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As a data point for anyone curious about what a fairly complex, but really not insane, tax return looks like, my taxes were fairly complicated this year: - 3

by harryh 11y ago

As a data point for anyone curious about what a fairly complex, but really not insane, tax return looks like, my taxes were fairly complicated this year: - 3 jobs (2 for me cause I changed mid-year, 1 for my wife) - Some investment earnings (both cap gains & dividends) - I was part of the Google class action settlement - Some random 1099s - Itemized deductions mainly just cause I live in a high tax state (NY) My federal tax return is 87 pages (not counting a list of all capital transactions). IMHO, complexity that could possibly be eliminated can be found in these items (in no particular order): - The deductibility of state taxes (still kinda weird to me how this works) - Foreign tax credits (Probably actually necessary, but tricky) - The AMT - Forms 8959/8960 (Can't this be built into the rates?) - Self Employment Tax (an artifact of the deceptive way SS & Medicare taxes work) - The worksheet for calculating capital gains tax seems a bit crazy Overall, at least from my perspective, no individual item is all that crazy. It's just the weight of a bunch of little things that all add up to something that feels overly complicated.

zeveb 11y ago
> The deductibility of state taxes (still kinda weird to me how this works) Well, the idea is that the federal government is only taxing your income, and money that your state has taken away doesn't is your income. It's not a bad idea, but the problem is that it means that no-or-low-income-tax states end up subsidising high-income-tax states. Moreover, there's no easy way to itemise other forms of state taxes, e.g. sales or property taxes. It really should be done away with.
- harryh 11y ago
  Ya, I get the reasoning. And I agree with your analysis about the negative consequences. But the part I actually think is weird/complex is the way it ties tax returns together from adjacent years. For my 2015 federal return I don't deduct my state taxes on my 2015 income, I deduct state taxes I paid in 2015. Those can be two different things. I just find that a bit weird.

by harryh 11y ago

zeveb 11y ago

> The deductibility of state taxes (still kinda weird to me how this works) Well, the idea is that the federal government is only taxing your income, and money that your state has taken away doesn't is your income. It's not a bad idea, but the problem is that it means that no-or-low-income-tax states end up subsidising high-income-tax states. Moreover, there's no easy way to itemise other forms of state taxes, e.g. sales or property taxes. It really should be done away with.

harryh 11y ago
Ya, I get the reasoning. And I agree with your analysis about the negative consequences. But the part I actually think is weird/complex is the way it ties tax returns together from adjacent years. For my 2015 federal return I don't deduct my state taxes on my 2015 income, I deduct state taxes I paid in 2015. Those can be two different things. I just find that a bit weird.