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You call it Tax Day, I call it Impenetrable Math Day

Once again, another April 15 is upon us. Oh joy.

It's not the money I owe to the government (this time around, we're getting a refund) that bothers me about filing my taxes. It's that I have no idea of the math that yielded that final number -- much less the logic behind all these Kafka-esque provisions that have made a basic rite of citizenship so mind-numbingly complex. I don't need to run third-party software to vote, serve on a jury, fill out a census form or perform most of the other government-mandated tasks in my life; why should I have to invoke the help of TurboTax, H&R Block, TaxAct and their ilk to pay my share of government's cost?

irs_e-file_logo.png

I'm even crankier than usual about Tax Day this year. Although I've bought a home for the first time, spent money to improve its energy-efficiency and purchased a new, hybrid car -- all activities now rewarded by the tax code -- I did those things in years when no such bribes were available from the Feds.

I've written this before (see the 2007, 2008 and 2009 versions of this rant) and I will keep saying so for, I guess, the indefinite future: The tax code as presently constructed is an insult to every thinking American.

For Virginians, this year's filing frenzy comes with an added indignity. Republican Gov. Robert F. McDonnell, just as I'd feared, on Sunday signed a bill that ends the state's free iFile Web tax-prep service in favor of a "Free File" regime that would only offer free online tax preparation and filing to residents below a certain income level. Jim Nolan's excellent story in the Richmond Times-Dispatch notes iFile's overwhelming popularity -- a 98 percent satisfaction rate in a recent survey -- and the unclear rationale for ending it.

Although iFile only costs Virginia's Department of Taxation $49,200 a year to run, the state may pay more overall if taxpayers who once filed electronically through iFile return to sending in paper forms. Yes, mailing in a 760 will still only cost you a stamp -- against $39.95 to e-file that two-page form in TurboTax and $19.95 or $39.95 in Block -- but the state will then have to spend about $1 to process the form. Guess what I'll be doing next year?

Nolan's piece also includes this detail: TurboTax vendor Intuit "has donated $113,500 to state lawmakers since 2001 according to records on file with the Virginia Public Access Project."

Blog comments are made for ranting, and now it's your turn. How confident are you in the numbers your tax-prep software has yielded? How many hours did your taxes take to finish? What else would you have done with that time?

By Rob Pegoraro  |  April 15, 2010; 10:54 AM ET
Categories:  Policy and politics  
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Comments

>It's not the money I owe to the government
>(this time around, we're getting a refund)

Rob,

You know that the fact you are getting a refund should actually bother you more than owing the government money in general, right? The refund is just the completion of an interest-free loan that you have given the government.

On all other points, I am right there with you. I don't mind paying taxes (that much). Let's just make it easy for everyone.

Posted by: kjhealey | April 15, 2010 11:26 AM | Report abuse

@kjhealey: That "interest-free loan" argument is tired. While it might make sense mathematically, I think more people will want to get a refund than owe the govt money. For one thing, it's not like you've been saving the money during the year. So getting a huge tax bill on April 15th is a shock to most budgets.

Anyway, I agree with Rob about the tax code and the state of VA ending the free filing system. I think that one act demonstrates our much influence lobbyists have in all facets of our govt. Because why would any right-thinking human being cut a govt problem with a 98% approval rating and saves the govt money?

Posted by: tundey | April 15, 2010 11:44 AM | Report abuse

Because I am considered a “contractor” and have to pay estimated taxes and such, I thought using iFile was a blast. I used it for the last seven years. When I found out the 2009 tax year was the last time it was going to be available, I couldn’t believe it. First, they make it hard to figure out what your taxes will be for any given year. Then, they allow a whole industry to establish itself, grow, and now charge about $230 per filer. It is only recently that the end of iFile has come to light and blasted in the press. Rob, I will see your paper return, and raise my paper return with all my bad writing. (Why even visit the site if I can't use it to file!)

I have only filed a paper return for the feds because I don’t believe I should have to go to a third-party site to do so. Plus, this year when I received the 2009 1040 instruction book, it looked as though the federal workers had stomped on it, and then, the postal workers backed their truck over it a few times. It was fitting though, what a nasty tome.

Posted by: ummhuh1 | April 15, 2010 12:20 PM | Report abuse

Thanks for the article - I thought the same thing you did when I filed my taxes the other night.

You wrote, "I have no idea of the math that yielded that final number." I totally agree, and extend that logic to the individual forms, such as tax credits. I can't even begin to comprehend why I'm being asked to compared this number to that number, and multiply it by 0.15, then then put in "$200" if Line 8 is less than Line 5.

Why can't there be an explanation of how these credits and other tax vehicles are supposed to work, a summary that describes the theory behind the arithmetic driving the calculations? Especially for those tax forms -- such as the Earned Income Credit -- being filled out by those who are extremely unlikely to be able to hire a professional accountant?

Posted by: ICchris | April 15, 2010 1:44 PM | Report abuse

Yes, I don't understand why the IRS cannot provide the software needed to fill out their messy forms.

I am also irked by the fact that I bought a new car in 2009 to help the economy, and then they give a tax break only applicable 15 days after I bought my car.

But what really irks me to the extreme is the AMT. Legislators don't want to do anything to fix the situation they created.

Posted by: hammster | April 15, 2010 3:56 PM | Report abuse

Everybody who is buying TurboTax to "help" with their taxes needs to understand that TurboTax has lobbied against state and federal programs that would make tax filing easier.

Think about that before you give your money to TurboTax.

Posted by: 12008N1 | April 15, 2010 4:02 PM | Report abuse

I'm glad MD still has iFile. Hopefully they won't be influenced by lobbyists. I usually owe a little to the Feds come April 15, so I use TurboTax but mail in the form and check. It takes it about another 5-7 days before it clears my bank to end my interest free loan.

Incidentally, I have never seen the Post Office so congestion free on a tax day as it was today. They really are going the way of the Pony Express.

Posted by: red4ever2 | April 15, 2010 4:06 PM | Report abuse

...hey, let's just listen to Palin and the failed GOP, and go back to cut taxes / cut govt that we tried for the 3 decades of the Reagan/Bush era. In fact, let's get ANOTHER big tax cut to the wealthiest as we did in 1981 and 2001.

I mean, that worked SO well to deliver trickle down prosperity. Almost nobody is unemployed now. And the banks and health insurers, heck - they POLICED THEMSELVES!!! Get government out of the WAY by golly!

Abe Lincoln would have said;
"You can fool some of the people, ALL of the time"... ;^)

Balkingpoints / www

Posted by: RField7 | April 15, 2010 4:15 PM | Report abuse

i used turbo tax for the first time this year and probably won't do it again. i can do it by myself and it takes the same amount of time. no reason to pay all that money.

Posted by: travelawp | April 15, 2010 4:16 PM | Report abuse

Wow, people are complaining about doing more math so that they can pay less taxes.

Seems like a fair trade-off to me. You wanna save money, you gotta work at it. Just like everything else in life.

Posted by: frantaylor | April 15, 2010 4:25 PM | Report abuse

Rob, I'm stunned that someone in technology finds any of this impenetrable. I've done my manually, and only use Turbotax because it is faster.

Regarding Bob, I'm a complete disaster but a moderate compared to my AG, McDonnell, what exactly did you think was going to happen when he was elected. The only surprise for me is that we do not now have to include an essay on the historic accomplishments of the confederacy when we file our Virginia income taxes. And by the way, those of us who live in the City of Falls Church usually just walk our tax package over to city hall. No stamps required. :-)

Posted by: JoelB8 | April 15, 2010 4:25 PM | Report abuse

I love, love iFile from Maryland. It makes doing the state taxes a breeze.

I'm trying the free forms from the IRS and it works decently well, but I hate having to calculate out my taxes there without the program doing it for me.

P.S. Schedule M has me pondering having a tax preparer do the taxes for me next year =P

Posted by: Joran | April 15, 2010 4:40 PM | Report abuse

Regarding the rules. your're right. They are absurd in illogic. Regarding electronic filing, the IRS should establish its own free to the taxpayer electronic program and get rid of the others. The VA Governor is just showing how cheap he is to bribe.

Posted by: jsjmmurray | April 15, 2010 4:53 PM | Report abuse

I am not one of those people who complain about paying taxes. I realize that my money goes to pay for the defense of our country, to building roads, schools, creating jobs, etc. What I can not for the life of me understand is why in this modern day and age we have a tax code that is so complicated. First off at the end of the tax year why I should I owe any additional monies from my wages or for that matter why should I get a refund. We have modern computers and payroll systems yet we can't seem to figure out exactly how much we owe. I do the EZ form and every year I either owe or I get a refund. For optimum yeild shouldn't all of this be automated? In fact why should we even file? I bet if the system was automated and the hassles of filing and not knowing if you owe additional monies was eliminated a lot of the anger against the IRS would die down. I sometimes wonder if the sole reason that the US tax Code is such a mess is so companies, like HR Block and Jackson Hewitt, and over priced corporate tax lawyers can stay in business?

Posted by: dre7861 | April 15, 2010 5:00 PM | Report abuse

I am not one of those people who complain about paying taxes. I realize that my money goes to pay for the defense of our country, to building roads, schools, creating jobs, etc. What I can not for the life of me understand is why in this modern day and age we have a tax code that is so complicated. First off at the end of the tax year why I should I owe any additional monies from my wages or for that matter why should I get a refund. We have modern computers and payroll systems yet we can't seem to figure out exactly how much we owe. I do the EZ form and every year I either owe or I get a refund. For optimum yeild shouldn't all of this be automated? In fact why should we even file? I bet if the system was automated and the hassles of filing and not knowing if you owe additional monies was eliminated a lot of the anger against the IRS would die down. I sometimes wonder if the sole reason that the US tax Code is such a mess is so companies, like HR Block and Jackson Hewitt, and over priced corporate tax lawyers can stay in business?

Posted by: dre7861 | April 15, 2010 5:00 PM | Report abuse

The blurb for this post on the main page reads, "Complex provisions make basic rites of citizenship mind-numbingly complex."

Complex provisions are complex, y'all.

Posted by: dkp01 | April 15, 2010 5:10 PM | Report abuse

Justice Oliver Wendell Holmes said that taxes are the price we pay for a civilized society. This is true to an extent; however, it does not follow that the more tax we pay, the more civilized the society becomes. And the complexity of the tax code is an abomination. 3.8 million words? Burn it and start over.

Posted by: PhilThijou | April 15, 2010 5:12 PM | Report abuse

To add to ummhuh1's comments, income tax preparation is a nation-wide industry that employs thousands of citizens (over 100,000 in IRS alone according to Wikipedia). A national sales tax would make so much more sense, but how can that be implemented without a big hit to the economy? I've been using TurboTax for so long now that it feels like an addiction.

Posted by: Tyelctu | April 15, 2010 6:54 PM | Report abuse

I have used TurboTax for about 10 years. I am a big fan of it. For $50, it handles the complicated tax code. This year's complication was excessive contributes to a HSA which I only had for a partial year. Plus, it finds many things that I may miss. e.g. college cost credits.

The tax code is complicated for a number of reason. One is that the government tries to influence behavior: buy a house, go to college, make energy-saving investments, get health insurance, etc. So the government provides deductions/credits to steer our behavior to be good citizens. Killing the complication, kills the government's ability to influence. (Money is, of course, the biggest incentive to people, in general.)

The code is also complicated because the government tries to give these incentives, but people like to cheat the system. The complications comes from the attempt to stop the cheating and fill the loopholes.

In addition, it is the whole accounting/tax preparation industry (not just TurboTax) which lobbies to keep the code complicated. Although I am a fan of TurboTax, I don't like their lobbying to kill iFile. However, I would guess TurboTax is not the only and probably not the largest contributor/lobbyist to try to kill iFile. The entire tax preparation is in on it.

For those who want a less complicated tax preparation, just enter your W-2/1099 info and be done with it. Don't take the tax breaks.

Posted by: david08054 | April 16, 2010 9:57 AM | Report abuse

@ICChris, who said:
I can't even begin to comprehend why I'm being asked to compared this number to that number, and multiply it by 0.15, then then put in "$200" if Line 8 is less than Line 5.
==
I think you're missing the point, ICChris, if you cannot understand that you're being taxed at 15% of the amount you've made over some calculated or stated minimum from reading that simple series of words, then there is probably not much hope that you'd understand any other stating of the situation.

However, if you are wanting to know WHY you have to pay 15% tax on something over a calculated or minimum amount, then THAT is a really different situation than you've outlined here.

Posted by: RHMathis | April 16, 2010 3:55 PM | Report abuse

Somewhere in the last couple months I read a great Op Ed saying that for most people, government already has all the information they ask us to put in our 1040s. I believe their suggestion was to have the IRS just use that information to generate a 1040 on their own, including taxes owed or refund due. They would send this to us for review and, if we had no changes (e.g. marriage, childbirth, divorce), they would send us a check or a bill. This is the kind of simplicity that is needed (each line of the document would have pull-down menus showing the sources of information, including formulas to calculate results). This method is no more difficult than machines reviewing our amateur attempts to read the mind of the IRS.

Posted by: stevebroache | April 16, 2010 10:34 PM | Report abuse

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