Excellent. Even if Direct File doesn’t yet handle my complicated tax needs, I am grateful for its existence and trajectory as it will eventually put downward price pressure on the commercial tax prep societal leeches like TurboTax and Block. Keep up the progress!
Looking forward to being able to file my non-resident return.
Here in NZ about 40 years ago we greatly simplified our tax system, most people don't have to file a return, if you have a single job chances are your employer will pay exactly the right amount of tax - if they got it wrong our IRD will either ask you for some more or send you a refund (with interest). If you want you can file online, it's a ~3 page web form (all your employer data, like W2s, are available on line).
>Here in NZ about 40 years ago we greatly simplified our tax system
Here in the U.S. over the same period we greatly complicated our tax system. Special interests, tax breaks for the wealthy, welfare payments issued as refundable credits, etc.
New Zealand has a population of 5.2 million people with a GDP of $247 billion. The United States has a population of 340 million people and a GDP of $27,940 billion ($27.94 trillion). New Zealand would be the 24th largest US state by population and the 30th by GDP. New Zealand has a smaller population than New York City. New Zealand’s economy is smaller than Denver, Colorado’s and would be the 19th largest city by GDP in the US.
It’s just not even remotely close to the same scale of problem. The United States has the largest economy in the world. It’s larger than the next three (China, Germany, Japan) economies combined.
I’m glad New Zealand was able to achieve their goal but I don’t see what it has to do with the US.
India has 4 times bigger population that the US and it has both direct and indirect taxes that "can" only be filed for free by anyone on government portals only.
there is a small cottage industry of software that cater to tax professionals to help them prepare returns data (like turbotax) and can track hundreds of clients' data in a single place but that is absolutely not needed.
the softwares are supposed to help prepare data but eventually all happens on government portals only.
this means when govt portals are down, it is down for everyone.
citizens CAN and DO file their own tax returns, both direct and indirect taxes but if they go to a professional for help, they usually use a software because it is easier, avoids repetitive work, helps in reducing errors and stuff.
even then, these softwares charge a pittance. something like $100/year for unlimited clients, unlimited everything because you, the professional installs it on their machine and stuff.
india has, in the past 7 years updated their government taxes websites and that has cost them actual billions of dollars but that has had clear benefits going forward
> Why should we aspire to this? Why is NZs solution better
Because New Zealanders, as well as almost everyone else in a developed country, spend much less time and money on a chore that can be optimised to be easy and free? Not to mention the pure PR side of things - people don't like doing their taxes. The easier it is for them, the less they'll hate it.
The UK is 4 countries with a government plus two devolved governments which have their own nuances and quirks. There's 67m people and a GDP of $2.7T USD. The vast, vast majority of people in the UK get a ltter once. ayear saying "this is how much tax you paid last year" and that's it. For the vast majority of people who _do_ have to engage, they file a self assessment which is a government form that is pre-populated with all the information they have already. Banks and financial institutions are required to give you annual statements which make filling in any missing details quite easy, but for most people it's 30 minutes of clicking and triple checking numbers.
There's no excuse for the state of the US system other than incompetence and greed.
Yes the tax filing system is overly complex in the US, and the IRS is rightly improving that. But the tax code itself is always going to be complicated.
One of the reasons the tax code is complicated is because everyone fills in a tax return. One of the reasons everyone fills in a tax return is because the tax code is complicated.
indian taxation is archiac, modern, lengthy and most fucked up and yet there are only policy decisions that are problematic. the same can be fixed the next day. other than that, it works fairly well
I lived in the US for half my adult life, I'm very aware how complex the US tax system is - doesn't mean you can't bite the bullet and change it - we used to have a complex one too. It was very simple - no exemptions, not for anyone.
The only real difference is that you have states and as a result have 2 levels of taxation
Making decisions is easier in a small country, but beyond that, most things are easier in a large country. You benefit from economies of scale, you have access to things that are not yet generally available, and the people responsible for implementing the decisions are more competent on the average.
It’s unclear to me how any of that simplifies federal income tax reporting. The US tax code is an important tool in steering the economy. It’s complex and always will be.
I’m not defending Turbotax here and I’m glad the IRS is building this system but I don’t see how the comparison to NZ is useful or even relevant.
New Zealand is also 4 places ahead of the US in terms of human development[0]. It would not make sense for the US to look at a country this much more developed. It should rather compare itself to its peers, e.g. Slovenia. /s
There’s no reason private companies should be needed to file income tax returns. The IRS Direct File system will eventually handle all 50 states (they are ~50% there) and all but the most unique tax situations. This is a utility, not a business.
(Cash App is also likely to not survive the FedNow instant payment rollout to all US deposit accounts, tangentially)
I agree, but my point is that a completely free option already exists and TurboTax still costs a bunch of money anyway for the same thing. If you want to remove the wind from TurboTax's sails, and I do, it's been possible nationwide for the past two years.
The US has a two-party system, one of the two parties opposes this,[1] and people prioritize other issues when they vote. Would Direct File even survive a Republican trifecta?
The party that opposes efficient delivery of government services has an electorate that keeps shrinking every year through attrition. Direct File will outlive said party going through a demographic compression.
(Re: your tangent) For a lot of Cash App users, the app is their bank. They're unlikely to switch to a traditional bank just because of FedNow. Cash App will survive. Had FedNow come out a decade ago things might be different.
It's free as long as Cash.app wants to maintain it. I'd rather there'd be no incentive to complicate the tax code such that many people need to hire accountants to figure it out.
It appears you need a smartphone and must download their app for it, although they claim you can then use your computer. That's a non-starter for many people.
While U.S. income tax filing is a perennially popular topic on HN, I don't recall seeing mention of the free, human-assisted (by trained volunteers) filing that has been provided under IRS sponsorship for decades[0]. AARP TaxAide[1] is also a large sponsor. I have been a volunteer in the past, and can report that in at least some locations, there is no $64K income limit, but it is true that a number of "complicated" forms can disqualify use (such as depreciation expense deductions).
Having the option to sit face-to-face with another person who can answer questions about your situation at no charge is of value.
“Free Fillable Forms” is the official IRS system for doing it manually online (no form or income limits). I even messed up my return last year and it got kicked out within an hour of upload with instructions on how to fix it.
It still seems strange that you have to file taxes in the first place. We generally don't in the UK - you only need to if you're in a situation more complicated than the standard salaried job. What do other countries do?
There's one party in the US that likes to show government is bad by getting elected and making it worse. Taxes especially are meant to be painful so that you're reminded everyday about them and dread filing.
Same here in France, all revenues from employers, unemployment office, capital gains, pensions, small business, etc. are already prefilled for you.
If you're in a classic situation, you just check the numbers match, and next next approve the form (online on a government website). If you have anything specific (like donations or capital gains abroad in foreign banks), you declare that yourself.
Title summarized from "IRS Direct File set to expand availability in a dozen new states and cover wider range of tax situations for the 2025 tax filing season" due to title character limits.
