current system is just about the ideal middle ground between private sector and government. I can get my federal taxes done quickly and easily, for free, and catching all of those odd little deductions and credits: Win for me. The IRS gets most people filing online, saving them lots of manpower in reading forms, and doesn’t have to write their own filing software: Win for them. The tax preparation companies get people using their business, and occasionally choosing to pay for their premium services, at very little cost to them: Win for them, too. The only way it’s even remotely not a win for me is that if I choose to get my state taxes done by the pros, too, I have to pay them for it… But that’s purely optional, and if it were the IRS doing it all in house, I wouldn’t even have that option.

Why would the IRS get involved with state and local taxes? The IRS has ways to file for free. States have their own mechanisms. Here is the one for CA.

In Canada, you file one set of taxes at the federal level. They work out the details for the different provinces and it’s all done in one easy step. Admittedly, this is probably easier for 10 provinces than for 50 states.

The IRS does have a front end that walks you through your taxes. It’s called the 1040 instructions. 30 minutes, a stamp, and a check isn’t free, but it’s pretty darn close. And pretty darn easy if you passed elementary school math.

But they do lobby congress and then people in congress try to convince everyone the Government can’t do anything right and you need the free market to submit your taxes.

America since 1980: A guy with his hand in another guy’s pocket.