this post was submitted on 30 May 2024
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Competition does NOT make prices go up, lol.
Well, the point was that it isn't competition in his scenario. I hope the exclusion of 1099 is temporary, because I had a 1099 for like a few dollars because I had a savings account that technically accrued interest, so as it stands that makes me ineligible. So his concern would be that because the tax prep services are competing against 'free' for that tier, that they'll ramp up prices for the rest to compensate for loss of income.
Given that savings accounts are at 1% interest or so, that's only a thousand dollars in a savings account.
Good savings accounts are above 4% these days. Wealthfront is 5%, Synchrony is 4.75%, Marcus (Goldman Sachs) is 4.4%, Amex, Discover, Capital One, Ally, are 4.25%
Hypothetical question: If you omitted the couple bucks of income from the 1099 on that one savings account and you later got audited- how much money would you be on the hook for? what would the consequences be in worst case and likely case scenarios?
I honestly think the government has next to no resources now to go after tax cheats that aren't hiding tens to hundreds of thousands of owed taxes... but would love to hear what others have to say. I suspect missing out on less than a dollar of taxes from omitting a single figure 1099 would not be big enough to chase and if found probably less costly than hiring a preparer every year when averaged out over your lifetime of tax returns.
Perhaps practically speaking you probably would get an automated form from IRS demanding a few dollars. But it'd be nice if qualification for 'direct file' option didn't rely on "mild tax evasion" for people with savings accounts.