Today was -- not is -- the deadline for filing 2019 personal federal income taxes in the USA. April 15 is the usual deadline unless it falls on a Saturday, Sunday, or holiday. The Coronavirus Aid, Relief and Economic Security Act (CARES Act) changed the deadline to July 15, 2020. The deadline to make contributions to IRAs and HSAs for 2019 was also extended to July 15. Link.
Among other things, the CARES Act eliminated required minimum distributions (RMDs) for taxpayers who were subject to them in 2020. The age at which RMDs begin to apply was 70.5. This was changed to age 72 in December, 2019.
THE HILL reports that participation in the IRS Free File program is up this year. "The IRS has received about 1.53 million tax returns through the program as of Feb 28. That's a 22.4 percent increase from the roughly 1.25 million Free File returns received last year as of March 1, 2019, according to interim data in a report released Monday by the Treasury Inspector General for Tax Administration (TIGTA)."
Participation was higher this year probably in part because the program received lots of news coverage during the last several months, especially by ProPublica's sustained smear campaign of Intuit and its TurboTax. Maybe the coronavirus keeping more people at home with more time on their hands and less money will also boost the number. TIGTA said that about 34.5 million filers were eligible to use the Free File Program last year but didn't. It also said about 2.5 million did use the Free File Program. If the final count of users this year is 25% more, that will be about 3.1 million, still less than 10% of those eligible. I won't even guess how many of the other 90% use computers nil or little.
Showing posts with label income tax. Show all posts
Showing posts with label income tax. Show all posts
Wednesday, April 15, 2020
Monday, March 9, 2020
ITEP smears TurboTax
ITEP smears Intuit and TurboTax. Author Jenice Robinson's blog-post has some half-truths and distortions.
Her title says the IRS "Should Administer Free File Program." Uh, it already does! TurboTax and other software are part of it, but the IRS has the most control. One might say the IRS's handling of Free File is lax (ProPublica did), but Robinson's blog-post casts no blame on the IRS.
Relying on ProPublica's reporting about an audit of Free File, she writes: "For tax year 2018, TurboTax and other companies funneled 14 million taxpayers who were eligible to file their taxes for free to paid services and reaped at least $1 billion in profits from the practice."
The TIGTA audit actually says: "Based on these results, TIGTA estimates that more than 14 million taxpayers met the Free File Program criteria and may have paid a fee to e-file their Federal tax return in the 2019 Filing Season" [my bold]. Robinson's assertion -- they did pay -- is clearly false. The audit does not say how many of the 14 million did pay; it only says they were eligible to file free. Robinson magically turns "may have" into $1 billion of real money!
She writes: "The truth is, if the government provided free tax filing, it would cut into the profits TurboTax makes from people trying to follow the law and pay their taxes."
A larger truth is the government does provide free tax filing -- via the Free File program, Free Fillable Forms, and VITA/TCE with many, many places staffed by volunteers all over the USA. Also, there is paper filing! What ProPublica and ITEP apparently fail to understand is that many people much fear the IRS, and they are willing to pay somebody else a few dollars to lessen that fear. Many also lack the confidence to go it alone and are willing to pay due to that.
She writes: "TurboTax has repeatedly proven that it exists to maximize profits for shareholders, not provide free tax-filing services for lower-income families."
Nonsense. TurboTax is a product; Intuit is the company. It's stunning how she sweeps Intuit paying its employees, suppliers, and lenders under the rug. No business exists primarily to provide free stuff. Why does she believe Intuit should do so? Does ITEP exist without donations and a huge tax break? ITEP's Form 990 shows that Robinson doesn't work for ITEP for free.
Robinson gives a link to a Washington Post op-ed -- Elizabeth Warren wants to make it simpler to file taxes. Good for her. Much of Warren's proposed legislation is about corporate, not personal, income tax. Anyway, it does include: "If Warren gets her way, the IRS would be required to offer an online service at no cost, one that would permit filers to do their taxes without the involvement of outside tax prep businesses." Sorry, WP opinion writer, the IRS already does that -- it's called Free Fillable Forms.
The Washington Post op-ed also says: "That an entire industry can make millions by complicating a civic duty is infuriating." Sorry, WP opinion writer, Congress and the IRS made it complicated, not TurboTax, H&R Block, etc.
She writes: "TurboTax has repeatedly proven that it exists to maximize profits for shareholders, not provide free tax-filing services for lower-income families."
Nonsense. TurboTax is a product; Intuit is the company. It's stunning how she sweeps Intuit paying its employees, suppliers, and lenders under the rug. No business exists primarily to provide free stuff. Why does she believe Intuit should do so? Does ITEP exist without donations and a huge tax break? ITEP's Form 990 shows that Robinson doesn't work for ITEP for free.
Robinson gives a link to a Washington Post op-ed -- Elizabeth Warren wants to make it simpler to file taxes. Good for her. Much of Warren's proposed legislation is about corporate, not personal, income tax. Anyway, it does include: "If Warren gets her way, the IRS would be required to offer an online service at no cost, one that would permit filers to do their taxes without the involvement of outside tax prep businesses." Sorry, WP opinion writer, the IRS already does that -- it's called Free Fillable Forms.
The Washington Post op-ed also says: "That an entire industry can make millions by complicating a civic duty is infuriating." Sorry, WP opinion writer, Congress and the IRS made it complicated, not TurboTax, H&R Block, etc.
Wednesday, February 19, 2020
ProPublica never satisfied
The IRS and providers of free software for filing income taxes recently signed a new agreement that is hoped will increase usage of said free software on the IRS's Free File website. I wrote about it here February 9.
ProPublica is still not satisfied and continues its smear campaign against Intuit, maker of TurboTax, with this article. As usual it has plenty of deception, half-truth, and use of double standards. As usual the IRS or non-savvy people hoping to file for free bear no responsibility for what ProPublica feels is unjust. All blame goes to the software providers, especially Intuit and TurboTax.
Before saying more about the article and to clarify, there are two free versions of TurboTax. The "Free File" version is the one accessed via the IRS's Free File website, which also hosts several competitor products. The "Free Edition" version is not part of the IRS's Free File program. If somebody tries the former and discovers they fail to qualify, they will not be offered a pay version of TurboTax. They will be directed back to the IRS Free File website to start all over again with a different product. If somebody tries the latter and discovers they fail to qualify, they will be offered a pay version of TurboTax capable of handling their situation.
The following are some assertions in the article and my comments about them.
1. "Intuit does not advertise its Free File offering on Google."
Why does ProPublica feel Intuit should pay to advertise something that will produce no revenues for Intuit? The IRS gets the tax revenue, so why shouldn't the IRS pay for all advertising of the Free File program? Why does ProPublica believe Intuit should pay to advertise a website that hosts several products that compete with TurboTax? Furnishing the software costs Intuit time and money, and some people get to use it for free. Why is ProPublica so ungrateful and mean-spirited?
2. "Google searches for 'free tax filing' and other similar phrases still yield ads for a plethora of products such as TurboTax’s 'Free Edition'. ... TurboTax’s version of Free File — the one that doesn’t charge customers anything — typically won’t appear until the second page of search results.”
The Free Edition doesn't charge customers either. Anway, so what? If a person searches for "free tax filing," shouldn't he or she be informed that TurboTax’s Free Edition exists? Or is ProPublica out to prohibit Intuit from advertising? When is ProPublica going to try to prohibit the IRS from advertising its Free File program?
3. "Intuit places its ads strategically in searches for “IRS” and “free file,” among thousands of related search terms."
This baffles me. What is the author's point? Anyway, I did that search. The first non-ad search result was www.irs.gov › filing › free-file-do-your-federal-taxes-for-free. So Intuit is not making it difficult to find the IRS Free File website. The first non-ad search result shown in the screenshot in ProPublica's article is to https://apps.irs.gov/app/freeFile/. So again Intuit is not making it difficult to find the IRS Free File website. Where's the beef?
Additional comments
Nowhere in this article does ProPublica tell readers how to find the IRS's Free File website, which is where you will go if you click on the link in that first non-ad search result.
Again ProPublica doesn't complain about a person not passing the criteria to use the Free File version and later finding "a dead-end street" after wasting a lot of time entering data. However, ProPublica loudly protests somebody not passing the criteria to use the Free Edition version and not "finding a dead-end street" since they can switch to a pay version.
Using the IRS's Free File link, the second option says "Income above $69,000" & "Free File Fillable Forms." Is a person required to have income above $69,000 in order to use said forms? No, but ProPublica hasn't accused the IRS of false advertising.
Addenda 2/23/2020
Justin Elliot has led ProPublica's smear campaign against Intuit, maker of TurboTax. He got this article published by HuffPost. The title, 'Congress Is About To Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.' is both misleading and false. The IRS already offers 11 ways to file free online now, and Congress isn't trying to eliminate them. There are 10 software options in the Free File program. The 11th is the IRS's own Free File Fillable Forms. As said above, a person is not required to have income above $69,000 in order to use said forms.
Again Elliot fails to mention VITA,TCE, and AARP, which prepare millions of tax returns for free and online.
ProPublica is still not satisfied and continues its smear campaign against Intuit, maker of TurboTax, with this article. As usual it has plenty of deception, half-truth, and use of double standards. As usual the IRS or non-savvy people hoping to file for free bear no responsibility for what ProPublica feels is unjust. All blame goes to the software providers, especially Intuit and TurboTax.
Before saying more about the article and to clarify, there are two free versions of TurboTax. The "Free File" version is the one accessed via the IRS's Free File website, which also hosts several competitor products. The "Free Edition" version is not part of the IRS's Free File program. If somebody tries the former and discovers they fail to qualify, they will not be offered a pay version of TurboTax. They will be directed back to the IRS Free File website to start all over again with a different product. If somebody tries the latter and discovers they fail to qualify, they will be offered a pay version of TurboTax capable of handling their situation.
The following are some assertions in the article and my comments about them.
1. "Intuit does not advertise its Free File offering on Google."
Why does ProPublica feel Intuit should pay to advertise something that will produce no revenues for Intuit? The IRS gets the tax revenue, so why shouldn't the IRS pay for all advertising of the Free File program? Why does ProPublica believe Intuit should pay to advertise a website that hosts several products that compete with TurboTax? Furnishing the software costs Intuit time and money, and some people get to use it for free. Why is ProPublica so ungrateful and mean-spirited?
2. "Google searches for 'free tax filing' and other similar phrases still yield ads for a plethora of products such as TurboTax’s 'Free Edition'. ... TurboTax’s version of Free File — the one that doesn’t charge customers anything — typically won’t appear until the second page of search results.”
The Free Edition doesn't charge customers either. Anway, so what? If a person searches for "free tax filing," shouldn't he or she be informed that TurboTax’s Free Edition exists? Or is ProPublica out to prohibit Intuit from advertising? When is ProPublica going to try to prohibit the IRS from advertising its Free File program?
3. "Intuit places its ads strategically in searches for “IRS” and “free file,” among thousands of related search terms."
This baffles me. What is the author's point? Anyway, I did that search. The first non-ad search result was www.irs.gov › filing › free-file-do-your-federal-taxes-for-free. So Intuit is not making it difficult to find the IRS Free File website. The first non-ad search result shown in the screenshot in ProPublica's article is to https://apps.irs.gov/app/freeFile/. So again Intuit is not making it difficult to find the IRS Free File website. Where's the beef?
Additional comments
Nowhere in this article does ProPublica tell readers how to find the IRS's Free File website, which is where you will go if you click on the link in that first non-ad search result.
Again ProPublica doesn't complain about a person not passing the criteria to use the Free File version and later finding "a dead-end street" after wasting a lot of time entering data. However, ProPublica loudly protests somebody not passing the criteria to use the Free Edition version and not "finding a dead-end street" since they can switch to a pay version.
Using the IRS's Free File link, the second option says "Income above $69,000" & "Free File Fillable Forms." Is a person required to have income above $69,000 in order to use said forms? No, but ProPublica hasn't accused the IRS of false advertising.
Addenda 2/23/2020
Justin Elliot has led ProPublica's smear campaign against Intuit, maker of TurboTax. He got this article published by HuffPost. The title, 'Congress Is About To Ban the Government From Offering Free Online Tax Filing. Thank TurboTax.' is both misleading and false. The IRS already offers 11 ways to file free online now, and Congress isn't trying to eliminate them. There are 10 software options in the Free File program. The 11th is the IRS's own Free File Fillable Forms. As said above, a person is not required to have income above $69,000 in order to use said forms.
Again Elliot fails to mention VITA,TCE, and AARP, which prepare millions of tax returns for free and online.
Sunday, February 9, 2020
Free File, Gov't Audit, ProPublica
The Treasury Department's Inspector General for Tax Administration conducted an audit of Free File program. IRS management did not, but could comment on the audit and did. Here is the audit report. Following is a summary.
To participate in the Free File program, taxpayers must access the IRS.gov Free File web page and choose a software application there, which directs them to a provider's (member's) website, e.g. TurboTax. Many taxpayers are unaware of this requirement (They believe wrongly they can go directly to the provider's website.) Once on the provider's website, taxpayers are not guaranteed a free return filing. On the Free File site, the taxpayer faces a myriad of criteria for being able to utilize the various software applications. Even if the taxpayer decides that he or she meets the criteria initially, upon entering his or her return information, the taxpayer could then be informed that the return no longer qualifies for free filing.
The modified agreement between members and the IRS requires the member to direct the taxpayer back to the IRS.gov Free File web page, where the taxpayer must restart the process to select a Free File offer. However, at this point the taxpayer has spent significant time on attempting to file, and thus may prefer to pay a fee rather than restart the time-consuming process. The auditor suspects this is why providers do not disclose all of their criteria on the IRS.gov Free File web page.
The auditor made 8 recommendations. The first 3 follow.
1. Better advertising of the Free File program and how to use it.
2. Require providers to fully disclose all criteria on the IRS.gov Free File web page.
3. Establish goals and performance metrics for the Free File program.
Regarding #2, IRS management said it had seen no evidence of any additional criteria being used to charge taxpayers!
How did ProPublica respond here?
1. They used the "scathing" audit as a chance to repeat their attacks on providers such as TurboTax and H&R Block.
2. They described the recommendations of the auditors.
3. They excused the IRS due to budget cuts
What's missing from their response? They said nothing at all about the scenario described above where the taxpayer attempts to use one of the Free File software application but fails. Like I wrote here, ProPublica invokes a double standard -- one for providers and a different one for the IRS! In ProPublica's view, all blame for the incomplete criteria on the Free File web site goes to the providers and none to the IRS, despite the site being owned by the IRS. I don't agree with the auditor's suspicion stated above. Hypothetically, if the criteria were complete, it would be more complicated, and even more taxpayers would be thwarted from using it. And who would ProPublica then blame for that? The providers 100% and the IRS 0%, of course.
Yahoo News, CBS News, and Daily Beast parroted and spread ProPublica's story.
In my personal experience as a volunteer, most taxpayers who come to us want help. Many want somebody else to do the work for them. Dealing with the software themselves alone is unpleasant. VITA and similar sites offer the most help in person. Software vendors' paid products offer far more help than IRS.gov Free File.
To participate in the Free File program, taxpayers must access the IRS.gov Free File web page and choose a software application there, which directs them to a provider's (member's) website, e.g. TurboTax. Many taxpayers are unaware of this requirement (They believe wrongly they can go directly to the provider's website.) Once on the provider's website, taxpayers are not guaranteed a free return filing. On the Free File site, the taxpayer faces a myriad of criteria for being able to utilize the various software applications. Even if the taxpayer decides that he or she meets the criteria initially, upon entering his or her return information, the taxpayer could then be informed that the return no longer qualifies for free filing.
The modified agreement between members and the IRS requires the member to direct the taxpayer back to the IRS.gov Free File web page, where the taxpayer must restart the process to select a Free File offer. However, at this point the taxpayer has spent significant time on attempting to file, and thus may prefer to pay a fee rather than restart the time-consuming process. The auditor suspects this is why providers do not disclose all of their criteria on the IRS.gov Free File web page.
The auditor made 8 recommendations. The first 3 follow.
1. Better advertising of the Free File program and how to use it.
2. Require providers to fully disclose all criteria on the IRS.gov Free File web page.
3. Establish goals and performance metrics for the Free File program.
Regarding #2, IRS management said it had seen no evidence of any additional criteria being used to charge taxpayers!
How did ProPublica respond here?
1. They used the "scathing" audit as a chance to repeat their attacks on providers such as TurboTax and H&R Block.
2. They described the recommendations of the auditors.
3. They excused the IRS due to budget cuts
What's missing from their response? They said nothing at all about the scenario described above where the taxpayer attempts to use one of the Free File software application but fails. Like I wrote here, ProPublica invokes a double standard -- one for providers and a different one for the IRS! In ProPublica's view, all blame for the incomplete criteria on the Free File web site goes to the providers and none to the IRS, despite the site being owned by the IRS. I don't agree with the auditor's suspicion stated above. Hypothetically, if the criteria were complete, it would be more complicated, and even more taxpayers would be thwarted from using it. And who would ProPublica then blame for that? The providers 100% and the IRS 0%, of course.
Yahoo News, CBS News, and Daily Beast parroted and spread ProPublica's story.
In my personal experience as a volunteer, most taxpayers who come to us want help. Many want somebody else to do the work for them. Dealing with the software themselves alone is unpleasant. VITA and similar sites offer the most help in person. Software vendors' paid products offer far more help than IRS.gov Free File.
Saturday, January 11, 2020
ProPublica is finally helpful
Only four days ago I summarized ProPublica's past efforts to smear income tax software vendor Intuit, maker of TurboTax. This was done without trying to inform readers about how to file for free. ProPublica has done the latter here, finally!
Kudos to them. Regardless, their article missed three ways.
1. There is no mention of AARP Tax Aide. This service's target clients are low- and moderate-income taxpayers and, of course, those who are retired. The criteria they use to decide who they can file for and who they can't aren't as simple as the other free services. It's based on specific IRS Forms, sometimes specific sections or lines on such Forms, and the filer's specific data. The service is in person. Trained volunteers at the sites file online for you. You need to call to make an appointment.
2. There is no mention of the IRS's Free File Fillable Forms. I can only give a "signpost" to the Forms now since the IRS is not allowing filing yet. Regardless, the signpost page gives some info about the capabilities and limitations. The programs in the Free File Program (or Alliance) guide the user's input and complete the tax forms in background, but this one does not. Generally speaking, you need to know what IRS Forms you need and have the ability to do the job almost like using the IRS's paper Forms directly. Like the signpost page says, it won't help you file a state return.
3. There is no mention of CreditKarma. It is not part of the Free File Alliance, but it is as easy to use as the programs on the Free File Alliance and without their limitations.
Kudos to them. Regardless, their article missed three ways.
1. There is no mention of AARP Tax Aide. This service's target clients are low- and moderate-income taxpayers and, of course, those who are retired. The criteria they use to decide who they can file for and who they can't aren't as simple as the other free services. It's based on specific IRS Forms, sometimes specific sections or lines on such Forms, and the filer's specific data. The service is in person. Trained volunteers at the sites file online for you. You need to call to make an appointment.
2. There is no mention of the IRS's Free File Fillable Forms. I can only give a "signpost" to the Forms now since the IRS is not allowing filing yet. Regardless, the signpost page gives some info about the capabilities and limitations. The programs in the Free File Program (or Alliance) guide the user's input and complete the tax forms in background, but this one does not. Generally speaking, you need to know what IRS Forms you need and have the ability to do the job almost like using the IRS's paper Forms directly. Like the signpost page says, it won't help you file a state return.
3. There is no mention of CreditKarma. It is not part of the Free File Alliance, but it is as easy to use as the programs on the Free File Alliance and without their limitations.
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