IRS to Begin Trial of Its Own Free Tax-Filing System

Re:IRS to Begin Trial of Its Own Free Tax-Filing System by seanmcdirmid on Saturday January 06, 2024 @05:06PM (#38895986)

So…they know very little actually. We just got a nasty tax bill from the IRS because when my wife gets an RSU grant, her company sells some stock to pay income tax for that grant. Little did I know, that generates a 1040 for the stock sale (to pay ordinary income taxes) with a cost basis of zero! Instead, you have to adjust the cost basis to the entire sale (or even more!) via supplemental information. Annoying, so I had to learn a bunch of tax rules over one day on the weekend, and in the end the amended return said the IRS owed us money.

It’s crazy stuff like this that means the IRS can’t really calculate your taxes for you.

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Re:IRS to Begin Trial of Its Own Free Tax-Filing System by georgeecollins on Saturday January 06, 2024 @05:44PM (#38896320)

True, but 99.5% of Americans don't get RSUs. There are other cases like business expenses and unusual deductions, but again most people don't have those. So the IRS can probably only calculate taxes for 80% of Americans. (I'm guessing, not an expert)

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Re:IRS to Begin Trial of Its Own Free Tax-Filing System by PaulDavisThe1st on Saturday January 06, 2024 @06:13PM (#38896568)

Last time I looked it up, it is indeed somewhere between 10% and 20% of individuals that file Schedule C to report business income, and thus could not be handled by an automatic IRS tax system. Good guess!

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Re:IRS to Begin Trial of Its Own Free Tax-Filing System by ghaff on Saturday January 06, 2024 @05:27PM (#38896177)

Cost basis stuff has improved over time and I haven’t had problems recently that I know of but I’m sure there are still issues.

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Re:IRS to Begin Trial of Its Own Free Tax-Filing System by seanmcdirmid on Saturday January 06, 2024 @05:36PM (#38896247)

I’m surprised they can’t just the cost basis directly.

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Re:IRS to Begin Trial of Its Own Free Tax-Filing System by ghaff on Saturday January 06, 2024 @05:47PM (#38896337)

In years/decades past figuring out cost basis through options and acquisitions could be a real nightmare. To be honest there have been times when I’ve thrown my hands up and just come up with a plausible average.

But as I wrote, I think things are mostly pretty good these days. But who knows with things like RSUs you have limited visibility into.

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Re:IRS to Begin Trial of Its Own Free Tax-Filing System by seanmcdirmid on Saturday January 06, 2024 @06:48PM (#38896823)

We both work at big techs , so first world problem. But her company grants RSUs and sells stock to cover income tax, mine gives less stock and grants cash to cover taxes instead. Which is why I was surprised she was getting 1040s at all. But the stock is sold to cover tax, since a stock grant is taxed as ordinary income, that this generates a 1040 with a cost basis of zero is crazy.

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