OpenTaxSolver solves taxes, openly

OpenTaxSolver (OTS) takes on one of open source software's long-standing criticisms: the lack of a simple-to-use tax return preparation application on the level of TaxCut or TurboTax. Although OTS does not feature the step-by-step, question-driven interface popular in the proprietary products, it includes an optional graphical front-end, and enables the user to systematically fill out the most popular US federal income tax forms: 1040, Schedules A,B, C, and D, and eight US state income tax returns.

Over the years there have been several other open source tax preparation projects, but most tend to produce working solutions for only a few years, then fall out of maintainership or disappear altogether. Because the income tax code changes every year, the math and the interface must change every year — in unpredictable and sometimes complicated ways. Consequently, the fact that OTS has been making stable releases since 2004 makes it a stand-out. The team is composed largely of individuals who choose to support specific tax solvers, thus explaining the specific state returns — in past years a few different forms were supported, but not continued in subsequent annual releases. Understandably, work on the code is cyclical, with discussion picking up each year as tax time in the US draws near.

OTS is written in C, and at its heart is a text-driven utility that reads data for input from an external file, "solves" the tax calculation, and writes its output to a separate file. Experienced users may still prefer this approach, but the project's site says most choose to use the bundled GUI instead. The GUI version reads in data from an example or template file, but allows the user to input the correct numbers, then performs the back-end calculations. Using OTS will not fill out your return for you, it will just perform the calculations you need to fill it out correctly yourself.

The latest release is version 7.05, updated March 9, 2010. It includes support for 2009 US Form 1040 (individual federal tax return), plus Schedule A (itemized deductions), Schedule B (Interest and Ordinary Dividends), Schedule C (Profit or Loss From Business), and Schedule D (Capital Gains and Losses), and state income tax returns for 8 of the 41 US states with a state income tax: California, Massachusetts, North Carolina, New Jersey, New York, Ohio, Pennsylvania, and Virginia. Packages are provided for Linux, Windows, and (new for this year), Mac OS X; each of which contains the appropriate binaries as well as the GPLv2-licensed source code.

The Linux package is a 421KB tarball, containing the command line and GUI versions of the program, example data files, and a build script that can be used to rebuild the binaries. The GUI is implemented in Open Tool Kit (Otk), a tiny cross-platform widget library that is entirely self-contained. There is no installation process required; one needs only to unpack the tarball to an appropriate directory and run the binaries.

Command-line usage

There is a separate binary for each state return, a binary for Schedule C, and a single binary that handles US 1040 and Schedules A, B, and D. To generate a return from the command line, first open up a template or example file for the appropriate form from the examples_and_templates directory. The only difference between the two is that "examples" are completely filled-in with test data, while the "templates" contain all zeroes in the numeric entries and blanks in the text entries.

The site's instructions say to create a copy of the template for each individual return being prepared, a helpful tip for those who do taxes for friends and family members. The templates use the .dat extension, but are plain text, and line-oriented. Each field from the official IRS form which you are expected to fill in is represented by a labeled line in the file, and comments both expand on the purpose of the line and give valid input, such as:

    Dependents     ??       {Number of Dependents, self=1, spouse, etc.}
    [...]
    D4		;	{ Short-term gain from 6252, gain or loss from Forms 4684, 6781, 8824. }

The input file does not include every line in the final form, of course; the idea is that the user fills in the basic data, and the solver calculates all of the intermediate lines with the relevant formula. This is where the examples come in handy. While the template provides a line for every required field, the filled-out example input is more helpful because it gives clues as to how to enter data for specific situations. For example, more than one source of interest income is entered for L8a:

    L8a                     {Interest 1099-INT}
              37.71           {Bank Savings}
              12.65           {Credit Union}
              16.85           {Savings Bank}
                    ;

When the input file is complete, simply execute the appropriate binary from the shell prompt, passing the input file as an argument, such as: ./bin/taxsolve_US1040_2009 my_2009_1040.dat. The solver will generate an output file named my_2009_1040.out, containing the correct number for every line of the form, including the final amount owed or to be refunded. For the 1040 solver, numbers for the various Schedules are included in the output in tab-offset blocks at the point just before the line where they are referenced in the main form.

From there, filling out the final forms (whether on paper or PDF) is as simple as copying the data from the output file. There has been talk in past years of adding additional output techniques, including automatically filling-in the editable PDF forms provided by the IRS, or of transforming OTS's output into TurboTax's Tax Exchange Format (TXF) files, but thus far neither technique has made it into a release. A discussion thread on the project's SourceForge site mentions several methods that an entrepreneurial hacker can use to transform OTS text output into a format that can be imported to a PDF form directly.

OTS_GUI

The final binary in the package is the OTS GUI application. Unlike the command-line solvers, though, it must be launched with the provided shell script, Run_taxsolve_GUI_Unix.sh. At launch, it presents a menu of the available tax solvers, and a button with which to select an input file. The input file is loaded in, pre-filling the form fields in the GUI. If the input file is already correct, hitting the "Compute Tax" button generates the output file automatically.

But the advantage of the GUI, of course, is that browsing through the fields and editing the input numbers is easier than editing the text file before hand. The GUI breaks up the long list of fields into convenient, page-sized chunks, including the line numbers and editable comments.

Otk is far from being a "flashy" user interface toolkit; it is very limited in layout and text options, and incorporates a look-and-feel that might even elicit sneers from Motif and Tcl/Tk scripters. Aesthetics aside, though, in practical usage the bare-bones text rendering can be difficult to read — horizontal and vertical scaling seem to be calculated as a percentage of the window dimensions, causing some fields and comments to be overly compressed, and others stretched out. Still, with a little trial and error, it is easy enough to step through all of the pages and produce an accurate output file, and that is ultimately the only goal.

Speaking of Tcl/Tk, there is an alternate, Tcl/Tk-based GUI available for download in a separate package. The timestamp on the latest release is from February of 2010. However, it is source code only, and depends on several external Tcl libraries; building it is not for the faint-of-Tcl-heart.

Technology and taxes

OTS keeps it simple, which is probably the key to its survival over this many years: TaxGeek (the second-most active project) has not been updated since early 2008, the once-promising Tax Code Software Foundation site now redirects to a holding page. The results are not much better for countries other than the US; a few dormant projects exist for UK, German, and Australian returns, but nothing is active.

A combination of factors are proposed to explain the lack of open source tax preparation software whenever the discussion comes up, including the level of legal expertise required to keep up with every-changing tax code, and the fact that most geeks do not find the arithmetic of filling out the paperwork difficult enough to warrant writing an application to do it for them.

Furthermore, the "correctness guarantee" question comes up in any discussion, despite the fact that other tax preparation services and programs only offer guarantees subject to their own list of restrictions and limitations. The OTS site argues that the only way to know for sure that a tax preparation program's numbers are correct is to examine the formulas it uses — something impossible to do with proprietary code. Searching on the web for "mistakes" and "TurboTax" indeed turns up a massive number of hits, many coming from the professional web sites of human tax preparers. OTS at least makes its math accessible, and it does log its steps to stdout and mark them carefully in the output file to assist in double-checking.

To some, the answer is that the government should provide free software enabling its citizens to prepare and file their returns electronically. In the US, there is at least a partial solution, which may also detract from the willpower of the open source community to produce its own alternative. The IRS provides all of its forms, instructions, and ancillary publications for free in PDF format. It has also started allowing individuals and small businesses to file returns electronically, at no charge — through the use of approved, regulated third-party companies.

But this option creates another set of problems for some people with free software leanings. As the OTS site observes, the third-party electronic filing services require entrusting a stranger with highly sensitive personal information, but they also impose other arbitrary restrictions: the return must be prepared and filed all in one session, there are income-limit and business-size restrictions, and each individual must file his or her own return only. To the OTS team, those are reasons enough to take the (tax) law into their own hands.

Any tax preparer will tell you that nothing trumps personal experience when it comes to getting the most deductions and advantages when filing your return. OTS does not attempt to do the professional tax preparer's job; it merely attempts to speed up the process of composing a normal return for a user who already knows more or less what that return should include. Then again, especially if you are the resident tax preparer for your family or friends, a tool to crank out those returns rapidly and systematically is still a win. Time is money.