In 2019 I filed my (Dutch) taxes on my phone, while I was on a bus somewhere in the north of Argentina after previously having traveled for 20 something hours. It took me about 15 minutes to check if the numbers from the government were correct (they were) and I was done. Americans are being duped by these predatory companies.
But I am going to play devil's advocate here, did you get the "best deal"?
It all comes down to deductibles. In France, the "one click taxes" option assumes 10% of your salary is deductible, which is often a good deal but sometimes, it may actually be more, especially if you have a long commute. The government app won't help you with that.
It may not help you with incentives too. For example, you may get some tax rebates if you did some work to improve the energy efficiency of your house, what exactly you can declare? And charities, loans, etc... A good accountant may help you save a significant amount with all these details.
Tax software are like a middle ground between simple, no brainer, government issued "one click" tax filling and hiring a professional accountant. Note that in France, most self-employed people hire an accountant, proper tax filling can be a minefield if you are not an employee.
And by the way, that's Intuit's argument. That it is used to justify its evil deeds is a thing, but the argument itself is not without merit.
I believe the way it works here (US), is most people with the standard deduction works for probably 80-90% of cases because their finances aren't complex enough or they're not doing enough where the deductions exceed the standard. So most would be fine with government just telling you what you owe/they owe and you just signing off or making a correction.
If you're doing a lot of charity donations, real estate, student loan debt, saving receipts for work related expenses, calculating depreciation on assets, etc, then its worth it, but by then you probably have a personal accountant doing it for you, not a program.
I'm Dutch as well. A couple of years ago my university fees were made tax deductible, I'm hazy on the details but basically I dropped out of my masters degree to work on a startup. Normally if you finish your degree some of your costs are relieved by the government with some loan forgiveness scheme. After 5 years or so they decided I definitely wasn't finishing that degree and all my university costs were suddenly tax deductible.
Obviously I had no idea of this scheme, I have no accountant and my university fees of 5 years ago were far from my mind.
Randomly got €6000 euros income tax back, very nice windfall courtesy of the Netherlands government.
The reason your taxes are simpler though is because the Dutch government doesn’t use the tax system to implement policy like the US does. The US Congress uses the tax system to influence social policy as well as to deliver benefits for specific groups and industries. And over time all of these legislative additions have turned a simple revenue raising system into a complex mess of deductions and credits.
Now I am not defending turbo tax’s predatory actions in the past but it’s not complicating the tax system just taking advantage of it being complicated.
In europe we just directly regulate behaviour either by directly taxing it or making it illegal.
In the US they set tax levels much higher and then offer breaks as incentives.
The latter has the philosophical virtue of making behaviour "expensive but not illegal" (ie., in europe you cannot legally avoid the tax).
However it dramatically complicates government and makes US citizens dramatically "overtaxed" absent these breaks. What we in europe often miss is that the US anti-tax lobby is reacting to a very different tax environment that is, on paper, very extreme.
Sweden uses tax policy to influence things and our taxes are just as easy. The state knows most stuff and then we just go in and adjust the default.
So, no, the reason is that they have all the information already and for most people just need you to verify it. In the US, the tax companies are lobbying the government to keep it difficult. The subject has been covered on HN every year during tax season.
You employer doesn't know your deductibles in the Netherlands due to privacy concerns (and other rules as well), which you definitely want to file in most cases since you pay less money or get some back. You are also responsible for your taxes, if the employer screws up you should check it. This is probably different from the UK. It is not a "can't do" but more or less a "won't do".
edit: so it's not that different, just a different method of doing so. Good to know.
That's likely true because like the majority of people, you don't make enough money, or wont see enough benefit from the effort involved. Anyone earning over £100k a year is required to file a self assessment, and if you've reached that point, you also likely have a bunch of tax deductible expenses, that even if the £-value is low, you're going to include in your filing since you're doing it anyway.
How complicated were your taxes? Did you work overseas for an extended period of time (outside of the EU)? Did you have special tax credits to claim, business profits to add, or anything else unusual? Simple taxes are relatively easy to file in America, too.
That's awesome! In 2006 I did the same thing with Turbotax for free at my PC at my desk in 15 minutes. I'm sure I could have started doing it on my phone once I got a smartphone but opted not to.
Pretty much yeah. I guess there are some deductions which need to be filed manually as the government would have no way of knowing about them. Like if you have a really long commute to work you get to deduct a certain amount per KM from your taxes.
But mostly these days, unless you run a company, you don't really have to change much about your pre-filled tax statement. Only once have I experienced that my housing association made addendums to the yearly tax report that needed to be changed in my tax statement.
I also lost some money on micro loans last year that apparently I had to file deductions for myself, but it amounted to so little money that I just let the state keep that money.
People always gloss over the massive scale differences when comparing the US to European countries, whether it’s prisons, taxes, healthcare, etc. It’s like, show me the system operating as well with 5x the population before even joking that it should work as efficiently at 10x, much less 20x. Call me when you’re filing EU taxes as individuals in addition to your nation-state taxes.
Its not the predatory companies that are the problem its the US tax system. If it was possible for people to "check the numbers from the government" on an app, it would happen here too.
It absolutely is a problem of predatory companies spending money on lobbying against simpler tax code. An equal share of the blame is on the politicians accepting these “legal” bribes against the interests of their constituents.
Lobbyists were supposed to be for promoting the interests of small groups that might not have the representation among a politicians constituents to warrant paying attention to. Instead we have rampant and excessive spending by corporations that lobby to keep their monopolies over segments of the market that harm American citizens.
Of course it's possible. The government will charge you if you filled out the forms wrong, so they have a lot available - instead they could prefill a lot of the information.
With all the wrongs about Turbo Tax and monopolizing tax filing - criticisms are appropriate. That said, I much prefer the US system. The US IRS already knows what how much tax an indiviual owes just like the Dutch government. Having to manually file taxes is a feature, not a bug IMO. The only difference is that the US IRS assumes you'd want to itemize and customize your tax return by default whereas the Dutch government makes standard deductions the default. I wouldn't want the government to just send me a number of what I owe. Sure you can challenge it, but I prefer the default to be that the citizen files taxes and the government can tally up the proposed taxes against the data they have and either accept or challenge it.
However, this Turbo Tax monopoly needs to go. There should be a free (OSS) software that can file the taxes.
In Norway the system is similar to the Netherlands. I think you are missing the part where it is mind numbingly easy to go in and add your own deductions. Also, you aren't challenging the amount you owe, you are simply adjusting it.
Having filed taxes in America and Norway, the American system is designed to make you fail and to use paid for nonsense to do something that is incredibly easy.
> Sure you can challenge it, but I prefer the default to be that the citizen files taxes and the government can tally up the proposed taxes against the data they have and either accept or challenge it.
But why? Both have the same outcome but one is more work and costs more as well as has a greater chance of you getting it wrong and being fined in the process.
Would you also prefer supermarkets to make you calculate the total amount you owe when you get to the cashier, making sure you applied all promotions and frequent shopper deductions manually?
You don’t seem to understand how things work. The government would send you a pre-filled tax return that contains everything they already know. You would check that and could then make amendments as needed. It doesn’t make sense to view it as a feature to have to put in the work to fill a tax return from scratch while the government already knows what should be there and will check it.
Like In every negotiation the advantage is on the side of the party who has the most information. The government first disclosing what they know gives you as taxpayer an advantage.
It's more of an oligopoly than a monopoly as you can pay TaxAct or TaxSlayer or H&R Block, etc if you don't want to pay TurboTax. The issue is that the IRS could relatively easily provide online federal tax filing as a free service but they choose not to compete with the tax prep industry.
> The US IRS already knows what how much tax an indiviual owes just like the Dutch government.
Citation very much needed; that’s not true for anyone running a business (even a side business), for anyone with shares of stock purchased before Jan 1, 2011 or mutual funds before Jan 1, 2012, and many other not uncommon situations.
TurboTax recently tricked me using some dark UI patterns into spending 30+ minutes painstakingly filling out my tax forms in a way that made it seem like it was for the free filing.
Only at the very end, did they reveal that it was in fact for the paid version, with no way to change it to the free version and also keep the work. Essentially holding my work hostage.
So I had to redo it again in the hard-to-find free version. I am now anti-TurboTax for life.
The same thing happened to me a few years ago. I wanted so badly to stick it to them on principle, but I didn't want to waste anymore of my time. I put my tongue to their boot and paid them for the privilege of getting scammed. Real 1984 shit.
1984? People throw that reference around that have never read the book.
What do a private company's payflow dark patterns have to do with mass surveillance by a totalitarian state? Everything slightly dystopian isn't "real 1984 shit."
Hypothetical scenario - Real 1984 shit would be to get a tax bill prefilled from the government to get you to sign on a dotted line. If you want to contest it, you'll need to hire lawyers but most refuse to work with you. Average citizen is left to defend themselves which is an impossibility. Sign on the dotted line or get arrested.
Folks, we need to go towards an open source route. Not put more power in the hands of a massively incompetent government.
Did something similar. I didn't care if the fee was like $30. But I needed their investment/small business tier and it was in the multiple hundreds of dollars.
Switched to a different service.
I know people want privacy, but I'd sell my income and personal company finances for $500. Where is that tax company?
>In 2019, ProPublica reported that Intuit added lines of code to the free version of its TurboTax website so that the site would not appear in search results on Google.
It's almost refreshing to see such an obvious "fuck you" move, without having it be covered by tons of PR and legalese.
What I don't understand is, if I make a mistake (e.g. missing a schedule or wrong number) in the form 1040 and send it to IRS, I'll be guaranteed to receive a CP notice from them later asking me to pay the missing tax and penalty. Clearly IRS has their own algorithm to calculate everything based on what they got (which is exactly the same as what I have, W-2, 1099, etc., for most Americans) anyways.
If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year? Why not just send me a pre-filled 1040 that their internal algorithm calculates and ask for my approval, like those Europeans do? How is this more "prone to raise tax"?
> If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year?
The tax preparation industry has successfully lobbied to stop the IRS from being able to do this.
In the UK it's possible to see a running estimate of your current tax position and the estimate for the end of the year. HMRC issues you a tax code which is used by your employer to determine how much tax they should be deducting each pay period. This means that in most cases you get no nasty surprises at the end of the year.
They don’t know everything. They automatically compare your return against information they’ve received from other parties (W-2s, 1099s, other tax returns’ dependents’ social security numbers, mostly) so you will get a notification if your return contradicts those in an obvious way. Beyond that, you need to be audited to get a notice. Audits range in their degree of inspection so most people just get a letter, but those kinds of audits usually just focus on one/two easy-to-discover issues.
They certainly could develop the ability to do your return for you, but it would be an effort.
They do not know everything here in Sweden either but they still give you prefilled forms with what they do know (based on what other parties like employers and banks have submitted) and then you can add the rest yourself plus add corrections if you disagree with them. Seems less work and less back and forth.
What would happen is that tons of people would want to know exactly what that algorithm is: they would want to know what exact rules are being applied to the information they have submitted, and they would want to validate the calculations themselves. Just in the name of transparency.
Still, it would be a good option for those who don't want to know. I.e. have the option of doing a return which you calculate yourself (which is then corrected, based on the input values in it). Or the option of just submitting the inputs and having them do everything.
Let's not forget the US and Eritrea are the only countries still taxing citizens abroad. You can escape the country and still have this tax bullshit, but now it's even more complicated because you're filing from abroad. Then a lot of the free options become unavailable strictly from filing from a non-US location.
I don't even owe anything and I still have to waste time and money filing! And they just keep making getting rid of citizenship more and more expensive! So authoritarian.
The threshold is > ~100k living abroad to pay taxes.
Almost nobody pays this. Moreover, it's not ridiculous that if you're a tycoon traveling the world and you're implicitly using US citizenship as your escape card, you should pay taxes.
Anyone who has lived abroad knows most countries don't want to jail/detain other country nationals.
That's if you take the expatriot exemption. Doing so has many implications including not being able to legally contribute to an IRA or SEP account. Even with the exemption, you still owe taxes on Social Security and Medicare. Social Security checks ship abroad, but the Medicare is not redeemable nor are there any exemptions for it. There's been years of editorials of regular Joe retirees not realizing this til late that they paid Medicare their whole lives to get in a big medical bind in another country.
You've got a biased view here. This is not a tycoon level of earnings. That's a standard citizen who moved abroad and works as a (senior) software engineer.
There is an additional problem in the form of FBAR/FATCA requirements, which impose a huge burden on taxpayers abroad. Ever tried to report the exact max amounts and interest in all of your accounts? It's not fun, it takes a lot of time and effort, and it costs money.
Every time this is brought up I will ask the same question.
Has anyone personally had to pay taxes to the US while living abroad? Not talking about a stock sale or business sale. Talking about making income abroad and owning the US for it. I don’t want to hear about your friend of a friend, you personally.
I’ve known people living in places like Costa Rica, China, and all over Europe. No one had to pay a cent ever.
Yes, I pay taxes living abroad. Any US citizen overseas that earns over $107,600 in 2020 (changes slightly every year) may be liable to pay US taxes (depending on what other deduction they may have, etc)[1].
There is the direct financial cost of paying US taxes when living abroad, but it is also a significant cost in time and energy to file taxes for 2 countries. It can get pretty complex, so many need to hire a tax service to handle it properly.
Then there are the additional reporting requirements for any banks that you have accounts with, so some banks will not allow you to have an account with them because you are a US citizen.
The point is that there are some real downsides to maintaining US citizenship when living overseas.
There are many upsides of course, like being able to return to the US at any time and live and work there. If there were an emergency situation, I could probably count on the US embassy to help me evacuate if necessary.
Overall, it's a cost/benefit evaluation. If you have citizenship in another advantageous country (or country in a powerful union like the EU) and significant resources, I can see why it would be tempting for some to drop the US citizenship.
I met someone running an AirBnB in London who was in the process of revoking his US citizenship because he was being taxed by the US despite not working there or having any business there. What blew me away is that he was having to pay thousands of pounds to _revoke_ his citizenship. From an admittedly naïve standpoint that seems like a real rort.
I was a dual us / Canadian citizen who have *never lived or worked in the US*.
I revoked my citizenship 2 years ago, after going through a stock sale here in Canada.
The process:
- cost me around $20,000 for the lawyer, accountants (had to go back and do 5-6 years of taxes), another $3,000 (I think?) to the US for the revocation process
- had to go to the Bahamas in order to get an appointment at an embassy, I never got a response from the ones here (this was the best part, nice little vacation during Canadian winter xD)
- cost more tens of thousands in Canadian tax as I couldn’t claim all of my tax deductions in Canada for the year of the sale of it would’ve pushed me over 25,000 owing on the US side and meant I’d have had to pay (there’s a program for clearing up to 25,000 owing taxes when you revoke now)
- the IRS fucked up and came back to me this year as owing so I’m continuing to pay the accountants to deal with that for me
- caused untold amounts of stress for myself and my wife
I had previously basically ignored the whole situation as it seemed entirely ridiculous that I should have to deal with this, however the US has started forcing foreign banks to ask their customers about their citizenship status. It didn’t seem smart to lie about this to my bank (who also happens to be my wife’s employer), so it seemed like I may have been ending up on the IRS radar at some point regardless.
All in all an entirely SHIT situation even though technically I probably never would’ve owed outside of your caveats about a stock sale. Had I been compliant it would’ve cost me in money and time each year.
> Has anyone personally had to pay taxes to the US while living abroad?
Yes, I'm living in Iceland at the moment and paying income taxes in the US.
Iceland has a teleworker visa that lets you live here tax-free while working remotely for your current employer. That's a fantastic deal for most countries, but I'm not saving any money while we're here. (We're not doing it to save money, just doing it to social distance and enjoy the scenery.)
Yes. Most of my tax is covered by reciprocal tax treaties between my country of residence (Canada) and the US, but I still have to file, and differences in tax regimes mean that there are decisions my family has to take that other families, in the same situation but without a US citizen, don't. For instance, if we sell our house, I will have to pay capital gains in the US, but not in Canada (it's our primary residence and gains from that sale are not taxable in Canada).
It's a minor inconvenience for me, but that's because we pay an accountant to handle a relatively complicated tax picture already.
US Tax law is far too nuanced and complex for this. Just simple things like donations create issues.
Donations to registered 501(c)(3) charities are tax exempt. But how does the IRS know if you gave the Salvation Army bell ringer $20? You have to tell them. On your tax return.
Medical expenses in excess of 7.5% of your income are also exempt. And the IRS has no clue which of your expenses were medical. So you have to tell them.
It's far more involved and complex than even just this. Did you move? Are you a member of the military? Costs related to your move are not taxable.
There are probably thousands of potential exemptions. Few of which could be automatically identified and credited without massive privacy issues. And even then couldn't be perfect.
That cardboard box you bought at the local big-box store? Was it a tax exempt moving expense?
Oh, and the IRS has been sitting on my return for 2 months now and I did all the work for them. Could only imagine what it would look like if they had to track all of this.
There are many possible deductions, however a lot of people can’t/shouldn’t use them because of the large standard deduction. The question is how many people file taxes which are basically W2 plus standard deduction? My bet is quite a lot.
It's not that hard really. You can get everything prefilled as if none of those points applied. Then you make changes which apply to you.
Various levels of deduction exist in other countries too - for example in Australia. But I get 95% of the form prefilled from employers/banks/insurance and only add what's missing.
Im Denmark that pretty much how it works. If you have complex scenarios you might need to adjust the numbers a bit, for example if you have stocks abroad or income from gigs.
Many trading platforms in Denmark do automated reporting, and some gig-economy apps do automated reporting too. But if you setup a lemonade stand, well, reporting is in you :)
The tax authorities also have pretty good phone support. It's a bit overloaded around filing season (but getting through is possible), but if come home from an internship abroad and call them, they are happy to tell you where and how to report income and taxes paid in Canada for example.
I bet it's expensive to offer phone support. But if you want people to pay taxes the best way to do it is to make it easy to do the right thing.
This advice goes pretty much everywhere, if you make it easy to do something, people will do it :)
In the UK, it is like this for the vast majority of tax payers. Certain criteria, like earning over £100k, mean you need to file a return. The government will usually send you a letter informing you that you've met the criteria too, as they know how much you earn each month.
At any time, you can log in and easily see how much the government thinks you have earned and from who, and which tax rate (tax code) is being applied to you. You can correct this as well if it is wrong.
Having lived in Australia, the US and UK, I've found the UK system to be the easiest to understand and navigate. Australia isn't too far behind. The US is just a mess.
In Australia we have something of an in-between approach. Essential tax data (e.g. total income and withheld tax) is sent directly to Government by your employer and it is pre-filled into the relevant fields of tax filing software developed and maintained by the Government.
However it is not a "one click to accept the default" system because there's still a lot of important information it does not know.
Not in Switzerland. Bank accounts and salary information are not accessible to either level of government (communal, cantonal, federal), due to strong privacy legislation and a traditional distrust for central data collection and authority.
But nevertheless the yearly filing process is rather straightforward, as the tax authorities provide their own free web app for this purpose. It hasn't always been great but it improved significantly over the last few years.
This works if your tax situation is W-2 income and investment income from mainstream investments. You start to run into issues for anything you have to report, like small business income. There are also privacy concerns. Mortgage interest is tax is tax deductible, but should the lender be obligated to tell the government it has a relationship with you? In the case of an employer, it makes more sense because the government is taking what it's owed. For deductions, it's what you're owed, so the onus can be more on the individual.
> Mortgage interest is tax is tax deductible, but should the lender be obligated to tell the government it has a relationship with you?
Yes, the govt has an interest in knowing the source of revenue for banks. Not only for money laundering and tax fraud, but ensuring the banks have stable income sources to avoid bank failures.
Mortgage interest is already reported to the IRS on Form 1098 and that form is required to be filed by the lender if you paid more than $600 in interest for the year.
The US taxpayers, thru their government, could just do a
buy out of Intuit/TurboTax for under $4 billion, and make
the software free to use as part of a transition process.
Any Intuit employees who at competent at tax preparation
could be employed by the IRS, which takes in 4-6 dollars
for every 1 dollar it costs. Win/win. Would never happen.
I trust Intuit more than the US government to provide a service like that. Have you ever used a US government web form? Who do you trust more, UPS or USPS?
Don't get me wrong, I don't support their monopoly. The only real solution is to move away from such a complex tax system and do things European style (no tax return).
I actually trust USPS a lot more than UPS. They're a fantastic service, and my opinion isn't unique. The USPS is America's most trusted federal service and 74% of people think they do an "excellent" job. [1] I agree.
In fact, USPS is ranked as a "more trusted brand" than UPS in surveys (#1 vs #8 nationwide respectively). [2]
Here in Australia (as in other countries mentioned in this thread) filing taxes on the government-provided website is super easy. Wait a few weeks to a couple of months after the start of the financial year and most of the fields will be pre-filled from employers, banks, investment accounts, and IIRC private health (if any). Just need to fill in deductions and hit Submit.
I don't see any technical reason the US government couldn't build something similar.
Planet Money/Pricenomics had a fascinating story about California's trial of a streamlined system that was incredibly well-received. However, Intuit's lobbyists teamed up with the small-government movement to sink it. https://priceonomics.com/the-stanford-professor-who-fought-t...
Readit News
But I am going to play devil's advocate here, did you get the "best deal"?
It all comes down to deductibles. In France, the "one click taxes" option assumes 10% of your salary is deductible, which is often a good deal but sometimes, it may actually be more, especially if you have a long commute. The government app won't help you with that.
It may not help you with incentives too. For example, you may get some tax rebates if you did some work to improve the energy efficiency of your house, what exactly you can declare? And charities, loans, etc... A good accountant may help you save a significant amount with all these details.
Tax software are like a middle ground between simple, no brainer, government issued "one click" tax filling and hiring a professional accountant. Note that in France, most self-employed people hire an accountant, proper tax filling can be a minefield if you are not an employee.
And by the way, that's Intuit's argument. That it is used to justify its evil deeds is a thing, but the argument itself is not without merit.
If you're doing a lot of charity donations, real estate, student loan debt, saving receipts for work related expenses, calculating depreciation on assets, etc, then its worth it, but by then you probably have a personal accountant doing it for you, not a program.
Obviously I had no idea of this scheme, I have no accountant and my university fees of 5 years ago were far from my mind.
Randomly got €6000 euros income tax back, very nice windfall courtesy of the Netherlands government.
From my experience with the NL tax system, next to nothing is deductible. Very straightforward taxes, they take 51% of all personal income. ;)
Now I am not defending turbo tax’s predatory actions in the past but it’s not complicating the tax system just taking advantage of it being complicated.
In europe we just directly regulate behaviour either by directly taxing it or making it illegal.
In the US they set tax levels much higher and then offer breaks as incentives.
The latter has the philosophical virtue of making behaviour "expensive but not illegal" (ie., in europe you cannot legally avoid the tax).
However it dramatically complicates government and makes US citizens dramatically "overtaxed" absent these breaks. What we in europe often miss is that the US anti-tax lobby is reacting to a very different tax environment that is, on paper, very extreme.
Most of the complications in tax policy are affecting a small minority of people and corporations.
So, no, the reason is that they have all the information already and for most people just need you to verify it. In the US, the tax companies are lobbying the government to keep it difficult. The subject has been covered on HN every year during tax season.
edit: so it's not that different, just a different method of doing so. Good to know.
But mostly these days, unless you run a company, you don't really have to change much about your pre-filled tax statement. Only once have I experienced that my housing association made addendums to the yearly tax report that needed to be changed in my tax statement.
I also lost some money on micro loans last year that apparently I had to file deductions for myself, but it amounted to so little money that I just let the state keep that money.
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A fairer comparison would be with the tax system of a small US state or a large city in the US.
Edit: Downvoted as it goes against the narrative, lol.
Lobbyists were supposed to be for promoting the interests of small groups that might not have the representation among a politicians constituents to warrant paying attention to. Instead we have rampant and excessive spending by corporations that lobby to keep their monopolies over segments of the market that harm American citizens.
- https://www.nbcnews.com/business/taxes/turbotax-h-r-block-sp... - https://www.propublica.org/article/filing-taxes-could-be-fre... - https://abcnews.go.com/Business/turbotax-lobbies-lawmakers-t...
However, this Turbo Tax monopoly needs to go. There should be a free (OSS) software that can file the taxes.
Having filed taxes in America and Norway, the American system is designed to make you fail and to use paid for nonsense to do something that is incredibly easy.
But why? Both have the same outcome but one is more work and costs more as well as has a greater chance of you getting it wrong and being fined in the process.
Would you also prefer supermarkets to make you calculate the total amount you owe when you get to the cashier, making sure you applied all promotions and frequent shopper deductions manually?
Like In every negotiation the advantage is on the side of the party who has the most information. The government first disclosing what they know gives you as taxpayer an advantage.
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Citation very much needed; that’s not true for anyone running a business (even a side business), for anyone with shares of stock purchased before Jan 1, 2011 or mutual funds before Jan 1, 2012, and many other not uncommon situations.
Only at the very end, did they reveal that it was in fact for the paid version, with no way to change it to the free version and also keep the work. Essentially holding my work hostage.
So I had to redo it again in the hard-to-find free version. I am now anti-TurboTax for life.
What do a private company's payflow dark patterns have to do with mass surveillance by a totalitarian state? Everything slightly dystopian isn't "real 1984 shit."
???
Hypothetical scenario - Real 1984 shit would be to get a tax bill prefilled from the government to get you to sign on a dotted line. If you want to contest it, you'll need to hire lawyers but most refuse to work with you. Average citizen is left to defend themselves which is an impossibility. Sign on the dotted line or get arrested.
Folks, we need to go towards an open source route. Not put more power in the hands of a massively incompetent government.
Switched to a different service.
I know people want privacy, but I'd sell my income and personal company finances for $500. Where is that tax company?
It's almost refreshing to see such an obvious "fuck you" move, without having it be covered by tons of PR and legalese.
If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year? Why not just send me a pre-filled 1040 that their internal algorithm calculates and ask for my approval, like those Europeans do? How is this more "prone to raise tax"?
The tax preparation industry has successfully lobbied to stop the IRS from being able to do this.
I've always found the US tax system bizarre.
They certainly could develop the ability to do your return for you, but it would be an effort.
Still, it would be a good option for those who don't want to know. I.e. have the option of doing a return which you calculate yourself (which is then corrected, based on the input values in it). Or the option of just submitting the inputs and having them do everything.
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Then again, I don't use TurboTax/etc, I do it by hand every year so it isn't a black box for me.
US citizens can still vote absentee while abroad, so no, not the same thing.
Almost nobody pays this. Moreover, it's not ridiculous that if you're a tycoon traveling the world and you're implicitly using US citizenship as your escape card, you should pay taxes.
Anyone who has lived abroad knows most countries don't want to jail/detain other country nationals.
You've got a biased view here. This is not a tycoon level of earnings. That's a standard citizen who moved abroad and works as a (senior) software engineer.
Do you have statistics to back this bold claim?
There is an additional problem in the form of FBAR/FATCA requirements, which impose a huge burden on taxpayers abroad. Ever tried to report the exact max amounts and interest in all of your accounts? It's not fun, it takes a lot of time and effort, and it costs money.
Has anyone personally had to pay taxes to the US while living abroad? Not talking about a stock sale or business sale. Talking about making income abroad and owning the US for it. I don’t want to hear about your friend of a friend, you personally.
I’ve known people living in places like Costa Rica, China, and all over Europe. No one had to pay a cent ever.
There is the direct financial cost of paying US taxes when living abroad, but it is also a significant cost in time and energy to file taxes for 2 countries. It can get pretty complex, so many need to hire a tax service to handle it properly.
Then there are the additional reporting requirements for any banks that you have accounts with, so some banks will not allow you to have an account with them because you are a US citizen.
The point is that there are some real downsides to maintaining US citizenship when living overseas.
There are many upsides of course, like being able to return to the US at any time and live and work there. If there were an emergency situation, I could probably count on the US embassy to help me evacuate if necessary.
Overall, it's a cost/benefit evaluation. If you have citizenship in another advantageous country (or country in a powerful union like the EU) and significant resources, I can see why it would be tempting for some to drop the US citizenship.
[1] https://www.irs.gov/individuals/international-taxpayers/figu...
I revoked my citizenship 2 years ago, after going through a stock sale here in Canada.
The process:
- cost me around $20,000 for the lawyer, accountants (had to go back and do 5-6 years of taxes), another $3,000 (I think?) to the US for the revocation process
- had to go to the Bahamas in order to get an appointment at an embassy, I never got a response from the ones here (this was the best part, nice little vacation during Canadian winter xD)
- cost more tens of thousands in Canadian tax as I couldn’t claim all of my tax deductions in Canada for the year of the sale of it would’ve pushed me over 25,000 owing on the US side and meant I’d have had to pay (there’s a program for clearing up to 25,000 owing taxes when you revoke now)
- the IRS fucked up and came back to me this year as owing so I’m continuing to pay the accountants to deal with that for me
- caused untold amounts of stress for myself and my wife
I had previously basically ignored the whole situation as it seemed entirely ridiculous that I should have to deal with this, however the US has started forcing foreign banks to ask their customers about their citizenship status. It didn’t seem smart to lie about this to my bank (who also happens to be my wife’s employer), so it seemed like I may have been ending up on the IRS radar at some point regardless.
All in all an entirely SHIT situation even though technically I probably never would’ve owed outside of your caveats about a stock sale. Had I been compliant it would’ve cost me in money and time each year.
Yes, I'm living in Iceland at the moment and paying income taxes in the US.
Iceland has a teleworker visa that lets you live here tax-free while working remotely for your current employer. That's a fantastic deal for most countries, but I'm not saving any money while we're here. (We're not doing it to save money, just doing it to social distance and enjoy the scenery.)
It's a minor inconvenience for me, but that's because we pay an accountant to handle a relatively complicated tax picture already.
US Tax law is far too nuanced and complex for this. Just simple things like donations create issues.
Donations to registered 501(c)(3) charities are tax exempt. But how does the IRS know if you gave the Salvation Army bell ringer $20? You have to tell them. On your tax return.
Medical expenses in excess of 7.5% of your income are also exempt. And the IRS has no clue which of your expenses were medical. So you have to tell them.
It's far more involved and complex than even just this. Did you move? Are you a member of the military? Costs related to your move are not taxable.
There are probably thousands of potential exemptions. Few of which could be automatically identified and credited without massive privacy issues. And even then couldn't be perfect.
That cardboard box you bought at the local big-box store? Was it a tax exempt moving expense?
Oh, and the IRS has been sitting on my return for 2 months now and I did all the work for them. Could only imagine what it would look like if they had to track all of this.
Don’t let the perfect be the enemy of the good.
Various levels of deduction exist in other countries too - for example in Australia. But I get 95% of the form prefilled from employers/banks/insurance and only add what's missing.
Many trading platforms in Denmark do automated reporting, and some gig-economy apps do automated reporting too. But if you setup a lemonade stand, well, reporting is in you :)
The tax authorities also have pretty good phone support. It's a bit overloaded around filing season (but getting through is possible), but if come home from an internship abroad and call them, they are happy to tell you where and how to report income and taxes paid in Canada for example.
I bet it's expensive to offer phone support. But if you want people to pay taxes the best way to do it is to make it easy to do the right thing.
This advice goes pretty much everywhere, if you make it easy to do something, people will do it :)
At any time, you can log in and easily see how much the government thinks you have earned and from who, and which tax rate (tax code) is being applied to you. You can correct this as well if it is wrong.
Having lived in Australia, the US and UK, I've found the UK system to be the easiest to understand and navigate. Australia isn't too far behind. The US is just a mess.
However it is not a "one click to accept the default" system because there's still a lot of important information it does not know.
But nevertheless the yearly filing process is rather straightforward, as the tax authorities provide their own free web app for this purpose. It hasn't always been great but it improved significantly over the last few years.
There are no deductions, for a lot of stuff you just get money directly from the government, as an incentive.
Not sure how IRS is going to know how many dependents I have living in my house or whether I've lost my hearing and am now deaf.
Yes, the govt has an interest in knowing the source of revenue for banks. Not only for money laundering and tax fraud, but ensuring the banks have stable income sources to avoid bank failures.
Any Intuit employees who at competent at tax preparation could be employed by the IRS, which takes in 4-6 dollars for every 1 dollar it costs. Win/win. Would never happen.
Don't get me wrong, I don't support their monopoly. The only real solution is to move away from such a complex tax system and do things European style (no tax return).
In fact, USPS is ranked as a "more trusted brand" than UPS in surveys (#1 vs #8 nationwide respectively). [2]
[1] https://news.gallup.com/poll/257510/postal-service-americans...
[2] https://www.marketwatch.com/story/people-trust-amazon-and-go...
US Digital Service and GSA 18f have been doing good stuff for the government for over a decade.
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