> Why does it still cost money to file taxes anyway?

It doesn't, but because of the complexity of the tax system most people either use a tool like TurboTax or an accountant, to file for them; that costs money.

And the reason it exists, the lobbying of special interest groups for exceptions to taxes. If you can convince people in government that you deserve a break b/c what you're doing benefits society somehow, there's a tax loophole waiting for you too!

And now, there is the multi billion dollar industry that depends on this complexity and doesn't want it simplified. This is a huge waste, we waste money individually that could be spent on actual goods, and the IRS/government waste money needing to audit all the people who decided that maybe they did deserve a tax credit that perhaps they did not.

> It doesn't, but because of the complexity of the tax system most people either use a tool like TurboTax or an accountant,

Very few people actually need an accountant or even TurboTax to do their taxes.

Roughly 62% of Americans are homeowners[0]. Somewhere between 50-75% of Americans have children[1][2]. If you're in either situation, you're likely unable to file a Form 1040 EZ. While the full Form 1040 is only 2 pages long, the instructions for it are 106 pages long[3] - and when you complete your 1040 you declare, under penalty of perjury, that you filled it out accurately.

Those people may not technically need an accountant, but to do their taxes without assistance would be foolish.

[0]https://www.bloomberg.com/news/articles/2016-07-28/homeowner... [1]http://www.huffingtonpost.com/2015/04/09/childless-more-wome... [2]http://www.gallup.com/poll/164618/desire-children-norm.aspx [3]https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

Neither of those situations is particularly difficult to handle. My mother has all of those things and to this day she still files a traditional paper 1040 like she has for the past decades. And she's not college educated or especially bright. She just does it because an hour of her time is worth more than the nearly $200 all-in costs of doing a state and federal return with TT.

The IRS could go towards a model where they assume a standard deduction and verified dependents, and issue a refund based on that. Then let people file an amended return with itemized deductions if they wish.

The tax code in the US can be very complicated, but the for the vast majority of wager earners, it's pretty straight forward. The complications come on the business end of things.

>Very few people actually need

You could use this phrase to describe a lot of advertisements and products. However, these ads work on many people and they are made to feel like if they need it. Considering the argument they make is that with TurboTax you could get more money back than without using it, I am not surprised many people buy this tool and use it.

Basically, politicians want to be seen as "doing something about the problem" for any problem you could think of. And the tax code is their preferred mechanism. So we have a huge mortgage interest deduction which is supposedly to encourage homeownership, deductions for home office expenses, the alternative minimum tax which is supposed to prevent millionaires from not paying taxes, and on and on. Most of these rules don't really do what they're supposed to do. For example, Warren Buffet pays very little tax, despite all the AMT's complexity. Tax breaks for homeownership just get reflected in the price of homes, serving to make them less affordable, not more.

Democrats oppose reducing taxes on principle. And Republicans talk a lot about reducing taxes, but usually find more interesting things to do once they're actually in office. Special interest groups of all kinds lobby heavily for their own distortions of the tax code, and the average voter has little idea what is going on.

The people who get hurt the most by all this are the middle class. The very poor have nothing to take, and generally pay either no or very little tax. The very rich have professionals to handle all this.

It's pretty funny. You get the same tax load in most of canada compared to california, yet the tax laws have far less gotchas like these and you get universal health care.

The canada gotcha's are:

1. Everything is more expensive.

2. Housing is overpriced in employement metros except alberta.

3. You get paid a lot less than the USA anyway.

4. Canada's stock market is pretty much flat compared to the USA in the past decade.

Sometimes just raw amounts of money overcomes a lot of these kinds of issues.

Salaries are lower than the US to boot.

And availability of TN only helps

> Why does it still cost money to file taxes anyway?

https://www.propublica.org/article/how-the-maker-of-turbotax...

That article brings up ReadyReturns in CA, which it appears has since been rolled into CalFile. Just moved to CA last year: anyone have experience with CalFile vs a paid tax preparation to share?

It doesn't cost money to file taxes in the United States. Well, you have to pay for the stamps, paper, and the printer ink, I guess.

Compliance cost.

Most people in the UK don't even need to do tax returns.

I lived and worked in the UK for decades and never did my own tax return. When I moved to the US, the UK taxman spotted this, calculated that I had overpaid my taxes for that year and sent me a refund automatically.

I guess the reason why it's not done this way in the US is a combination of the general mistrust of government, and the lobbying from companies like Intuit to keep the tax system as complex as it is now.

I have to be nice about HMRC (the UK tax agency) as they were actually responsible for me making a chunk of money by refusing to make on a call on some options we'd been granted as the result of a ratchet agreement (which we'd actually tried to get removed from our first VC investment agreement!).

They wouldn't make a decision on how things would be taxed until after our IPO - so we were able to exercise the options and sell the shares to cover the worst case tax scenario.

After the IPO nice tax man said that the best case rules applied and we got to keep the money that would have been used to pay our tax bills.

Thank you HMRC!

The tax system was a mess before Intuit existed. I don't see a way to lay the blame at their feet.

Others may messed it up, but Intuit lobbies to keep things that way.

Here's their lobbyist's disclosure form. It says "Oppose IRS government tax preparation" right there in Box 16. https://soprweb.senate.gov/index.cfm?event=getFilingDetails&...

Their SEC disclosure says essentially the same thing. Grab it from here: http://investors.intuit.com/financial-information/annual-rep... Specifically, on page 10 of the 2016 version:

"We are a member of the Free File Alliance, a consortium of private sector companies that has entered into an agreement with the federal government. Under this agreement, the member companies provide online federal tax preparation and filing services at no cost to eligible federal taxpayers, and the federal government has agreed not to provide a competing service.... However, future administrative, regulatory, or legislative activity in this area could harm our Consumer Tax business."

The lack of auto filing is not the core issue with our tax code. The ridiculous complexity is. I want auto filing but the tax code could be drastically simplified without the government directly competing with TurboTax.

Elsewhere in one of their filings, it also says "Simplification of the tax code."

I'm totally fine blaming them.

If they're legitimately lobbying for a complex tax code, then yeah, they deserve part of the blame.

Who's eligible for free tax preparations?

There is an income threshold: $64,000 for 2016, which the IRS says covers ~70% of tax payers.

If you make less than that, the "Free File Alliance" let you submit a simple federal return for free using their software. They may try to upsell you on various things and may charge for a state return too.

Above that threshold, your only free options are the paper forms or the "Free Fillable Forms" online. The latter option is really simple. It will copy some numbers from place to place and does some basic math, but beyond that it is very similar to filling in the paper form--it won't help you optimize your return or anything like that.

More here: https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-...

We citizens have very little say in the machinery. That is the biggest problem we face these days. Regular people have no agency at all and there is a sneering elite that runs things from the coasts who believe everyone else is a sheep to be sheared for them.

More than half the population lives on the coasts. Most of them are "regular people", too.

The problem with our tax code is the same as the problem with the rest of our laws: pandering politicians push through complex and expensive trash because it makes either their constituents or their donors happy.

For taxes specifically, normal people have complex taxes because of the dozens of deductions and credits that hide the handouts (to the wealthy and the poor alike) built into the system. In a sane tax code, there would be no standard deduction or mortgage deduction or earned income tax or alternative minimum tax. There would be a set of tax brackets (adjusted to compensate for the loss of all the complexity) and very little else.

Of course in a sane system, the government would just file your taxes and send you a statement along with a refund or a bill. They have all the relevant information with the exception of some itemized stuff they can't know about, but they could just eliminate that and simplify.

All of that, plus tax software companies, such as Intuit lobbying against simplifying the tax code.

https://techcrunch.com/2013/03/27/turbotax-maker-funnels-mil...

And once again we reach the conclusion that corporate lobbying and donations are the "root of all evil" in American politics, and everything is broken because of it. Larry Lessig has been right all along when he said this needs to be fixed before anything else [1]. Because once this is fixed, everything else should be a lot easier and a lot more in tune with what the People want [2].

[1] https://www.youtube.com/watch?v=mw2z9lV3W1g

[2] https://www.youtube.com/watch?v=5tu32CCA_Ig

It's just so easy and so cheap for corporations to buy votes right now. Why wouldn't they do it, when the upside is billions of dollars and there's no penalty for it? They can literally buy a vote with a few thousand dollars "donation". Set a limit of $200 (maybe $500 for presidential candidates) political donation per year per person and imprison (6-36 months) anyone who dares to do it any other way, fast and furious, no matter who he is, wealthy billionaire or former president. It's the only way to escape this corruption in the system.

Also, I think the U.S. would need a special agency whose sole mission is to look for this type of corruption. In this case, "mission creep" and the purpose of maintaining their jobs would work in the People's favor. The more the agency would do (catch corrupt donors or politicians), the more it could justify its existence. Similar agencies have seen a lot of success in Europe, trying to catch corrupt politicians.

Reformers have been begging to "fix the broken system" regarding lobbying for hundreds of years in this country. Lobbying as a legalized form of bribery is a deeply-ingrained part of the political and economic system the US is rooted in, or in other words it's another dimension of capitalism. Academics and journalists have been writing about this for two centuries and not once has substantial change occurred.

They're lobbying for the government to stay out of the auto filing business, not to keep the tax code over complex. I think the government should auto file but simplifying the tax code would be a huge improvement without that.

Bollocks. Less populated states have vastly higher federal legislative representation per capita.

So to you it makes a difference whether some individual is represented at the .01% level vs. the .001% level?

Multiplied by millions of people that obviously matters.