Senator Warren slams Intuit's 'junk fees' as America's Tax Day rolls around again As Americans go through their annual ceremony of tax day, Senator Elizabeth Warren (D-MA) has reminded the FTC that tax software biz Intuit is making bank on "junk fees." The FTC has been after Intuit, the operators of TurboTax, for years now, and in January finished a two-year probe and banned the tax filing system from …
Maybe a solution to this problem is to legally force any paid-for tool to display a prominent banner informing the user that what they are about to pay for can be done for free, and provide the necessary links or addresses or phone numbers to the free service.
And be very explicit about how big the banner must be and in what colours. And specify that it is displayed before the user has gone to the trouble of typing in any information. And to make sure the user has not missed anything, force the user to click either the “use free service” or the “I understand this is available for free but I want to spend money on it anyway” button
No, businesses will just have their lawyers find the best way to slither around any such rule.
The solution is to have IRS.gov provide a free service to fill out your taxes, getting all the tax prep services out of it entirely. They've got all your tax info, they could easily pre-fill a tax return for you, and just let you scrutinize it and either submit as-is, or go through and make any changes / itemizations you want/need.
The only reason the IRS didn't start providing this service a couple decades ago is the for-profit tax services lobbied against it, and they all agreed to provide free filing options for cheaper/simplel tax returns, in exchange for the IRS scuttling the plan. Since they've demonstrated their bad faith, it's back to plan A.
They are starting to do this now. "Direct File" is available this year for "12 pilot states". Hopefully this will be expanded to the rest by next year.
Some IRA free file partners are honest. https://www.olt.com/ will allow you to file Federal taxes up to any income level for free. They prompt you to spend a few dollars for greater features, but you can opt out. However, state taxes aren't free, about $10 if you file through them. Some states don't have income taxes, and others have their own websites to allow free filing, but paying OLT $10 to pre-fill your state return may be the most convenient.
Or just do what most of the rest of the developed world does and have the government manage taxes for employed people (rather than self-employed) so that they don't have to worry about it unless they want to claim certain tax rebates etc which they can do from an easy government web portal.
A better solution is to stop making individuals fill out these stupid forms just to tell the IRS and state tax boards, what they already have on file. There's absolutely no reason why the IRS couldn't just send everyone like a postcard saying, "Here's the info we have on file regarding your income. Is this correct?" If it is, you don't have to do anything, if you want to dispute something, then you have an opportunity to do so. For people who have only a single income on a W-2, which is probably like 90% or more of the population, as long as you check the box to have taxes withheld from each paycheck, you basically don't have to do anything.
All the people crying, "Won't anyone think of the CPAs!?" can rest easy in knowing that they will still have all the people with more complex income streams. People who own rental properties, or have a lot of investment income. Those people will probably still need a CPA to help them with their taxes. Life may not be quite as lucrative that way, but you also won't basically be redlining for a heart attack one or two months of the year, chewing tums like they're candy. The world will always need beancounters as long as money is a thing.
I doubt that the percentage of people who can file a simple return is 90%. What gets me, and a lot of people, is owning a home and needing to itemize deductions. Property taxes and mortgage interest being the two biggest. I hit the limit on SALT (State and Local Taxes) a couple years ago, and I live in a Red state, not a Blue state that was supposed to be the target of the limit. Then there are also charitable donations. For the first time in a very long time I filed standard deduction last year. My house is paid off and my itemized fell just under that standard deduction.
It would be nice if states would update their systems to the current century and offer online filing. My state of residence only allows electronic filing with your Federal (commercial tax prep software), or paper filing. The (non-resident) state where I earn my income, has a simple and painless online portal to file your taxes.
"The boomer generation made sure that no one else will be able to afford to buy a house."
If you want to buy a house where everybody else is buying a house, better have a big stack of cash. I would never be able to afford a house in the area where I lived when I was younger. Where I am now is not glamorous, but I bought a house and it's completely paid off. When I see the cost of living figures for big cities, I have to shake my head at all of the people that live there but are spending their whole paycheck and then some just to survive. I get it that people have a certain skill set and job in mind, but if that job requires living in a major city and not being paid the big bucks, find something else. I've done loads of different things and all of them I've enjoyed. They are also very different.
Cities need people in them, capitalism isn’t sentient, etc.
The market is not some god that we have to worship, it is not a force of nature, housing is a thing that does not even have to be subject to its whim. It can be brought to heel.
If you want to live in a world of spiralling housing costs where the market dictates that only the rich can live in certain areas, do not be shocked by the existence of homeless people, slums, ghettos, all the myriad problems of inequality and social unrest, an absence of working class labour or horrendous traffic and planning issues as everyone needs to commute for god-knows-how-many miles just to serve the hyper rich….
This “but the market says so” thought-terminating garbage needs to stop.
Houses are cheap. The cost of building a house, especially the timber-frame type popular in the US, is not really very much. The cost of building a tower block is also not that much once you divide the cost by all the apartments in it. What *is* expensive is the land, and land in cities is more expensive because there is less of it in the city than in all of the surrounding area, simple supply and demand. But what is *really* expensive about land isn't usually even the land itself, but the bit of paper that says that you're allowed to build on it. And *that's* where the boomer generation are making property expensive for everyone else - they've mostly got their own houses and many of them are NIMBYing to block new development that would reduce the value of their homes.
Local politicians obviously don't like to put in place policies that are unpopular with incumbent locals, and the simple fact is that policies friendly to getting young people on the property ladder (ie build a large number of entry-level properties) are, as a consequence, going to put downward pressure on the value of all the existing properties, thus wiping out a huge amount of equity. Of course it's stupid to think of it that way, because the value of a house to a homeowner is that they can live there. The theoretical value is moot if they're going to keep on living there. And if they do move, an across-the-board lowering of house prices mean that while they might not get as much for selling their old property, they will equally pay less for the new property.
The cost of building a house, especially the timber-frame type popular in the US, is not really very much
You're using weasel terms like "not really very much", but relative to median US household income, this simply isn't correct. Homebuilding material costs in the US have risen sharply in recent years, and lumber in particular has greatly outstripped inflation. (There was a brief dip back to pre-pandemic levels last year, but they're higher than any time between 2004 and 2018, in inflation-adjusted terms. Adjusted, lumber is more than twice as expensive today as it was in 2009.
Other materials are also more expensive.
Code requirements have pushed up the cost of construction too, requiring thicker exterior walls and more insulation in most parts of the country, and much more expensive window and door units. AFCI circuit breakers, now required for many domestic applications are around 5x more expensive than conventional ones. And so on.
Around here, home construction costs start around $350 per square foot, which means more than half a million dollars even for a 1500 square foot home, which is very modest by US standards. And with mortgage rates quite high in recent-historical terms, that would mean a monthly payment around $4000 on a 30-year fixed mortgage.
For most US families, that is really very much.
I won't contradict you in this specific case of costs at a given location & time, nor that that cost is very high for US families. I was talking about typical / historic case. And of course as a house gets older, cost of building is amortised over many years while the value of the property typically increases significantly over any timespan.
"And of course as a house gets older, cost of building is amortised over many years while the value of the property typically increases significantly over any timespan."
Values also get reset from time to time during economic downturns when somebody losses a bunch of money vs. what it cost to build the home. A bank that has to foreclose on a mortgage when an owner defaults and has no other choice but to walk away needs to sell that property to get back at least some of their loss. In the US, it's also a bad idea for banks to just sit on an unoccupied home as those will attract squatters that will wreck the home to the point where a city might require it be demolished reducing the value to a negative.
"they've mostly got their own houses and many of them are NIMBYing to block new development that would reduce the value of their homes."
I don't see a problem with that. I'd hate to see the land next to me bought up and bribes paid to the city to allow a 4-story block of flats rather than the single home/lot that it's zoned for. The blocks of flats not that far way are a source of work for the police department all of the time and it's not unusual to hear a whole lot of loud and nasty arguments coming from that direction. (The residents are on the lower end of the socioeconomic scale). Due to the nature of where the city is, there isn't much of a chance that a new block of flats is going to be built that caters to young professionals with jobs.
If you've made a substantial investment in a home and part of your decision was based on how the area around you had been zoned, changing that zoning is likely going to be for the worse and your home's value can drop quite a lot in the process which could put you underwater with respect to any loans you might have or make you re-calculate your financial plans for the future.
Most cities have a master plan for what goes where. Lots of developers love to cheat by buying up a bunch of parcels of what is classed as agricultural (least cost per hectare/acre) and then petition to have it rezoned so they can build blocks of flats or an industrial estate rather than buy more expensive land with that zoning already in place. That just throws out what was probably a well reasoned division of property uses.
"Most cities have a master plan for what goes where. Lots of developers love to cheat by buying up a bunch of parcels of what is classed as agricultural (least cost per hectare/acre) and then petition to have it rezoned so they can build blocks of flats or an industrial estate rather than buy more expensive land with that zoning already in place. That just throws out what was probably a well reasoned division of property uses."
True and the developers can also lobby/bribe heavily for that, often successfully. Another dirty trick where developments over a certain size are more tightly regulated is to split a big parcel of land and present big developments as multiple smaller adjacent ones that are apparently unrelated (eg owned by different holding companies that are ultimately all controlled by the same people). Or just building irregularly and paying a fine later to 'regularise' a development as a cost of business.
The smart way for cities to be doing it is in reverse.... identify in their zoning a place where they plan to build new affordable (and probably high-rise) housing, then re-zone that area with park / green space buffers around to minimise disturbance to other areas. If done well it would increase value of lands within the rezone without affecting the adjacent ones, combined with, for example, tax credits for sustainable redevelopment, temporary housing and/or financial help for current residents. Of course the exact details depend on the city, neighborhood, rates of home ownership, employment and poverty and a huge bunch of other things.... also keeping in mind that someone has to do the actual work and no company is going to do it without a profit incentive. The trick, as with most things in good governance, is to find the right set of incentives for the desired goal, with the understanding that whatever incentives are put in place, there's always going to be some arsehole trying to game the system.
"Let's try this for a first step. Reduce/remove any depreciation or tax breaks for single-family houses owned by corporations. Also, local surtaxes on construction of luxury homes."
That would require a whole re-write of how corporations are classified. For better or worse, they are considered the same as a person in the US. There are also instances where it's been made advantageous to form a corporation, typically a Limited Liability Corporation (LLC) to own the home while the "owner" owns the LLC. It's a way to manage taxes and reduce liability from nuisance lawsuits.
What's the definition of a "luxury" home? When will the basis for that definition be revisited? Is a large and more expensive home that an extended family occupy a luxury property when the accommodation is very middle-class, there's just more of it. A person I worked for bought a cluster of attached homes so he and his wife could have one, his son and his wife would have another, his mother-in-law had her own with his mother who needed more care had a room in one that he also used as offices and a workshop for his engineering business. Based on price or footprint, that might get classed as luxury. The way it was used was so the whole extended family could look after one another and preserve capital.
It can come down to how one would define porn, "I know it when I see it". Ok, me too. At the same time, somebody that does have a truly luxurious home is also providing employment since if they can afford the home, they aren't doing the cooking, cleaning and yard work themselves on a regular basis and there will always be places in the world were people of means can use their money to live how they would like. I don't see how it benefits a city to chase them away and instead have block after block of government subsidized low-income housing that would really need a police substation on the ground level of each so there would be better parking for the police cars that are there all the time anyway.
I cant find the exact proportion here in Sweden, but it might very well be about 90%. Including various home owners. The process this year for me (owns a condo apartment, so not totally simple).
1. Tax office send me a copy of their pre-filled simple form to my secure digital mailbox
2. I look at it: can't think of anything to add or adjust: amending the form is dead simple in most cases. If I was a financially complex person (owning a business, etc) I might need to do the full form instead.
3. A week or so later I can digitally file my taxes, accepting all their calculations: salaries, interest, etc are all reported to them, so they know better than I what the numbers are. This takes about 1-2 minutes, and I naturally get a digital receipt.
4. A few week later I get the money they owe me* directly into my bank account
* I have my employer deduct a bit more then the tables suggest, such that something exceptional would have to happen for me to need to pay extra tax. Keeps my life simple, and I can afford to push a little bit of salary in front of me.
"4. A few week later I get the money they owe me* directly into my bank account"
In the US it can be a bad idea to give the government access to your bank account. By doing so, you also give permission for them to extract funds without any process and that has lead to some issues for people. Best to calculate what it due so when you file, you are pretty close so waiting from a check in the mail or sending in a small payment isn't a big thing. If you want to push some of your salary forward, open a "Christmas savings account" at the bank. You don't make much in interest, but it's there if you desperately need it rather than being held by the government.
Surely there would be some way for property taxes and mortgage interest to be automatically reported to the IRS though?
In the UK, Council Tax and mortgage interest aren't deductible, so that's how they deal with that.
Mortgage interest used to be deductible many years ago, but that was dealt with through MIRAS (Mortgage Interest Relief At Source) and worked by reducing your mortgage bill.
Surely there would be some way for property taxes and mortgage interest to be automatically reported to the IRS though?
Banks are required to file a 1098 stating interest paid on a mortgage on a yearly basis.
Property tax, OTOH, is subject to every little taxing authority (usually counties) with varying degrees of incompetence. And the way government agencies work is they beat the dead horse for as long as they can. Then they contract with someone to write a shiny new system that may or may not be delivered, but is guaranteed to be expensive. If it does get delivered it will meet few of the contracted requirements and be overly complex, like the legacy system. Between the cost and disappointing outcomes, it will be a couple decades before anyone attempts to purchase a new system. Or maybe I'm just a little jaded when it comes to IT projects.
Mortgage insurance is deductible in an effort to make it possible for more people to own their own home.
While you're not wrong, every time I read a piece about how Americans have to pay for this or that thing which the rest of us get as part of the whole taxpayer experience in the country we inhabit, I ask myself who the government of America is set up to benefit.
I don't think its you.
I mean, technically we pay lower taxes than a lot of European countries, but that also means our infrastructure is literally falling apart, we can't educate our kids, can't get healthcare to anyone without utterly bankrupting them, and we have a resurgence of robber barons and the gilded age of the 20s. So, as I'm often fond of telling people when looking to buy electronics: You can pay now in cash or you can pay later in installments of frustration, but you will pay.
Probably obvious, but in assessing any given tax burden, you need to balance what the taxes are paying for (as you suggest). Personally, I'd rather pay for a health service through taxes than a separate health insurance scheme, and I know people who question whether we really need quite so many ICBMs, etc...
Usually the people bitching the most about "socialism" and "socialized health care" are the people who are miserly penny pinchers who bemoan having to pay even a single penny more than absolutely necessary. Yet, when you tell them that single payer healthcare would be cheaper, because you wouldn't have upteen hundred duplications of all the administrative functions and hundreds of individual companies all looking to take a cut out of the total funds as profits... first they get confused, then they get angry because they're confused, then they get angry because you used their own "virtues" against them. It's like those meme photos of the face where the eyebrows change to make it seem like the face is increasingly angry.
"A better solution is to stop making individuals fill out these stupid forms just to tell the IRS and state tax boards, what they already have on file. There's absolutely no reason why the IRS couldn't just send everyone like a postcard saying, "Here's the info we have on file regarding your income. Is this correct?" "
There's still loads of carp that has to be put in especially as they want to place tiny lower limits on selling stuff on places such as eBay. Currently, you don't have to do all of the accounting for that if you are under $20k in sales and so many transactions, but they'd like to reduce it to $600 which means everybody is going to have to file a Schedule C (business p/l) so they can deduct for expenses, cost of goods sold and so forth. Yes, the IRS knows what is submitted via W-2 wage reports and 1099 income statements, but not much else. They have no idea what your deductible expenses are which is obvious when they completely miss how bad inflation is getting.
I think part of the problem is that the IRS and states would be liable for their software being broken, inaccurate or just down right confusing. BTW, they will hold you responsible for fines and penalties if they give you bad advice or incorrect instructions so you are better off talking with an accountant that has a guarantee.
I file on paper, Forkum. I used to get TurboTax since it was very handy and worth the coin to have it walk me through the process. When they went to strictly online, Yeah-no. I'm not disclosing my personal financial matters to Intuit to put in the "cloud". The IRS is bad enough at securing information.
If an eBay seller in China sells something to someone in the UK, eBay is required to deduct the tax from the sale proceeds and pay it over to HMRC. The same happens in the EU, this is an EU directive that the UK decided to implement 1 hour after leaving the EU, and 6 months before the EU implemented it.
Why couldn’t the US do something similar?
The reason they do that is because they can't get any tax from the wealthy people so they go after the little people. Bezos paid no personal tax in 2007 and 2011. Musk paid none in 2018. Many billionaires in the US pay no personal tax and the money's got to come from somewhere. Much easier to go after people who can't afford to fight back or pay millions to lobby politicians to reduce their tax bill.
Not wanting to canonize the guy or anything, but major kudos to Mark Cuban who literally (in the correct sense) boasted that he just paid $275,900,000.
And wrote:
"I was wrong with my number yesterday. Got the final number and the wire is complete. Wanted to be accurate.
Do I expect all of it to be used wisely. Of course not.
But I'm still proud to be able to give back to our country.
I've said it for years. After military service, paying your taxes is the most patriotic thing we can do."
Which was nice.
First, the IRS had to get around the problem of "not being allowed to provide tax filing software directly" which was a problem in the US for many years. Thanks to Intuit and other tax software providers lobbying against it because "freedom, liberty, market share, etc." it took much longer than it should.
In the very early days of doing taxes with computer assistance, you could find people who had used spreadsheet software to create their own "auto-calculating" tax returns, and provided them in various places for other people to use with the understanding that "hey, the calculations might be wrong, just my best effort, etc.". IRS would even accept, (and still might) electronic filing of a spreadsheet-based return, once the spreadsheet people worked out the proper format. (E-filing was mostly sending the form type, followed by line number/amount pairs)
Intuit got itself (and the rest of the "industry") in trouble by using the "Free Filing" system as a marketing tool to sell people software they didn't actually need to be paying for. It's a whole rabbit hole to go down, working out exactly why it's taken this long for the US to catch up with the rest of the modern world in tax filing.
For reference, the "solution" in the UK is two-fold.
The vast majority do nothing at all. Tax is deducted through Pay-As-You-Earn by your employer, who has no idea of any special circumstances that might apply to you but no-one (including the Inland Revenue) gives a shit as long as the bottom line is close enough.
Secondly, if your case is more complicated or you are a masochist, then you can fill out a tax return on the Inland Revenue's website. Again, as far as I am aware, no human being actually checks the numbers in most cases because most folks are honest and the amount paid is probably close enough for government work.
I assume that checks are made in a randomly selected number of cases, and in cases where the numbers are well outside 1-sigma of the population average. But basically ... most people do nothing and most of the rest use the government website and almost certainly no-one in the UK pays the right amount of tax. Still, the system seems to work well enough that no-one wants to spend more time or money on a new one.
Intuit is a predatory company, and I am not going to defend them per se. But EVERY tax return can be filed for free if you want to fill out and file the forms yourself, and $133 is much less than what a CPA would charge if they prepared the return. Someone has to pay for the knowledge and training that a tax preparer has if they want to use that preparer to file their taxes, and Warren complaining that companies charge for the service is a non-starter.
Charging after the fact while claiming to be free is a different issue, and some C-level execs seeing the inside of a prison cell for fraud is a reasonable expectation.
However the government created the US tax code, so it is the responsibility of the government to fix it so that there is no need for private enterprise to step in and fill the void. It is legislators like Elizabeth Warren who are the ones responsible for overseeing that. Intuit can charge because Warren and her ilk haven't done THEIR job, and then are blaming free enterprise for filling the void that they left. If legislators would do their job instead of passing the blame this would be a non-issue.
Something like 90% of people have trivial taxes and do not need any assistance whatsoever to file. They've got one or two salaried or hourly jobs, and that's it.
In most of the world they wouldn't file a tax return at all!
- In the UK for example, if you have one or two jobs HMRC work it all out each year and tell your employer how much tax to take out of your salary. At the end of the tax year they adjust so small discrepancies even out.
In the UK around 75% of workers do not fill out a tax return at all. Maybe 10% pay a tax accountant to prepare their return, generally because that accountant pays for themselves by knowing legal ways to reduce tax due.
The trouble in the US is that some companies are charging quite a lot of money for utterly trivial work.
I'm one of the 25% in the UK filling out a tax return, takes me about an hour, half of which is tracking back to find the dividend payments for the relevant tax year (which are still low enough to not pay tax on, but I figure it's safer to declare rather than get pulled up in an audit...). I spent many years not having to fill one in, but I had to do it while contracting (needed to sort out the pension deductions which weren't taken off at source) and latterly due to child benefit clawback. Easily done via the tax portal and it does most of the work in terms of calculating tax due and fixing my tax code.
I'd agree an accountant is often worth it, since they'll pay back their fee in tax savings; even for a simple sole trader, get an accountant for a year or two to figure out the right tax breaks before going it alone.
US is "special" because companies bribed (sorry, "lobbied"...) the government to let them fleece the populace in the name of "freedom".
Same here - contractor with mix of dividends, CG and salary. The HMRC portal is great and improving in my experience. The other thing in the UK is that even if you have more complicated personal income there's usually help. I had a managed investment fund for a few years with capital gains, dividends and interest from all over the world. Every July the fund manager sent me a note telling me which sections I needed to include in my tax return and the values to enter in each of the numbered boxes plus her calculation of tax due to compare with HMRC as a croos-check for finger trouble on my part. I'd have needed an accountant otherwise.
The main problem with the US (and the UK) system isn't the problems filling in the tax form, it's that the tax code is so complex in the first place.
> EVERY tax return can be filed for free
Yes, I remember nights at the kitchen table with ball-point pen and calculator. It wasn't that much harder than $130 software. But you had to buy a ($0.17) stamp, and wait another week for postal delay. And today my hand would cramp writing into those boxes. (BUT we now have two working typewriters in the house! And I suppose there are fillable-PDF 1040s.)
I still begrudge TurboTax for the 2003 C-Dilla root-kit. It spoiled my design software for no apparent reason, and I did not know it was TurdTax for a couple years. Arrgh, still so mad.
A year ago I swore-off HRBlock for constant stupid aggravations. I only used it that last year because complex real-estate losses.
Tried TaxAct. Not impressed. Have a feeling I under-paid and IRS will come back at me. Their Maine state return was very incomplete.
Next year, FreeTaxUSA??
> Intuit is a predatory company, and I am not going to defend them per se.
As for "requiring" tax software to not be fraudulent: the people who could legislate that (no, not us people) are, like Warren, unskilled workers who depend on the kindness of large political donors. Elizabeth will NOT bite the hand that feeds her and hundreds of colleagues. She's just nipping at the industry so they will throw a bone.
The Turbotax Trap TurboTax’s 20-Year Fight to Stop Americans From Filing Their Taxes for Free
I used to file paper returns too, and before that used to help my father do our family's return. But mine got too complicated to make that a good use of my time. My return this year was just under 100 pages, including the state returns.
I had some complex investment activities to report due to a corporate acquisition. And those are all from employee stock programs of one sort or another — I don't play the market myself. And some complex deductions due to mortgage activity. Some of that stuff is quite difficult to figure out, even when you read through the IRS instructions and guides.
I want to use local tax-prep software, not anything online, because I want to be sure I can work on my taxes even if there's a network failure, and be able to open old returns if I need to. (Yes, I have them as PDFs and paper too. I'm just paranoid about it.) And I have little faith in the security of any of the online tax-prep vendors. And as much as I hate TurboTax and Intuit, I've been using TT for decades and it generally works fairly well. So even if there are other offline options (I haven't looked recently), I'm leery of switching.
Like ... what, exactly?
I mean, I'm all for CPAs. Important job. But I don't believe one would make my tax filing any better for me in any measurable way.
I certainly don't believe a CPA would save me any money. If there are deductions I'm "missing", that's a good sign that I'd feel taking them would be unethical anyway.
How are people spending "on average of nine hours, and $150" to file their taxes? Desktop Turbotax and H&R Taxcut retail for less than $40 and will cover most situations. Is this a problem where the average and the median values differ greatly and this average includes rich people paying CPAs a thousand or two? Or are people somehow actually paying Intuit $150?
I do my taxes (federal plus two states) and file them using the H&R Block tax software (desktop, windows), the software was about $36, includes federal and one state, federal is free efiling, New York is free efiling. Purchasing the second state and efiling that one is not free. Even so, it is under $100 for my situation.
Even if filing out the paper forms and mailing them in, like I used to do, I would pay for the certified mail with receipt option, which was not cheap across 3 big envelopes. Ah, the good ol' days when the post office was open to midnight on the 15th and the lines were long.....
That said, the IRS could, for many taxpayers, calculate their tax return based on the W-2 and 1099 information it gets and the tax code is needlessly complex, partially at the behest of special interests such as various financial companies such as Intuit.
are people somehow actually paying Intuit $150?
If you file your taxes in person at H&R Block, I don't think you can get out the door without paying at least $150.
https://www.hrblock.com/tax-offices/upfront-pricing/
https://www.mightytaxes.com/hr-block-pricing/
I expect most people don't enjoy or don't trust themselves to "enter the number from line 14a. on line 27 if it is greater than than the number on line 8" for a couple hours of their life, and instead prefer to let someone else trudge through it.
Actually the usual version of TurboTax I have to buy (because I sold stock from my ESPP) is now $65.
I spent 30 minutes trying to buy & download TurboTax, to save myself a trip to physically buy it.
It was a maze of twisty little links, all alike, and I wasn't able to do it. It was the CLOUD CLOUD CLOUD CLOUD! that we're all familiar with here.
This was back in February, and I notice they now have a footer with a "Desktop Products" section that wasn't there before.
TurboTax is constantly trying to upsell you. Couldn't pay me to use their web site. I just went to Amazon and bought it there.
I buy just the Federal and electronically file. Then I can file one state via the state's online portal, and paper file the final state. Which of course requires a trip to the post office for mailing because there are 15-25 pages you have to print and mail. Depending on whether you itemize.
I direct you to <https://www.irs.gov/e-file-providers/free-file-fillable-forms> which I have used for the past several years. It has limits but does everything I need since I am comfortable reading the instructions and filling out the PDF forms. It will copy relevant information between forms, and perform most of the arithmetic if you choose. If you have 1099s you need to transcribe info from your copies to a facsimile to submit. You can save and or print copies of the return, then submit and pay electronically. Don't wait until the last minute; it can take hours for the IRS to acknowledge receipt of your submission, and if it doesn't pass some elementary sanity checks the return will be rejected until you fix those mistakes.
Quite why the USA has such a byzantine tax system is beyond me.
Here in Sweden, the tax authority sends people their pre-filled tax declaration form a month before the deadline for filing. If I agree with the figures on the pre-printed form (which already includes income, tax paid, and deductions for interest paid on loans, etc), I just send a text message to the tax authority and my tax declaration is done. It takes me about 1 minute each year and costs no more than sending the text message.
The USA tax code *itself* is an order of magnitude (or two) more complicated than the so-called "socialist" nation-states of Europe. If you have ANY kind of deduction, tax credit [1], non W-2 income [2], etc. then the IRS needs YOU to tell THEM exactly what and how much.
I wouldn't mind stuffing paper forms into the typewriter -- after working it all out in Excel or with a lined-paper pad and calculator, then paying extra for USPS Priority Mail with a tracking number -- but I have indeed leveraged paid software before to help me walk through WHICH forms I needed. In subsequent years, free software is fine [3] since I can follow simple instructions, as long as my situation doesn't drastically change. I especially like how software automatically chooses "standard" versus "itemized" deductions [4], and can show much exactly how much more I'm getting versus the other route.
[1] Credits may be refundable like tax payments, or non-refundable. You can get a tax credit just for having kids -- the Child Tax Credit, which requires an entire worksheet of its own to roll-off the credit for higher incomes.
[2] I don't even trust the IRS with 1099 forms, since some need to be "paired" with Schedule C -- working freelance for yourself is technically a self-owned business. Some people I know even file "doing business as" (d/b/a) forms with their state/county, get a separate Taxpayer Identification Number (TIN) from the IRS, and use that on the Schedule C so the IRS has a clearer delineation between personal and "business" income.
[3] I use Cash App Taxes (free federal AND state) and have since they were Credit Karma Tax. I didn't switch their very first year, so they could work out the bugs, but have been since. It's not a great solution if you don't know which forms, but fine if you're experienced, and you get the benefit of e-file. (Credit Karma got bought by our "friend" Intuit and had to spin off the tax service because conflict with TurboStax -- stacks of revenue for them, that is.)
[4] Itemized deductions WAS the winner, between mortgage interest, charitable giving, real estate tax, state income tax, even our annual value-based car registration fees, but thanks to the state/local tax limit imposed by some Congressional bozos and their clown-leader #45, I've gone standard the last few years. Who gets hit the hardest by such legal antics? Middle-class schmucks like me.
"US folks are still being misled and needlessly charged"
That actually refers to the IRS, not the tax preparation business. The IRS will mislead people and over charge them. The government cannot be trusted.
Do you think the 30,000 IRS employees hired under Biden are going to sit around or do you think they are going to find a way to validate their jobs? https://www.govexec.com/workforce/2023/04/irs-hire-30000-employees-over-next-two-years/384897/
Seriously. This is why people pay to have their taxes done. When the IRS throws them a past-due fine two years later, their tax preparer will help them sort it out. I've had that happen several times, and after my tax prep person explained it to they IRS, they realized their mistake and dropped the claim. Just one of those 'fines' would have paid for a decade of tax prep service.
I pay for a tax prep service not to fill in the numbers. I pay so I have insurance when the IRS tries to come after me for a false claim.
"Just one of those 'fines' would have paid for a decade of tax prep service."
It's often the case where a good paid preparation service will know the tax code better than the drone working for the IRS. When I had a manufacturing company, I could have used the payroll section of my accounting program to calculate withholding and cut checks, but just one mistake, one tax submission a day late would pay for two years of having a proper payroll company do it for me with an accuracy guarantee. Even if there were something that I owed for, the legal and accounting representation that I'd get would be worth it. In 17 years, I never had an issues or audits. The state learned that they get their backside handed to them with that payroll company. Even if the state wound up winning one, it wouldn't be worth being made to look like fools for not knowing their own regulations nearly as well the rest of the time.
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