Comment by dpark
1 day ago
25% of returns include the child tax credit and 16% include the earned income tax credit. These aren’t wealthy people filing with CPAs. These are lower income folks who specifically benefited from the IRS direct file program.
Again, you seem to simultaneously believe that nearly everyone has trivial taxes to file while believing that the government cannot reasonably support free direct filing for these people. I have to wonder how you reconcile these beliefs in your head. “I mean, this is so simple. Any moron can do it. But not the agency specifically responsible for handling trillions in tax revenue. Nah, too complex for them.”
Credits are applied after you take the standard deduction. You subtract the standard deduction, figure out your taxable income, then subtract credits and taxes already paid.
> These aren’t wealthy people filing with CPAs. These are lower income folks who specifically benefited from the IRS direct file program.
Lower income people were not using IRS direct file. That’s would be the economically rational thing to do, but this is exactly the market the strip mall CPA target. They also offer advances. I have tried and tried and tried to get lower income people to use free or direct file. Virtually none are interested. They have “their guy” who is getting them a great refund.
> Credits are applied after you take the standard deduction.
I did not state otherwise. The point is that you are misstating the complexity of the typical tax return. It is not in fact “enter your W-2, take the standard deduction, and done” for most people, even for those with relatively straightforward taxes.
> Lower income people were not using IRS direct file.
I don’t think the IRS has released this data. I do know that direct file was specifically limited to simple cases though.