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The Almighty Buck

Open Source (e-File) Tax Return Software? 28

Posted by Cliff
from the don't-let-4/15-sneak-up-on-you-this-year dept.
If you're an American, it's getting closer and closer to that date we all have come to know (and dread)...tax time! To this end, Weston Hopkins asks: "I am filing my income tax return again this year and was looking at the IRS's e-file option. They list many software companies but I have found none that are free. Does an open-source e-file tax filing project exist?" and a more general query from DarkClown, who is looking for an Open Source equivalent to Turbo Tax. Have there been significant changes in this area since the first time this question was asked?
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Open Source e-File Tax Return Software?

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  • It's not OSS, but Intuit (Turbo Tax) has a web-based filing option. Don't know how it works (this is a good reason to keep my MS box around) from Mozilla, but it is there.
  • No sophomore CS major is going to spend time researching the tax code of Indiana.

    Well, if he's an Indiana resident, he most likely will. Likewise so would residents of other states. You could theoretically make a sourceforge project out of this if you could somehow garner enough interest from many people.

    Best thing to do would probably have a core team work out the basics of a tax program and then have other teams make modules for the different states. Probably in some scripting language (python would be a good choice given good GTK bindings and support as a scripting language in GNOME).

  • Perhaps the IRS itself should provide a free (perhaps not open source) software solution in order to prevent any sort of liabilty issues affecting developers. It should be in Java for portability, or perhaps a PHP or Perl application running on a secure server. I think liability and complexity are the primary reasons for not having open source tax software.
  • Some of us don't ;-)

    IRS stands for internal revenue scam*, so the trick is figuring out how to be legally external

    Gotta love how certain countries don't tax foreign income ;-)

    --

    * Social (in)security is the greatest ponzi scheme ever pulled.
  • If it met your needs then it was probably the best tool for the job. My recommendation is just that you double check the results and evaluate them against your priorities. This is good advice for most of your life, but especially taxes.
    _____________
  • I know it's not quite what the poster had in
    mind but here's a start.

    Fidelity investments makes turbotax for the web
    available for FREE to anyone who links from their
    site, whether you're a customer of theirs or not.

    if you'd like to do your 2000 US Federal (and state if needed) for free, then check out
    fidelity's tax link:

    http://web300.fidelity.com/qttw/bookmark.jhtml

    Saved me about $30 this year.

    --chuck
  • That's what I've found. Fortunately for me, Massachusetts has an online form. It's very simple, at least for those who are eligible for the EZ form. All I had to do was fill in the numbers (rounded to the nearest dollar) in the specific boxes. Piece of cake.

    I was really disappointed to find that the IRS didn't have something similar. I was also just very disappointed in the IRS website. [irs.gov] It doesn't really jump out at you that it's a government site. At first glance it looks like a magazine or something, called "The Digital Daily", though upon closer inspection of the banner, you can see that it does belong to the IRS.

  • I suspect that part of the reason for this is the same as requiring "certified software". They don't want garbled data uploaded into their system. If you use "certified software" then it's not too likely that your tax return will show up on their computer with a stated gross income of ten cents and a tax refund owing of six million dollars. Like any other large corporation, they like to know where the data is coming from and know who to choke if it gets buggered up. "Joe in his basement" isn't going to impress them.
  • I've always found that they didn't get me as big of a refund as filling out the tax forms by hand.

    The only reason we used them was because we could e-file, and get the refund deposited directly in our account (Supposedly as soon as 10 days from the IRS getting it). She'd already done the taxes by hand, and came up with the same amount. Could we have gotten back more? Maybe.. but since we didn't want to go to a CPA and were going to mail them in, this was nice just to make it quicker.
  • When you get ready to e-file in California, make sure to call the State Tax Board and get an ID number for your state tax return. They will want information like your SSN and your previous state tax return numbers before they will give it to you. Once you have it, it probably won't be a pain next year.

    It takes them about 3 days to process your e-filed return and they cut a check within a week. I did mine 3 weeks ago, it may get worse as a lot more people start submitting them.

    -Pat

  • Because 15 April is a Sunday, you have until 16 April to file.

    Let the procrastination begin...tomorrow!

  • Audit rates are much higher for people who e-file.

    If the following applies to you:

    1. You are a own a business (including doctors, lawyers, 'freelance' consultants)

    2. You have held 5 or more jobs in the last 7 years

    3. You itemize deductions

    DO NOT EFILE! There is a 30-60% higher chance of you getting a microscope stuck right up your ass in the form of a tax audit!

    Type up the forms and mail them in. It takes them like one week more to write a refund check.
  • Read any tax magazine, I've read about this phenomenon in 6 or 7 articles in the last year or so.

  • Gawd, what an awful web site! Totally weird and unhelpful (unless you're a spouse looking for relief).
  • Or it could be that it was a sweet deal for some campaign contributions to that particular minister's election campaign to Parliament. Any system that relies on client software to protect itself against "garbled data" is asking for the mainframe version of Armageddon.
  • Check out TaxAct [taxact.com]. Their basic version is free, and came pretty close to what Kiplinger TaxCut did when I compared them last year. I didn't try the deluxe version, but it's come down to something like $7.00 if you buy it online.

    And just so you're not surprised, you do realize that E-filing your taxes isn't free, right? It costs like 5 bucks or something like that. The "Free E-Filing" in TaxCut and TurboTax is a mail-in rebate on the cost of your E-Filing.

  • Not only is the .tax file not in a logical format (do we really need to use a binary format for 4K files? what's wrong with a standard line-break-and-comma-delimited file?)

    Oh, but it is. It's in ANSI x.12 EDI format.
    ---

  • I've used Turbo Tax for the Web(tm) each of the last two years (got this year's refund a week or so ago). Last year it was free, since I have Vanguard funds, this year it cost ~$20 for state and federal combined. I used it from regular Netscape (4.7x) instead of Mozilla (on all three of WinNT4, Linux(2.2.x) and AIX 4.3.3.4). You see a lot of gain year to year, since they automatically fill in last year's tax info for the current year (state taxes for deductions, etc). Easy to use, and platform independant. I've been happy with it, and my life wasn't complicated enough the last couple years to warrant a CPA... it is starting to get that way, though...
    --
  • I've tried them the last couple of years, but I've always found that they didn't get me as big of a refund as filling out the tax forms by hand. My taxes are easy, I just take the standard deduction. There's not much excuse for getting them wrong.
    _____________
  • I use it too, but I get to use it for free every year because I'm a WingspanBank.com customer (free ATM country-wide!). I like it because it is well-done and it works equally well on my Mac and OS/2 machines - now THAT'S cross-platform! In fact, I wonder why anyone would use the boxed software, considering how much better the web verison is.

    Tax software is so complicated that there's no way it will ever be free, let alone open source. It costs A LOT of money to hire the accountants you need to translate the complex tax code into software that anyone can understand.
    --

  • You got numbers to back that up? I find it hard to believe that the IRS would risk effectively killing a program that saved them so much money by having it get out that they experienced a higher audit rate--and it would get out. It'd be all over Money magazine and others of the ilk, and the IRS would be more buried in paper than ever.
  • Not if Microsoft's Jim Allchin has anything to do with it...
  • by Aggrazel (13616) <aggrazel@gmail.com> on Thursday March 15, 2001 @07:19AM (#361777) Journal
    Well... I mean its open source as in you can go to the IRS and ask them for the tax code laws and they will give them to you.

    But as far as software like turbotax? This is one area where I don't think you'll find an open source equivilant (though I could be wrong). The thing is, tax code is so friggin complicated, a small error in your code could trigger an audit. And as all taxpayers know, thats the last thing you want.

    So there's doing it yourself on paper, taking it to an accountant, or using a $20 piece of software.

    Personally, I prefer an accountant, because they think of things that even the software misses, and usually they more than pay for themselves in the money they save me. Last year before I took my taxes in, I did them as best I could using turbo tax, then I took the same figures to the accountant. Badda bing, The accountant had me paying almost $200 less than turbo tax would have had me pay. And since it was a national tax service I don't think they are going to get me audited.
  • by Bazzargh (39195) on Thursday March 15, 2001 @10:31AM (#361778)
    The government provide software [inlandrevenue.gov.uk] for this purpose.
    They also provide links to other suppliers, and in an almost-open-source move, notes for developers [inlandrevenue.gov.uk].

    Ok its not going to be much use to you as the US tax rules are so different. But it made me wonder - are the efile formats the same worldwide?
  • by cperciva (102828) on Thursday March 15, 2001 @09:45AM (#361779) Homepage
    The Canadian Customs and Revenue Agency introduced "netfiling" to the general public this year (last year it was an invite-only pilot project). You have to use "certified" software to do this -- and there are five certified software packages, all of them commercial. The software packages produce .tax files which must be uploaded to the CCRA website.

    Not only is the .tax file not in a logical format (do we really need to use a binary format for 4K files? what's wrong with a standard line-break-and-comma-delimited file?) but the format isn't documented anywhere -- meaning that even if you have done your taxes by hand and are computer literate, you can't file online without shelling out $25 for some tax preparation software.

    You'd think that, considering the cost savings for the government to have people file returns electronically rather than on paper, they'd make it *cheaper*, not more expensive.
  • by benenglish (107150) on Friday March 16, 2001 @05:54AM (#361780)

    Hmmm. No employee of the IRS can speak on behalf of the IRS without approval. So let's just say I'm some guy with some experience in this stuff. I'm not saying where I work or that anything in this post is official, OK?

    Basically, tax prep software that is e-file enabled will do your forms, wrap them up in one big package, and send them to an intermediary. NOT the IRS! The intermediary is subject to all sorts of requirements regarding security and other things. They have to be open to constant scrutiny from the IRS. It would be silly to allow 50 million people to directly update a database at the IRS - there would be too many people who sent in garbage of one type or another.

    The intermediary puts together big packages of files that have been checked for problems and transmits those to the IRS.

    So why is there no open source efile software? The biggest reason I can think of is security. The IRS approves software for efiling based on a number of factors including their comfort level that the software works nearly perfectly and won't result in anyone trying to send them a bunch of garbage. Open source projects willing to go through a code audit from the IRS aren't exactly common. Open source projects that are able to turn out software to do a complex task essentially error free and be usable by my mother aren't terribly common either. And both those things are necessary to make it to that list the original question referenced.

    Of course, there are exceptions. There are some "industrial-strength" tax prep packages that aren't particulary easy to use and are targeted to tax prep offices, CPAs, etc. There are some names on that approved software list that most people wouldn't recognize because they are not tageted to average consumer. But the need to have truly locked-down software and keep it completely current with the law remains and would sink most open source attempts.

    Another reason is because those intermediaries use the software to get paid. TaxWise, for example, is the package used by the IRS, itself, when you walk into the office and ask to have your return prepared. To get TaxWise to work, you have to activate it with a code from the company that is keyed to a special number issued to you by the IRS, the EFIN or Electronic Filer Identification Number. TaxWise then acts as the intermediary. Do you think they want to accept efiled returns from anyone who didn't spend the money to buy their software?

    The same deal goes for TurboTax. They will act as your intermediary for a fee. Or, if you make *very* little money, they'll act as your intermediary for free. Either way, though, you will have had to have bought the software from them in the first place.

    Tax prep software, *especially* efile software, is something that will be done by commercial software houses. It just doesn't fit with open source.

    For heavy-duty and far more technical information about this topic (I've seriously over-simplified some things in this post), try the IRS efile site for software developers. Yes, there is such a thing and it's available to the public. If you really want to know about file specifications, scripted testing of software, and other deeply techy kinds of things, you might want to pick up a copy of Publication 1346, Electronic Return File Specifications and Record Layouts for Individual Income Tax Returns. You can get in dead tree format or entirely online.

    All this info can be gotten by digging just a few links below here. [irs.gov]

  • by srhuston (161786) on Thursday March 15, 2001 @07:37AM (#361781) Homepage Journal
    My fiancee used Hdvest.com [hdvest.com], who lets you file for free through their system. The only problem I noticed is that, under Netscape 4.76/Linux, it wouldn't open the form to enter W-2 information, had to do it in IE on Winders. Didn't try Mozilla tho...
  • by update() (217397) on Thursday March 15, 2001 @09:49AM (#361782) Homepage
    Realistically, this isn't one of those things free software developers are likely to make. Like game development, it requires a team - in this case, accountants, lawyers, and more lawyers to make sure you don't get sued. And in contrast to game development, it's boring. No sophomore CS major is going to spend time researching the tax code of Indiana.

    A couple of years ago I saw a command-line Perl tax form app on Freshmeat. I tried it and couldn't get it to work, even with help from the developer. I couldn't find it now.

    Honestly, though, would you seriously trust your tax return to something from Freshmeat? I was happy that this year i could do my taxes in KSpread instead of Excel like I usually do.

    Unsettling MOTD at my ISP.

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