Turbo Tax saves me hours of work, confusion and eye strain every year when I do my taxes. But using tax preparation software always leaves me with the uneasy feeling that companies are making a buck off the government’s failure to make tax filing easy or intuitive.
How hard is it for the average citizen to file his or her own taxes? In 2008, nearly 58 percent of individual tax returns were professionally prepared. And a 2005 Government Accountability Office report estimated that Americans spend $107 billion complying with the tax code.
Unfortunately, the tax preparation industry has a perverse incentive to keep tax filing difficult. For instance, in 2007 Intuit (worth $5 billion today) and HR Block ($4 billion) actively lobbied against allowing Americans to file taxes online. Unless, of course, taxpayers did so through tax preparation companies like Intuit and HR Block.
That’s a pretty crass move, even for corporate lobbyists. And I imagine if the IRS ever seriously considered creating their own easy-to-use tax preparation software or web forms, the entire tax preparation industry would fight it.
This year, I’m going to pay Turbo Tax $29.95 for a federal return and probably an additional $36.95 for a state return. Do I save more because I use Turbo Tax? Probably. The software takes me through income reporting and deductions in a clear, methodical fashion. I’m sure I would have missed some deductions if I had to do my taxes on my own.
But more importantly, I would have missed a couple hours of my life. I loathe the idea of filling out the IRS’s little boxes and following cryptic instructions, such as this 16-page guide for writing off the interest I paid on my mortgage. In Turbo Tax, I answer a few question and the software does the obtuse “Subtract line 8 from box 3B” work for me.
But still, that’s $70 of “my money” going to Turbo Tax to help me navigate something the government has made too complicated.
Easy-to-use tax forms — and software — should be a basic government service. If we, as citizens, are handing the government thousands of our own dollars, the least the government can do is make that process as painless as possible.
Further, I’m sure the pain and confusion of paying taxes contributes to people’s dislike and distrust of government. Politicians and agencies interested in burnishing the public’s esteem for government, especially the federal government, would do well to focus on making the act of paying our taxes just a little better.