is taxation as fucked up in other countries as it is in the usa? rules set up to encourage people to have to pay some shady third party to know how much they owe (even though the irs could tell them directly).
No, in the UK the majority of people don't need to 'do taxes' at all.
('Normal' income tax is taken through 'Pay As You Earn' by employer's payroll, you only ever receive net pay; capital gains, dividends, 'innovation', etc. have tax free thresholds that mean you don't have to worry about it until (if) it's big. And then you can just file it online (or paper) directly with HMRC (IRS equivalent), or pay a tax advisor if you want of course, but that's certainly exception not norm.)
My impression is that most countries either withhold taxes correctly, or send you a bill at the year end without you having to file, unless if you have a complex setup like owning a business.
In Germany it is a clusterfuck of special rules and millions of forms and extra deductions.
Much easier in Romania, if you have only employment income nothing to do. For capital gains or other incomes basically a single form, only 10% flat taxes so you know what you owe.
In Germany a lot of people don't need to file taxes. If you have a job that takes taxes out automatically, like an office job, you aren't obligated to files taxes, but if you freelance or have some additional income that wouldn't be taxed then you are obligated to file. As far as I understand the rule of thumb is if all of your employers deduct taxes you don't need to file.
I moved here from the USA and it feels simpler for the average person. You don't declare how many withholdings you get (I always used 0 so I could get some money at the end of the year), you just tell your employer your tax class and everything else is handled, and any refund is based on if you paid too many taxes somehow (there are some situations where you might have overpaid taxes inadvertently, like if you have a change in income part way through the year, and if this is the case when you file the return they analyze your income data and give you a refund).
Taxes are not hard for people with one job and one SSN and no schedule Ks filing in one place. Last year I had four TIN/EIN/SSNs, filing in up to three states, depending on the TIN/EIN/SSN, along with a federal return. That meant a dozen different filings. Hiring an accountant was worth it for me.
On the other hand, when I was young, I did my own taxes by hand on paper, and it was easy: they are easy if you just have a W2 and maybe some 1099s. But I was not an adult then, nor did I have adult finances.
Does it stand to reason that the average person does not have multiple business entities in multiple locations?
You are getting scammed by the government, who have made it burdensome to report all of this income. A tax professional or a service like Intuit are trying to help here. If the government wanted to make this process easier for the small percentage of people like you, they would have done so, but they haven't, because they have weak volition and desire for creativity.
Does it stand to reason that the average person needs to actually file taxes if the government knows the information necessary to calculate a tax refund or bill anyway?
So are we really going to go through the entire tax code and all of the potential use cases of median individuals, all so that we can conclude that the government needs to predict our deductions in advance so that you don't have to spend 1 hour and $39 per year filling out your info on TurboTax?
I'm tired of arguing with malicious people on the internet.
No; under every actual proposal, people who have these complicated deductions and other specialized needs can still file exactly the way they do today so that they can get their taxes calculated properly.
And making sure that >50% of Americans—in particular, the >50% who have the simplest taxes, which correlates highly with lower income—don't have to "spend 1 hour and $39 per year" with private companies to accomplish their legally mandated tax filing is a very good thing, even if it were to actually increase the inconvenience for the wealthy and complicated.
Which, again, this wouldn't.
So please put aside the ad hominem attacks, which I believe are against the HN guidelines anyway.
So paying $39 to a private company (not mandatory btw, you don't need to go with Intuit or TaxAct or HrBlock or etc), is evil incarnate...
...but the thousands of dollars my wife paid directly to the government two years ago for her green card application which still is not done is totally fine?
If there was an Intuit for green cards, I would be camping outside to be the first to give them my money.
You still haven't answered my question: does the average person have complicated deductions? What is the government just calculated the average amount someone drives for their job and just give a blanket deduction by default, and if you had more you would just tell them you spent more?
Further, you make this point in a later comment:
> I'm tired of arguing with malicious people on the internet.
I don't see anything remotely malicious in this thread other than people not agreeing with your point, and this whole thread seems to be pretty healthy. With that in mind it's quite interesting to me that you're implying that this healthy discussion is malicious.
That is not a vaguely fair characterization of what filing taxes is like. Every year my accountant sends me a 50-page booklet of questions on things that might affect tax returns. Taxes are in fact quite hard.
But that's not my real issue with your comment. I agree adults have to tough things out sometimes. But toughing out a problem that doesn't need to exist is macho nonsense. You might as well insist that people get rid of their indoor plumbing, because we got got along fine without it for most of human history. You can go dig your own outhouse if you want, but don't suggest somebody else is inferior for not going out of the way to make their life harder unnecessarily.
What is the nature of your income, such that it requires a 50 page booklet? The normal W2 worker does not need such a booklet.
I am not saying that you should tough something out for no reason. I have electricity coming to my house to make my life convenient, which I pay for. I have water coming to my house, which I pay for.
But I cut my own grass manually. Why? Because I felt the prices offered to me were not fair, and that the job was not complex or hard.
Either you pay a tax professional if you feel the work is too complex and the price is acceptable, or you do it yourself.
You can try to fight the government on this one, and you might win (even I hope you do), but at what cost? Certainly it is not cheaper than $39 a year.
They send the same booklet to all their clients. Because at least one person needs each page.
I agree that the modal W2 worker does not need such a booklet. But they don't need to fill out tax forms at all. The correct solution is not to make them pay $39 for software they don't need. It's for the IRS to say "Here's what we think we owe you and why. If you don't like that, go and fill out the forms."
Nope. Here in Sweden, your employer reports your pay to the tax authorities, and deducts your tax from every paycheck. Banks report your capital gains and losses.
In March or April, everyone gets sent their pre-filled tax form for the previous year. You can change it as needed, for example adding income from a side hustle, or making deductions -- though those are fewer and less complicated than the US from what I understand. Many common deductions (e.g. for mortgage interest) will be pre-filled too.
Most people will not need to change anything, and so can approve the pre-filled form through text message or digital signature (or phone robot for old people iirc). If you do need to make changes, it can be (but doesn't have to be) done online without too much trouble. Don't get me wrong, it's not always trivial, but it seems significantly more pleasant than what I hear about the US system. And, again, the vast majority of people just have to send a text message some time in March or April.
Sweden has the mortgage interest deduction too? I wonder how wide spread that is. I thought that was a US financing lobby invention sold under the guise of the "American Dream of Home Ownership."
My understanding (based on no research at all) is that it was introduced here for a similar reason: "homeownership is good". And it probably is.
But I don't know if the deduction helps with that. People buy what they can afford, so the "discount" is probably consumed by higher interest rates and inflated prices. It can also be argued that it's a form of regressive taxation: the rich are eligible for bigger mortgages, and therefore have more to gain from the policy.
Personally, I would like to see it removed. Any serious attempt to do that it's probably political suicide, though, since it would have a noticeable impact on many people's finances. And who knows how it would affect the housing market. Maybe if it was done gradually over many years.
The Netherlands have been passing various restrictions on mortgage interest reductions over the past few years. Many are phased in over 30 years.
With the current interest rates it's an ideal time to pass any tax changes anyway - they won't hit new mortgages nearly as hard as 10 years ago, and the housing prices can use some downward pressure anyway.
I mean, people still prefer to not have to interact with the tax authorities, so maybe heaven is a bit of an overstatement. And I have no personal experience with the US system. But yeah, I sure wouldn't want to switch. :)
" Nope. Here in Sweden, your employer reports your pay to the tax authorities, and deducts your tax from every paycheck. Banks report your capital gains and losses."
It's literally IDENTICAL in USA yet there's a hellscape come tax time. The IRS already has all th e info they need and know the amount. Lobbyists (intuit & H&R block) have made it worse for decades.
Crazy isn't it?
France, my employer reports how much they pay me to the state. I tell the state how much I made, in a pre-filled form of everything they know. That includes salaries, donations, as well as the default 10% tax write-off. I can of course adjust this form. I can also tell the state how much I expect to make this year, and the state will tell my employer to directly deposit a specific percentage of my salary directly for taxes to the state. When doing my tax declaration, if anything has changed, it gets all settled in September. If I didn't pay enough yet, I'll be asked to finish paying it (ex: this year, where my estimation of what I'd make was too low, and I'll owe 1000€ by September). If I paid too much, I'll be reimbursed (or it'll be paid in advance for next year.)
All in all, revenue tax takes about 5 minutes a year for me to check that what they have is correct (since I am salaried, which is the easy path), and maybe 5 more minutes to adjust my monthly tax rate.
Brazilian here. For us, there is no third party; we must use the tax filing software from Receita Federal (our IRS), available for free on the website (Java version, for desktops), within the website itself (web version), or the smartphone app. This software has been available since the 90s; initially a DOS-only application, later a Windows-only application, then a pair of the Windows-only application and the Java application, then the Windows-only application was dropped in favor of the Java application, and later came the web and smartphone versions. For a while, we could also use the older paper forms, but that hasn't been an option for over a decade.
Based on what I’m hearing from folks inside the gov, this administration will encourage and support the IRS in flexing to be more citizen friendly and focused instead of rolling over for Intuit and Co (which personally I find to be refreshing).
I pay my taxes too. But hiring more audit agents will have them finding work to do. An audit for me, even though I’ve kept good records and everything is on the up and up, is a lot of time and money and I want to avoid.
This sounds like all those police departments who hire cops and then end up writing lots of speeding tickets to pay for the cops.
The IRS has traditionally not audited high net worth individuals proportionally to all taxpayers due to a lack of resources. This hiring is to support auditing those taxpayers (based on news reports and administration communication).
When the IRS is underfunded they unable to expend the funds needed to tackle complex audits. Who has complex audits? The wealthy 1. 100M & billionaires 2. multi-national corporations 3. venture capital tax schemes.
According to the CBO: https://www.cbo.gov/publication/56467
"CBO estimates that increasing the IRS’s funding for examinations and collections by $20 billion over 10 years would increase revenues by $61 billion and that increasing such funding by $40 billion over 10 years would increase revenues by $103 billion."
Additionally the poor are now being audited as much as the rich (but not the super rich). Maybe this could be seen as IRS incompetence but I think given proper funding and motivation they'd be happy to turn this around. The decline of the auditing of the wealthy went hand in hand with IRS de-funding.
For the good of the economy, they should be looking at how much hiring an auditor and doing more audits helps the economic outlook of the whole USA.
Audits on honest people cost those people time they could use to generate economic value.
Audits on the dishonest might prevent dishonesty, but the economic value gained for the country isn't equal to that collected from the dishonest person - since you are reducing their spending on rolexes...
This should be good news for the regular tax payer and incentivize those making $400k+/yr to play by the rules or risk jail time. Stop stealing from the treasury and start helping your fellow citizen.
That's the one I tried before going back to TurboTax a couple of years ago. And unfortunately, it's hard to tell whether their forms are inadequate (or broken) until you're deep into the process.
We badly need legislation to force the IRS to send every taxpayer a bill which they can pay.
They certainly have enough information from employers, banks, estimated payments from contractors, etc. Otherwise, how would they decide who to audit? How would they know to mail you an adjusted return for a past year?
It feels completely ridiculous that we need to calculate these things ourselves, only to be bugged by the agency for entering the wrong numbers. Just tell us what you think the bill is, and let us make a counter-claim if we think you're wrong!
But this has been true for years, decades. I'm not holding my breath.
This is one of those areas where Congress has purposefully injected friction into the system specifically so that businesses can seek rents. It’s incredibly obnoxious, but the amount of money made is so obscene that it makes bribing[0] Congress people trivial.
0 - Yes, I know it’s technically a donation. But if it walks like a bribe and it quacks like a bribe, I see no reason to arbitrarily let them off the hook.
It walks like a bribe, it talks like a bribe, it quacks like a bribe, it flaps like a bribe, it lies like a bribe, it hides like a bribe, it looks like a bribe, it feels like a bribe, it smells like a bribe, what is it?
Lobbying, duh. Definitely not a bribe.
It's pretty wild that legal lobbying + the realities of campaign finance effectively mean that our government has instituted a policy of mandatory bribery. I mean, democracy is always going to have warts, but this one is really special.
Seriously, though, go on. I'm dying to hear how you've got a definition of "lobbying" that cleverly gerrymanders around all the corrupt dealmaking and only includes purely informational communication. I can't wait to hear why we should confuse this definition -- which seems precision-engineered to deflect blame away from certain shortfalls in our political apparatus -- with the common usage of the term, which frequently refers to real life events and therefore inevitably includes a great many situations where the thing going "quack" is, in fact, a duck.
Lobbying is advocacy. If you call your congressperson you're lobbying. If the ACLU files an amicus brief in a SCOTUS case that's lobbying. When the NRA hosts events for their members to speak to congresspeople that's lobbying.
Registered lobbyists work for interest groups to have their voices heard. It's not always innocent, but it is not the same problem as campaign financing. Money is not changing hands.
> This is one of those areas where Congress has purposefully injected friction into the system specifically so that businesses can seek rents.
Its sticky because that's not the only purposes; GOP politicians who want to campaign against taxes to push serial tax cuts weighted to the rich as the solution to every problem also want to preserve the current filing system as a source of leverage because it makes the perceived burden of taxes higher, though some of them (e.g., flat taxers) are willing to trade it off in exchange for a permanent massive downward redistribution of tax burden.
I'm not talking about pushing “exemptions”, I’m talking about motivation for specifically not allowing the IRS to prepare and provide taxpayers with a baseline calculation based on information they have as a complete return for the common simple cases requiring supplemental filing for compelx cases.
> Notice the Democratic support state tax exemption
Both Democrats and Republicans support the State and Local Tax Deduction; the GOP supports a dollar cap so as to increase pressure for low-tax state policies (more than would exist without the deduction at all or with an ubcapped deduction), Democrats prefer it be untaxed which leaves the federal hand off state tax policy.
I'm generally less anti-lobbying than most - I think there's value in corporations being able to express their desires to elected officials - but this is the case that just completely destroys the validity of it.
It's just unjustifiable that we have the current system in place. There is not one single, rational argument to be made that US citizens are better off having to file their taxes every year. A system in which people get a tax bill from the government with an explanation of how it's calculate, then they can file their own tax return if they disagree, is just clearly better in every single way.
I think Intuit is a company that makes a lot of really useful products, but I can't look at them as anything except just utterly unethical because of their lobbying on this topic.
What you describe is only half the process, they don't know about your expenses and deductions, which is where most of the work is when preparing the tax return. Do you file your own taxes and do you itemize? It's not something I want the government to do for me.
Here we go again. Expenses and deductions don't apply to most tax filers. There is no reason to keep a broken system in place for the benefit of 10%.
If there are deductions to be made we can do the same as other modern countries, have the taxpayer fill in an amendment and recalculate the proper amount.
Exactly. The standard deduction in the US recently doubled in size. That covers a lot of people. We could cover even more if the IRS sent you an email in January and said, "We expect your refund to be $X. If you think you have more than $12k in deductible expenses, click here to tell us about them."
People for whom that's not enough can still go through the whole ritual.
TBF, deductions aren't "gaming the system", but rather a very limited form of what companies get to do for all of their expenses. I agree they're a pain in the ass and much nicer to not do personally, but I don't see much of an alternative (besides not itemizing). But really if you want to make the tax code more fair, the restrictions on individual deductions for transportation, housing, food, etc should be eliminated. Those expenses are in fact required for you to earn your income.
Social security was a good thing, and it happened. Medicare was a good thing and it happened. Even Obamacare had lots of good things, and it happened. So did the child tax credit. And the endangered species act. The establishment of the Environmental Protection Agency. Our air, btw, has a lot less smog and small particles than it did in the 80s.
Cynicism like you expressed may earn likes in some contexts, but it isn't accurate, and it isn't helpful.
Nothing has happened in my lifetime that has made my life better compared to my parents. The ACA mandated I buy private insurance, and that hasn’t really helped me at all. I still got charged almost $1000 for an ambulance ride last year, one that I didn’t really have a choice on.
So no, I don’t think anything good happens in America. Maybe it did at one point, but I’ve never seen it. What I see instead are trillion dollar bailouts for banks, airlines, and auto manufacturers. Student loans, though? Yeah, get fucked. Qualified immunity? Yeah, get murdered.
Every system will offer some disproportionate rewards to the groups that are able to exert some control over it. In our system it seems that large business interests, wealthy individuals and the politicians themselves are the ones able to cash in somewhat on this control. In general, I think most people living in the real world accept this as human nature and we collectively try to minimize this corruption.
I’m aware of many systems where this disproportionate distribution of benefits to certain groups is much worse. But in theory, it would be utopia!
Which countries do you feel operate in a “better” or less corrupt way?
Note that I wouldn’t consider “in theory” responses valid answers to that question.
None. I believe the answer to the Fermi Paradox, at least for humanity, is “capitalism.” There are no governments or international institutions which are capable of responding to climate change. Every organization with political clout is based around growth, and that is the very thing which must be halted if not reversed.
You cannot depend upon the IRS to send you an accurate bill.
Anyone who has ever dealt with IRS will know that they seem to arbitrarily inflate the amounts they ask for. When this happens, you need a tax attorney to point out to them that they got it wrong. Rinse and repeat a few times and they will eventually get it right after several years and many iterations.
Every proposed legislation I’ve ever seen on this would let the individual tax payer still fill out a Form 1040 and send it in, if they disagree with the IRS prepared numbers.
No, if taxes are actually going to be non citizen-hostile, the IRS needs to get it right the first time. If everyone knows you need to find an appeal to get the real tax rate, you haven't made any progress, just moved the annoyance to the appeal stage.
You need to ask why it wasn’t right. It’s not that their computers can’t do basic math - usually it comes down to incorrect data in (e.g. your payroll processor or broker listed something incorrectly) or missing data. In most cases, supplying the complete records will solve that problem.
But it’s not an appeal. It would be the exact same process as if you filed your taxes for the first time.
And for most people the tax bill that arrives would be correct. The parts that wouldn’t be correct would be if there are deductions you’re eligible for, that the IRS may not have any documentation of.
Most people don't hire lawyers to fight protracted legal battles with the IRS, so it's a bit ridiculous to suggest that we optimize the system for that path. Besides, nobody is suggesting we take that option away from you, or from anyone else who finds it worthwhile.
I've never been audited by the IRS but I've been hounded by the CRA (Canada) 3x now and each time it's been a huge pain, one time dragging on more than a year partially because it was so hard getting CA FTB to send me my tax transcript. Every time they've audited me they've ended up having to refund me more, did that stop them?
Right now the IRS thinks I'm using a fake American address for some good forsaken reason despite me paying almost 100k in taxes the last few years under the same name/address. And for what?! Half a penny in taxable intrest?!
I never suggested that the system should be optimized for the < 10% path. I was simply pointing out that the current IRS culture is not based upon accurate accounting. They seem to "accidentally" make errors in their favor, and then send notices out to taxpayers.
I am all for a flat tax. It would be fair and easy.
I dispute your suggestion that IRS culture tends to make errors accidentally in their favor. First, it is not my experience at all. To me it just sounds like lemons.
> Anyone who has ever dealt with IRS will know that they seem to arbitrarily inflate the amounts they ask for. When this happens, you need a tax attorney to point out to them that they got it wrong.
The people I know who weren’t cheating or in very complicated scenarios did not have this problem. It’s certainly possible but remember that our impressions are skewed by a large, well-funded media operation promoting the idea that the IRS is horrific for political and business reasons. Intuit alone makes billions from that idea.
A retired IRS auditor mentioned that around half of the cases they processed ended up finding deductions which benefited the taxpayer more than the discrepancies.
Well you don't know me. I usually leave off a few deductions just in case I get audited. That way the IRS will end up owing me money after the audit. Despite this, there have been a number of screw ups. The latest was in 2017 when they "lost" the cost basis (submitted by me and my brokerage) for my investments and then sent me a bill for over $200k of capital gains.
I have known people who could not be bothered to file their taxes. The IRS would bill them and they would pay. If somebody pays the IRS without question, it seems to set off a red flag and the IRS will immediately follow up with another bill. Also, if you do not file, you get zero deductions and they will base their bill on that.
> Well you don't know me. I usually leave off a few deductions just in case I get audited. That way the IRS will end up owing me money after the audit.
So you’re saying that you give the government a donation every year just in case you get audited so you might get it back that year? This does not seem like a financial win.
Again, I’m not saying that the IRS are perfect — only that it’s not wise to base your opinion on anecdotes. This is both a political issue and one where a lot of people have an incentive to blame the government for catching them, while everyone else has little reason to say they haven’t had problems. It’s like learning about feminism at a bar favorited by middle-aged divorced guys.
I choose to not claim several deductions to which I am entitled. E.g. Use of vehicle for business, Home office deduction, etc. I could easily defend these deductions, but claiming them would increase the odds of an audit. I don't want to waste my time and money dealing with an audit, so I pay a little more and decrease my odds of having one. I do not view this as a "donation".
This wouldn't be possible unless we had government surveillance of everyone. If I sell junk in my house for a profit there is no IRS record nor is there a government record for selling Bitcoin for cash or a million other possible transactions.
The IRS could make things easier to fill out but they can't just send you a bill.
What do you mean? It's already possible in countries that use the push-tax-bill system. If you're a small business, you self-report. It will be literally the same situation for any small business under a push or pull system - they either choose to self-report or not self-report. No government surveillance required.
The whole point of the push system is to make it easier for anyone who has a simple tax setup. That is, they work for an employer who is continuously reporting on pay checks to the IRS and state revenue departments.
> If I sell junk in my house for a profit there is no IRS record nor is there a government record for selling Bitcoin for cash or a million other possible transactions.
Yes, but most people do very few of the possible transactions that don't create records, at least so as to incur income tax liability. Requiring supplemental filing only where actually necessary would vastly reduce the burden on most taxpayers, and sending a baseline bill with notice of the need and conditions for supplemental filing would be a viable alternative to the current system.
The easy solution that the UK takes is to have £1000 of untaxed casual income. If you sell things at home for profit and make less than £1000 a year (which is most people), then you don't have to do anything.
Selling stuff on craigslist, sure. but they're already all over bitcoin if you buy/sell it with your bank/cc info. They even have several contractors trying to break the monero rings.
> We badly need legislation to force the IRS to send every taxpayer a bill which they can pay.
The truth is the IRS bill would be wrong and the IRS would have countless challenges and no practical ability to review any in-house type of challenge and all cases would needlessly result in court.
I had a horror story that took 2-3 years to resolve went all the way to tax court for a fraudulent 1099 in the amount of $75k presumably so the company could take a deduction and the IRS was seeking about 30k in taxes/fees/interest. Tax court require an agreement on the facts and issues before trial which the IRS dragged its feet until about 1 week before the agreed order was due when the conceded I was right and owed $0 taxes.
To even get to that point there were about 1/2 dozen phone calls with the IRS which took hours and always resulted in the employee confirming the believe me and I won’t owe anything. There were about 3 formal written responses I provided but IRS kept giving me standard boilerplate letters that I hadn’t proved I wasn’t paid the 1099 income reported and escalating the matter until finally they adjusted my return and forced my hand into filing a petition for tax court. Once in tax court their is supposed to be a stay on the matter until resolved by the court, but the IRS put me in collections, so I filed a motion which the Judge granted in chamber without a hearing to remove me from collections, this was after multiple conversations with the IRS attorney who never did anything but laugh when I called it a IRS automated track of hell and otherwise did nothing to looking into what I felt should have been pretty obvious case of fraud by the company that falsely reported the 1099 income.
This took hundreds of hours and the only way possible I got through it is that I happen to be an attorney.
This has nothing to do with the IRS sending automated bills. It's not like they would have not pursued you if you'd chosen not to report the fraudulent 1099. This is an entirely separate problem.
This, combined with the ability to audit back 20 years if they find any deliberately incorrect tax returns, is a neat way to only audit a tiny fraction of returns, while keeping losses to fraud small.
>> We badly need legislation to force the IRS to send every taxpayer a bill which they can pay.
> The truth is the IRS bill would be wrong and the IRS would have countless challenges and no practical ability to review any in-house type of challenge and all cases would needlessly result in court.
That's not how it would work. The IRS wouldn't send you a bill: it'd sent you an offer in the form of a pre-filled tax return. You accept the offer or you submit your own tax return.
That's how most of the world does it and it works fine. And for businesses it can be just as is.
Its the insane burden and waste of time for the average person that is the problem.
Imagine how much more productive the entirety of the US would be if tax filing would be simple. The amount of time saved would be enormous, there are approx 140 million tax payers and if everyone would spend just an hour (in reality its probably multiple days) per year doing tax related work you get an idea how much time is wasted.
This seems like another case of American exceptionalism. Countless countries around the world do this, they do it by having employers report income when they pay people. I’m in the UK and other than a short period of being self-employed I’ve never had to fill in a tax return, I just get the amount I should deducted from payroll each month and get on with my life. Occasionally I’ll change jobs which causes my tax code to move and I get a cheque in the mail from HMRC for the amount I overpaid.
Employers report that in the US, too. But that is just the beginning of the story. The IRS doesn’t know about your charitable contributions or your extra income from that side-job you did for your uncle until you report it. On the form.
The way it works in the UK is there's £1000 of untaxed self-employed income.
So you only need to bother with a "self-assessment" tax return if you earn over £1000 of casual income.
And then, if you have less than £1000 of expenses related to that income, you don't have to justify the deductions so you just enter the income as a number and you're done.
Charitable contributions are claimed by the charity at the basic taxpayer rate. So when you donate £1 they can claim 20p from the government.
You only need to itemise your charitable contributions (to claim back the difference between the 40p of tax you paid and 20p the charity got) if you are a higher rate taxpayer, which is something like £70k per year gross, so you're well into <5% of people here.
I'd expect if we moved towards a direct-bill model, tax policy would begin to optimize for "causes least frustration for the 200 million common-case taxpayers who do the direct billing."
We'd probably see more monkeying around with the standard deduction. I know for me, and presumably a lot of people (especially those without major mortgage interest), the current standard deduction exceeds the benefits to be had by itemization-- and claiming the trivialities like charitable donations or medical expenses.
For me, cost/time savings of paying a few hundred in fees is cheaper than a CPA (or spending an entire weekend doing it myself).
I never protest what they send back - either some check or a bill. I just take care of it and don't ask any questions.
If the IRS doesnt think I am paying them enough money, they can feel free to send me a bigger bill or assess greater fines.
I may get audited but I just don't give a shit about this broken mess anymore. I don't have anything to hide, and I would happily pay whatever shortfall is calculated just to get them out of my life again.
I am fairly confident that as long as you are paying your taxes and not giving the IRS a hard time (i.e. WRT overseas tax haven shenanigans and insane corporate structures), they will not fuck with your life.
A quality tax preparer is no more than "a few hundred bucks". It is a more direct and quicker route than this faintly dramatic treatment, TBH.
You're right in that the IRS will treat people operating in good faith just fine, but a decent preparer makes it so much easier. My guy just asks me for my stuff in January and does his thing.
> A quality tax preparer is no more than "a few hundred bucks".
I do not want to continue to contribute to the tax preparation ecosystem any more than absolutely necessary. Paying a CPA to file my taxes is no different than paying intuit for a new copy of turbotax every year. I don't see a distinction in principle. They probably use the same software internally.
My tax preparer is also my accountant and one of my financial advisors. Tax preparation is a service he offers. And I have access to all of the spreadsheets he uses to calculate them, so I'm fairly certain it's not "the same software internally".
If you don't see a distinction here, I suspect it's because you don't want to.
The IRS only gets your employer's contribution to taxable revenue. They don't have a way of knowing what you do with that income, which may be taxable. That's what you're supposed to do.
Can people in the EU chime in on this? My understanding is that is how France does it (just go to a website, pay what the gov't says you owe because the gov't has all the details).
> I'm not holding my breath.
Yeah I assumed back in the 80s this was a no brainer.
Edit: I see below that many from Sweden, UK, Germany have chimed in and basically said only the US is this stupid when it comes to federal and state income taxes. Thanks for the info.
Norway is technically not in the EU, just the EEA (European Economic Access) zone. But we do it the same way. Our tax authorities get all information they need from employers, banks, stock brokers, etc. Each citizen then get a tax settlement report and can submit a pre-filled tax statement online. You make any adjustments to taxable income or tax deductions that might be missing, and then you are done. Pretty simple.
The french equivalent of IRS provides citizens with a pre-filled tax return form with information from employers, banks, etc...
You can fix it on the web, add stuff not known by IRS, simulate tax level, and then validate it on the web.
You can explain in text boxes if you have a doubt about something (which I did for the first time this year since I did contract some home exterior insulation work but it was done in more than one fiscal year and the subsidy rules for such work changed between the two years).
Something approaching this is certainly possible and is the status quo in other countries. I remember a Swedish colleague demonstrating their tax system by filling out his return on his mobile phone live in front of an audience about 5 or 6 years ago. It involved literally no typing - all the numbers were already there, he just had to check them and hit "accept" or challenge anything that was wrong. At the end it told him how much he still owed/was owed.
In the UK a very substantial portion of my tax return is trivial to fill out, and filing online doesn't require any kind of software - the uk hmrc website does all the calculations for you. I was absolutely flabberghasted when I had to complete a US tax return a few years back at how incredibly archaic and byzantine the process was. It could certainly be a lot simpler which would save time and money for both the citizens and the IRS themselves.
IRS has tried to do this for decades, which is one reason why the free file program exists. Intuit is the #1 company lobbying against the IRS giving out a paper that says the number you owe.
Right on, but you forgot to mention the other part of their business model with is to sell out their customer's financial information to the highest-paying bidder.
In addition to TurboTax, Intuit owns Mint.com, Credit Karma, QuickBooks, and other services. All of these services are covered under Intuit's global privacy policy, which states that Intuit uses personal information in multiple privacy-violating ways:
> For joint features, sales, promotions and events. We may share your information with third-parties companies who are jointly providing features, sales initiatives, promotions or events with us.
> With financial services providers. We may share personal Information with collection agencies, credit bureaus and loan service providers, and payment card association members. We may also share your personal information with other companies, lawyers, credit bureaus, agents, government agencies, and card associations in connection with issues related to fraud, credit, defaults, or debt collection.
> We may share your information with our affiliates and subsidiaries for everyday business purposes as described in this Statement, including for marketing purposes.
Considering that Mint.com and Credit Karma are free of charge, it's obvious that Intuit is using personal information harvested from these services to generate revenue in the ways described. TurboTax and QuickBooks are mainly paid products, but have the same privacy policy.
On Intuit's privacy statement page [0] there is a "How We Share Your Information" section which contains the following paragraphs (amongst others):
> When you connect with an Intuit Platform partner. You may be provided with offers, products, and services from third-party companies who integrate with our Intuit Platform (“Platform Partner”). If you choose to interact with a Platform Partner, apply for their services or offerings or otherwise link or sync your account to a Platform Partner’s product or service, you consent and direct Intuit to share your information, including personal information, to the Platform Partner providing the service or offering.
> For joint features, sales, promotions and events. We may share your information with third-parties companies who are jointly providing features, sales initiatives, promotions or events with us.
> With financial services providers. We may share personal Information with collection agencies, credit bureaus and loan service providers, and payment card association members. We may also share your personal information with other companies, lawyers, credit bureaus, agents, government agencies, and card associations in connection with issues related to fraud, credit, defaults, or debt collection.
> With our affiliates and subsidiaries and your right to limit information sharing. We may share your information with our affiliates and subsidiaries for everyday business purposes as described in this Statement, including for marketing purposes.
I stopped using turbo tax a long time ago because of their privacy policy. I use olt.com now.
I almost feel like "doing your taxes" is one of those things that is like going to buy a new car. Everyone hates it, but when Saturn came along and said "no haggling, just best price on every car" people didn't actually like that.
I go to buy a new car and I HOPE I got a great price, I worked on it, I bargained, I did the research. They say I did really good this team, I got such a great deal!
I "do my taxes" and I HOPE I paid as little as possible. I worked on it, I kept my receipts, I did the research, and maybe I even paid someone to do all that for me and they say I did really good this year, low tax bill!
Both of these things suck, but if I just got a bill from the IRS I'm just going to think "maybe I could've done better" just like if I see a car that just has a price I am going to think "maybe I could've done better"
It’s funny, I don’t really feel that way about spending money on stuff, especially not cars which are a total nightmare. I guess I consider my time a lot more valuable? Probably why the higher prices for Apple products don’t bother me. I just want something consistent that I don’t have to think about.
For virtually everything in life (not just cars and taxes), there's always "maybe I could have done better". This attitude is a recipe to be always dissatisfied and unhappy. The approach should be "did I do a good job?". For example, if you were able to get $1000 off on the car but most people are able to get only $800 then the answer is "yes" and you should be happy and content even though someone may have gotten $1200 off. Once you start evaluating your actions and decisions like that, life becomes much happier and content.
> Both of these things suck, but if I just got a bill from the IRS I'm just going to think "maybe I could've done better"
I don't think anyone is advocating for removing the option to file taxes manually. Just let the IRS send a bill by default, and give you the option to file your taxes yourself if there's something wrong or you think you can do better.
> when Saturn came along and said "no haggling, just best price on every car" people didn't actually like that.
Uh-huh. The world is full of people willing to make things easy for a small fee. In my experience, many of them advertise as bargain options without actually offering a bargain. Is that what Saturn was doing? Does the market really have a perverse enjoyment for haggling or was Saturn full of shit and the market called them out on it?
Saturn was quite popular – what killed them was internal GM politics. As the only American car approaching Japanese quality they sold quite well even during the early 90s recession, which was seen as cannibalizing other divisions within GM and their quality improvements prevented sharing components across other GM lines. I would not draw any lessons from that other than that the “startup within a large company” path is perilous.
For taxes, I think most people would be quite happy to have a “we think you get/owe $x” statement arrive since it’d require no action and would give ironclad audit protection. People with complex taxes, distrust, or intention to cheat would still do their own but I’d be quite surprised if 20 years later the U.S. didn’t resemble most other countries.
I think this should not be downvoted. It's an honest expression of a plausible feeling.
My dad always said his favorite video game was TurboTax because when he got a high score, it was real money. He loved spending hours every year optimizing his return. He was also the sort of person who really got into rewards cards and airline miles. It was satisfying to him to work the system in his favor. And he's not alone. I once accidentally ended up at a meetup of people who were airline miles fiends. They were very... dedicated.
Personally, I think all of that stuff is tedious nonsense. I'm not interested in letting companies manipulate my behavior. If I'm going to work hard at something, it will be something that creates value. But I recognize I'm an outlier here. Some people would really miss doing their taxes because they've gotten good at it. Which is why it's good that the proposed laws will let them keep going if they want to.
I think it's more like the thing where everyone hates it, but it doesn't matter because US public policy literally has nothing to do with what an average person wants, except by accident, and reflects the desires of the wealthy pretty well.
I wish I were joking or just being cynical. This is a legitimately defensible position. Political science studies have shown this sort of thing: https://oxfordre.com/politics/view/10.1093/acrefore/97801902... . I believe it because it reflects my experience in the US in my lifetime. Nothing happens with government except knee-jerk reactions to things like the Sept 11, 2001 attacks and the TSA. Aside from that, business as usual. The infrastructure crumbles, healthcare costs keep going up, tax code never gets fixed, and on and on. It works fine for the wealthy, doesn't represent or help the people, and never gets any better. That's all, that simple.
Incidentally, I didn't downvote you. I just disagree.
I agree with the many comments here calling for an IRS-driven system.
But I'd also like to see improvements for the 10-13% of people who cannot be correctly billed by the IRS (I'm one of them). I say this because we're already so close to how it ought to be ... for several years now, I've used freefilefillableforms.com to file my taxes as a self-employed person with periodic capital gains and other stuff. It's not really a great model for how such a website could be designed, but it's not actually terrible and generally gets the job done.
However, it has been intentionally hobbled: there are several places where you must manually transfer numbers from one field to another, or from one form to another. There's clearly no technical reason for this, and the system will also not report any error if you do not do so (making it trivial to have major errors, despite all the data being input correctly).
I can only conclude that it has been hobbled by the same motivations that affect the tax reporting/return field in general.
I'd definitely like to see this done even better, but a good small step would be a bill for force this site to do 100% of what it clearly already can, rather than 95%.
So I wonder what will happen if they are somehow exiting this space. The announcement seems to only be about the no-fee for < $75k income folks side of things. I wonder if they will continue to run this, if it will shut down, or be transferred elsewhere.
Why do we even have to pay income taxes in the first place. Even companies get a far better treatment as they can at least deduct their expenses. Humans are treated worse than a register entity.
And for what? To send troops abroad for some killing, ultimately benefiting only a tiny few.
For health care, infrastructure, police, education?
The whole thing is a joke. Perhaps this move will make people wake up and ask for income tax on individuals to be voluntarly, somehow I still doubt so.
I am waiting for the day when some ransomeware attack happens to Intuit a day before taxes are due and it causes such a disruption that congress will act and this shit is over but I guess I am dreaming...
Intuit just decided that it could not make enough money with this scam, so they stopped using this particular one. It's probably a wise decision. Claiming that you're providing a free service, while making it pretty difficult for users to find it so they will use your paid services instead, is definitely wrong from a moral point of view, but it might also be shaky from a legal point of view. The bottom-line was probably just the profit.
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[ 0.19 ms ] story [ 188 ms ] thread('Normal' income tax is taken through 'Pay As You Earn' by employer's payroll, you only ever receive net pay; capital gains, dividends, 'innovation', etc. have tax free thresholds that mean you don't have to worry about it until (if) it's big. And then you can just file it online (or paper) directly with HMRC (IRS equivalent), or pay a tax advisor if you want of course, but that's certainly exception not norm.)
Much easier in Romania, if you have only employment income nothing to do. For capital gains or other incomes basically a single form, only 10% flat taxes so you know what you owe.
I moved here from the USA and it feels simpler for the average person. You don't declare how many withholdings you get (I always used 0 so I could get some money at the end of the year), you just tell your employer your tax class and everything else is handled, and any refund is based on if you paid too many taxes somehow (there are some situations where you might have overpaid taxes inadvertently, like if you have a change in income part way through the year, and if this is the case when you file the return they analyze your income data and give you a refund).
Be an adult.
You are getting scammed by the government, who have made it burdensome to report all of this income. A tax professional or a service like Intuit are trying to help here. If the government wanted to make this process easier for the small percentage of people like you, they would have done so, but they haven't, because they have weak volition and desire for creativity.
Furthermore, my taxes take me less than 1 hour per year. I prefer the current system where I tell them what I think I owe.
If they told me what I owed, and I disagreed, what recourse would I have? I guarantee it would take more than an hour.
I'd have to drive several orders of magnitude more than I do to spend tens of thousands of dollars on gas each year.
I'm tired of arguing with malicious people on the internet.
No; under every actual proposal, people who have these complicated deductions and other specialized needs can still file exactly the way they do today so that they can get their taxes calculated properly.
And making sure that >50% of Americans—in particular, the >50% who have the simplest taxes, which correlates highly with lower income—don't have to "spend 1 hour and $39 per year" with private companies to accomplish their legally mandated tax filing is a very good thing, even if it were to actually increase the inconvenience for the wealthy and complicated.
Which, again, this wouldn't.
So please put aside the ad hominem attacks, which I believe are against the HN guidelines anyway.
...but the thousands of dollars my wife paid directly to the government two years ago for her green card application which still is not done is totally fine?
If there was an Intuit for green cards, I would be camping outside to be the first to give them my money.
Further, you make this point in a later comment:
> I'm tired of arguing with malicious people on the internet.
I don't see anything remotely malicious in this thread other than people not agreeing with your point, and this whole thread seems to be pretty healthy. With that in mind it's quite interesting to me that you're implying that this healthy discussion is malicious.
You'd file your taxes exactly as you do now, losing nothing.
But that's not my real issue with your comment. I agree adults have to tough things out sometimes. But toughing out a problem that doesn't need to exist is macho nonsense. You might as well insist that people get rid of their indoor plumbing, because we got got along fine without it for most of human history. You can go dig your own outhouse if you want, but don't suggest somebody else is inferior for not going out of the way to make their life harder unnecessarily.
I am not saying that you should tough something out for no reason. I have electricity coming to my house to make my life convenient, which I pay for. I have water coming to my house, which I pay for.
But I cut my own grass manually. Why? Because I felt the prices offered to me were not fair, and that the job was not complex or hard.
Either you pay a tax professional if you feel the work is too complex and the price is acceptable, or you do it yourself.
You can try to fight the government on this one, and you might win (even I hope you do), but at what cost? Certainly it is not cheaper than $39 a year.
Wait, what? Are you actually arguing that electricity is a convenience?
I agree that the modal W2 worker does not need such a booklet. But they don't need to fill out tax forms at all. The correct solution is not to make them pay $39 for software they don't need. It's for the IRS to say "Here's what we think we owe you and why. If you don't like that, go and fill out the forms."
In March or April, everyone gets sent their pre-filled tax form for the previous year. You can change it as needed, for example adding income from a side hustle, or making deductions -- though those are fewer and less complicated than the US from what I understand. Many common deductions (e.g. for mortgage interest) will be pre-filled too.
Most people will not need to change anything, and so can approve the pre-filled form through text message or digital signature (or phone robot for old people iirc). If you do need to make changes, it can be (but doesn't have to be) done online without too much trouble. Don't get me wrong, it's not always trivial, but it seems significantly more pleasant than what I hear about the US system. And, again, the vast majority of people just have to send a text message some time in March or April.
But I don't know if the deduction helps with that. People buy what they can afford, so the "discount" is probably consumed by higher interest rates and inflated prices. It can also be argued that it's a form of regressive taxation: the rich are eligible for bigger mortgages, and therefore have more to gain from the policy.
Personally, I would like to see it removed. Any serious attempt to do that it's probably political suicide, though, since it would have a noticeable impact on many people's finances. And who knows how it would affect the housing market. Maybe if it was done gradually over many years.
With the current interest rates it's an ideal time to pass any tax changes anyway - they won't hit new mortgages nearly as hard as 10 years ago, and the housing prices can use some downward pressure anyway.
It's literally IDENTICAL in USA yet there's a hellscape come tax time. The IRS already has all th e info they need and know the amount. Lobbyists (intuit & H&R block) have made it worse for decades. Crazy isn't it?
All in all, revenue tax takes about 5 minutes a year for me to check that what they have is correct (since I am salaried, which is the easy path), and maybe 5 more minutes to adjust my monthly tax rate.
https://www.propublica.org/article/the-ftc-is-investigating-...
Based on what I’m hearing from folks inside the gov, this administration will encourage and support the IRS in flexing to be more citizen friendly and focused instead of rolling over for Intuit and Co (which personally I find to be refreshing).
Stay tuned, progress ahead.
As the saying goes, “I like taxes, with them I buy civilization.”
This sounds like all those police departments who hire cops and then end up writing lots of speeding tickets to pay for the cops.
According to the CBO: https://www.cbo.gov/publication/56467 "CBO estimates that increasing the IRS’s funding for examinations and collections by $20 billion over 10 years would increase revenues by $61 billion and that increasing such funding by $40 billion over 10 years would increase revenues by $103 billion."
Additionally the poor are now being audited as much as the rich (but not the super rich). Maybe this could be seen as IRS incompetence but I think given proper funding and motivation they'd be happy to turn this around. The decline of the auditing of the wealthy went hand in hand with IRS de-funding.
"Americans who receive the earned income tax credit, one of the country’s largest anti-poverty programs, are audited at a higher rate than all but the richest taxpayers. " https://www.propublica.org/article/irs-now-audits-poor-ameri...
For the good of the economy, they should be looking at how much hiring an auditor and doing more audits helps the economic outlook of the whole USA.
Audits on honest people cost those people time they could use to generate economic value.
Audits on the dishonest might prevent dishonesty, but the economic value gained for the country isn't equal to that collected from the dishonest person - since you are reducing their spending on rolexes...
This should be good news for the regular tax payer and incentivize those making $400k+/yr to play by the rules or risk jail time. Stop stealing from the treasury and start helping your fellow citizen.
They certainly have enough information from employers, banks, estimated payments from contractors, etc. Otherwise, how would they decide who to audit? How would they know to mail you an adjusted return for a past year?
It feels completely ridiculous that we need to calculate these things ourselves, only to be bugged by the agency for entering the wrong numbers. Just tell us what you think the bill is, and let us make a counter-claim if we think you're wrong!
But this has been true for years, decades. I'm not holding my breath.
0 - Yes, I know it’s technically a donation. But if it walks like a bribe and it quacks like a bribe, I see no reason to arbitrarily let them off the hook.
Lobbying, duh. Definitely not a bribe.
It's pretty wild that legal lobbying + the realities of campaign finance effectively mean that our government has instituted a policy of mandatory bribery. I mean, democracy is always going to have warts, but this one is really special.
(quack)
Seriously, though, go on. I'm dying to hear how you've got a definition of "lobbying" that cleverly gerrymanders around all the corrupt dealmaking and only includes purely informational communication. I can't wait to hear why we should confuse this definition -- which seems precision-engineered to deflect blame away from certain shortfalls in our political apparatus -- with the common usage of the term, which frequently refers to real life events and therefore inevitably includes a great many situations where the thing going "quack" is, in fact, a duck.
Registered lobbyists work for interest groups to have their voices heard. It's not always innocent, but it is not the same problem as campaign financing. Money is not changing hands.
Its sticky because that's not the only purposes; GOP politicians who want to campaign against taxes to push serial tax cuts weighted to the rich as the solution to every problem also want to preserve the current filing system as a source of leverage because it makes the perceived burden of taxes higher, though some of them (e.g., flat taxers) are willing to trade it off in exchange for a permanent massive downward redistribution of tax burden.
I'm not talking about pushing “exemptions”, I’m talking about motivation for specifically not allowing the IRS to prepare and provide taxpayers with a baseline calculation based on information they have as a complete return for the common simple cases requiring supplemental filing for compelx cases.
> Notice the Democratic support state tax exemption
Both Democrats and Republicans support the State and Local Tax Deduction; the GOP supports a dollar cap so as to increase pressure for low-tax state policies (more than would exist without the deduction at all or with an ubcapped deduction), Democrats prefer it be untaxed which leaves the federal hand off state tax policy.
It's just unjustifiable that we have the current system in place. There is not one single, rational argument to be made that US citizens are better off having to file their taxes every year. A system in which people get a tax bill from the government with an explanation of how it's calculate, then they can file their own tax return if they disagree, is just clearly better in every single way.
I think Intuit is a company that makes a lot of really useful products, but I can't look at them as anything except just utterly unethical because of their lobbying on this topic.
If there are deductions to be made we can do the same as other modern countries, have the taxpayer fill in an amendment and recalculate the proper amount.
People for whom that's not enough can still go through the whole ritual.
Some in congress are working for this:
https://twitter.com/senwarren/status/1214310004804792320
https://twitter.com/SenWarren/status/1416088088934338562
Cynicism like you expressed may earn likes in some contexts, but it isn't accurate, and it isn't helpful.
So no, I don’t think anything good happens in America. Maybe it did at one point, but I’ve never seen it. What I see instead are trillion dollar bailouts for banks, airlines, and auto manufacturers. Student loans, though? Yeah, get fucked. Qualified immunity? Yeah, get murdered.
I’m aware of many systems where this disproportionate distribution of benefits to certain groups is much worse. But in theory, it would be utopia!
Which countries do you feel operate in a “better” or less corrupt way?
Note that I wouldn’t consider “in theory” responses valid answers to that question.
But that won’t happen.
So this would still be an option.
And for most people the tax bill that arrives would be correct. The parts that wouldn’t be correct would be if there are deductions you’re eligible for, that the IRS may not have any documentation of.
Right now the IRS thinks I'm using a fake American address for some good forsaken reason despite me paying almost 100k in taxes the last few years under the same name/address. And for what?! Half a penny in taxable intrest?!
I am all for a flat tax. It would be fair and easy.
The people I know who weren’t cheating or in very complicated scenarios did not have this problem. It’s certainly possible but remember that our impressions are skewed by a large, well-funded media operation promoting the idea that the IRS is horrific for political and business reasons. Intuit alone makes billions from that idea.
A retired IRS auditor mentioned that around half of the cases they processed ended up finding deductions which benefited the taxpayer more than the discrepancies.
I have known people who could not be bothered to file their taxes. The IRS would bill them and they would pay. If somebody pays the IRS without question, it seems to set off a red flag and the IRS will immediately follow up with another bill. Also, if you do not file, you get zero deductions and they will base their bill on that.
So you’re saying that you give the government a donation every year just in case you get audited so you might get it back that year? This does not seem like a financial win.
Again, I’m not saying that the IRS are perfect — only that it’s not wise to base your opinion on anecdotes. This is both a political issue and one where a lot of people have an incentive to blame the government for catching them, while everyone else has little reason to say they haven’t had problems. It’s like learning about feminism at a bar favorited by middle-aged divorced guys.
The IRS could make things easier to fill out but they can't just send you a bill.
The whole point of the push system is to make it easier for anyone who has a simple tax setup. That is, they work for an employer who is continuously reporting on pay checks to the IRS and state revenue departments.
What do you think W-2s and 1099s are?
Yes, but most people do very few of the possible transactions that don't create records, at least so as to incur income tax liability. Requiring supplemental filing only where actually necessary would vastly reduce the burden on most taxpayers, and sending a baseline bill with notice of the need and conditions for supplemental filing would be a viable alternative to the current system.
The truth is the IRS bill would be wrong and the IRS would have countless challenges and no practical ability to review any in-house type of challenge and all cases would needlessly result in court.
I had a horror story that took 2-3 years to resolve went all the way to tax court for a fraudulent 1099 in the amount of $75k presumably so the company could take a deduction and the IRS was seeking about 30k in taxes/fees/interest. Tax court require an agreement on the facts and issues before trial which the IRS dragged its feet until about 1 week before the agreed order was due when the conceded I was right and owed $0 taxes.
To even get to that point there were about 1/2 dozen phone calls with the IRS which took hours and always resulted in the employee confirming the believe me and I won’t owe anything. There were about 3 formal written responses I provided but IRS kept giving me standard boilerplate letters that I hadn’t proved I wasn’t paid the 1099 income reported and escalating the matter until finally they adjusted my return and forced my hand into filing a petition for tax court. Once in tax court their is supposed to be a stay on the matter until resolved by the court, but the IRS put me in collections, so I filed a motion which the Judge granted in chamber without a hearing to remove me from collections, this was after multiple conversations with the IRS attorney who never did anything but laugh when I called it a IRS automated track of hell and otherwise did nothing to looking into what I felt should have been pretty obvious case of fraud by the company that falsely reported the 1099 income.
This took hundreds of hours and the only way possible I got through it is that I happen to be an attorney.
> The truth is the IRS bill would be wrong and the IRS would have countless challenges and no practical ability to review any in-house type of challenge and all cases would needlessly result in court.
That's not how it would work. The IRS wouldn't send you a bill: it'd sent you an offer in the form of a pre-filled tax return. You accept the offer or you submit your own tax return.
Its the insane burden and waste of time for the average person that is the problem.
Imagine how much more productive the entirety of the US would be if tax filing would be simple. The amount of time saved would be enormous, there are approx 140 million tax payers and if everyone would spend just an hour (in reality its probably multiple days) per year doing tax related work you get an idea how much time is wasted.
So you only need to bother with a "self-assessment" tax return if you earn over £1000 of casual income.
And then, if you have less than £1000 of expenses related to that income, you don't have to justify the deductions so you just enter the income as a number and you're done.
Charitable contributions are claimed by the charity at the basic taxpayer rate. So when you donate £1 they can claim 20p from the government.
You only need to itemise your charitable contributions (to claim back the difference between the 40p of tax you paid and 20p the charity got) if you are a higher rate taxpayer, which is something like £70k per year gross, so you're well into <5% of people here.
We'd probably see more monkeying around with the standard deduction. I know for me, and presumably a lot of people (especially those without major mortgage interest), the current standard deduction exceeds the benefits to be had by itemization-- and claiming the trivialities like charitable donations or medical expenses.
For me, cost/time savings of paying a few hundred in fees is cheaper than a CPA (or spending an entire weekend doing it myself).
I never protest what they send back - either some check or a bill. I just take care of it and don't ask any questions.
If the IRS doesnt think I am paying them enough money, they can feel free to send me a bigger bill or assess greater fines.
I may get audited but I just don't give a shit about this broken mess anymore. I don't have anything to hide, and I would happily pay whatever shortfall is calculated just to get them out of my life again.
I am fairly confident that as long as you are paying your taxes and not giving the IRS a hard time (i.e. WRT overseas tax haven shenanigans and insane corporate structures), they will not fuck with your life.
You're right in that the IRS will treat people operating in good faith just fine, but a decent preparer makes it so much easier. My guy just asks me for my stuff in January and does his thing.
I do not want to continue to contribute to the tax preparation ecosystem any more than absolutely necessary. Paying a CPA to file my taxes is no different than paying intuit for a new copy of turbotax every year. I don't see a distinction in principle. They probably use the same software internally.
If you don't see a distinction here, I suspect it's because you don't want to.
> I'm not holding my breath.
Yeah I assumed back in the 80s this was a no brainer.
Edit: I see below that many from Sweden, UK, Germany have chimed in and basically said only the US is this stupid when it comes to federal and state income taxes. Thanks for the info.
You can fix it on the web, add stuff not known by IRS, simulate tax level, and then validate it on the web.
You can explain in text boxes if you have a doubt about something (which I did for the first time this year since I did contract some home exterior insulation work but it was done in more than one fiscal year and the subsidy rules for such work changed between the two years).
https://www.impots.gouv.fr
In the UK a very substantial portion of my tax return is trivial to fill out, and filing online doesn't require any kind of software - the uk hmrc website does all the calculations for you. I was absolutely flabberghasted when I had to complete a US tax return a few years back at how incredibly archaic and byzantine the process was. It could certainly be a lot simpler which would save time and money for both the citizens and the IRS themselves.
> For joint features, sales, promotions and events. We may share your information with third-parties companies who are jointly providing features, sales initiatives, promotions or events with us.
> With financial services providers. We may share personal Information with collection agencies, credit bureaus and loan service providers, and payment card association members. We may also share your personal information with other companies, lawyers, credit bureaus, agents, government agencies, and card associations in connection with issues related to fraud, credit, defaults, or debt collection.
> We may share your information with our affiliates and subsidiaries for everyday business purposes as described in this Statement, including for marketing purposes.
https://www.intuit.com/privacy/statement/
Considering that Mint.com and Credit Karma are free of charge, it's obvious that Intuit is using personal information harvested from these services to generate revenue in the ways described. TurboTax and QuickBooks are mainly paid products, but have the same privacy policy.
I should have communicated more clearly, I was specifically regarding personal finance data collected via TurboTax during the tax process.
> When you connect with an Intuit Platform partner. You may be provided with offers, products, and services from third-party companies who integrate with our Intuit Platform (“Platform Partner”). If you choose to interact with a Platform Partner, apply for their services or offerings or otherwise link or sync your account to a Platform Partner’s product or service, you consent and direct Intuit to share your information, including personal information, to the Platform Partner providing the service or offering.
> For joint features, sales, promotions and events. We may share your information with third-parties companies who are jointly providing features, sales initiatives, promotions or events with us.
> With financial services providers. We may share personal Information with collection agencies, credit bureaus and loan service providers, and payment card association members. We may also share your personal information with other companies, lawyers, credit bureaus, agents, government agencies, and card associations in connection with issues related to fraud, credit, defaults, or debt collection.
> With our affiliates and subsidiaries and your right to limit information sharing. We may share your information with our affiliates and subsidiaries for everyday business purposes as described in this Statement, including for marketing purposes.
I stopped using turbo tax a long time ago because of their privacy policy. I use olt.com now.
[0] https://www.intuit.com/privacy/statement/
I go to buy a new car and I HOPE I got a great price, I worked on it, I bargained, I did the research. They say I did really good this team, I got such a great deal!
I "do my taxes" and I HOPE I paid as little as possible. I worked on it, I kept my receipts, I did the research, and maybe I even paid someone to do all that for me and they say I did really good this year, low tax bill!
Both of these things suck, but if I just got a bill from the IRS I'm just going to think "maybe I could've done better" just like if I see a car that just has a price I am going to think "maybe I could've done better"
I really don't like thinking like this!
I don't think anyone is advocating for removing the option to file taxes manually. Just let the IRS send a bill by default, and give you the option to file your taxes yourself if there's something wrong or you think you can do better.
Uh-huh. The world is full of people willing to make things easy for a small fee. In my experience, many of them advertise as bargain options without actually offering a bargain. Is that what Saturn was doing? Does the market really have a perverse enjoyment for haggling or was Saturn full of shit and the market called them out on it?
All proposed legislation I’ve see would allow you to fill out a 1040 and send it in, if the IRS prepared numbers don’t work for you.
So if they mark the standard deduction, but you think you can do better itemizing your deductions you would still be able to do that.
It would mean the people that want to optimize their filings can, but every person isn’t forced to do so.
For taxes, I think most people would be quite happy to have a “we think you get/owe $x” statement arrive since it’d require no action and would give ironclad audit protection. People with complex taxes, distrust, or intention to cheat would still do their own but I’d be quite surprised if 20 years later the U.S. didn’t resemble most other countries.
My dad always said his favorite video game was TurboTax because when he got a high score, it was real money. He loved spending hours every year optimizing his return. He was also the sort of person who really got into rewards cards and airline miles. It was satisfying to him to work the system in his favor. And he's not alone. I once accidentally ended up at a meetup of people who were airline miles fiends. They were very... dedicated.
Personally, I think all of that stuff is tedious nonsense. I'm not interested in letting companies manipulate my behavior. If I'm going to work hard at something, it will be something that creates value. But I recognize I'm an outlier here. Some people would really miss doing their taxes because they've gotten good at it. Which is why it's good that the proposed laws will let them keep going if they want to.
I wish I were joking or just being cynical. This is a legitimately defensible position. Political science studies have shown this sort of thing: https://oxfordre.com/politics/view/10.1093/acrefore/97801902... . I believe it because it reflects my experience in the US in my lifetime. Nothing happens with government except knee-jerk reactions to things like the Sept 11, 2001 attacks and the TSA. Aside from that, business as usual. The infrastructure crumbles, healthcare costs keep going up, tax code never gets fixed, and on and on. It works fine for the wealthy, doesn't represent or help the people, and never gets any better. That's all, that simple.
Incidentally, I didn't downvote you. I just disagree.
But I'd also like to see improvements for the 10-13% of people who cannot be correctly billed by the IRS (I'm one of them). I say this because we're already so close to how it ought to be ... for several years now, I've used freefilefillableforms.com to file my taxes as a self-employed person with periodic capital gains and other stuff. It's not really a great model for how such a website could be designed, but it's not actually terrible and generally gets the job done.
However, it has been intentionally hobbled: there are several places where you must manually transfer numbers from one field to another, or from one form to another. There's clearly no technical reason for this, and the system will also not report any error if you do not do so (making it trivial to have major errors, despite all the data being input correctly).
I can only conclude that it has been hobbled by the same motivations that affect the tax reporting/return field in general.
I'd definitely like to see this done even better, but a good small step would be a bill for force this site to do 100% of what it clearly already can, rather than 95%.
And for what? To send troops abroad for some killing, ultimately benefiting only a tiny few. For health care, infrastructure, police, education?
The whole thing is a joke. Perhaps this move will make people wake up and ask for income tax on individuals to be voluntarly, somehow I still doubt so.
https://www.propublica.org/article/turbotax-just-tricked-you...
Intuit just decided that it could not make enough money with this scam, so they stopped using this particular one. It's probably a wise decision. Claiming that you're providing a free service, while making it pretty difficult for users to find it so they will use your paid services instead, is definitely wrong from a moral point of view, but it might also be shaky from a legal point of view. The bottom-line was probably just the profit.