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First of all, no self-employed taxpayer ("contractor income via 1099") could have an accurate return prepared by the IRS because the IRS won't know their expens

by hundt 8y ago

First of all, no self-employed taxpayer ("contractor income via 1099") could have an accurate return prepared by the IRS because the IRS won't know their expenses. But secondly there's a lot more to taxes than just income. For example: - Filing status (married, head of household, etc.) - Education credits - Child credits - Personal exemptions (income adjustment reduced to zero, but you still need to calculate them to determine qualification for various things) These things affect most taxpayers and require information that is not reported to the IRS. The IRS could make "worst-case" assumptions (single, no kids, etc) thus requiring everyone to revise their returns, or they could guess and invite tax fraud and inadvertent errors. So that's a reason why not.

scott_s 8y ago
So then you take what the IRS gives you, modify it with new information and send it back in. You’re arguing against having an easier starting point.
Spooky23 8y ago
That's all data that the IRS either has already or can collect more simply. So, because 20 million households can't have a form auto-filled, we should forget about the other 100 million? The other upshot is that the expense and non-compliance from a tax perspective would probably drive more W-2 employees in situations where 1099 status is being abused. (ie. probably 40%)
- hundt 8y ago
  > That's all data that the IRS either has already or can collect more simply. How can the IRS collect information on your filing status and family/dependent situation that would be simpler than just asking you to file a tax return? It's not just a matter of who lives where, you know. They could always implement something like TurboTax. That's a reasonable option, but a far cry from "pre-filled forms." > So, because 20 million households can't have a form auto-filled, we should forget about the other 100 million? Well the issue is that the IRS has no way of knowing which of the households are the "easy" ones, because that is determined by facts not reported to them (except on a 1040). They can guess, but I think they would be wrong pretty frequently. I think you have the underlying premise that the IRS guessing wrong has no cost, because you can just correct it. But my suspicion is that a lot of people would just file with the incorrect information, either willingly or unwillingly, and many of those people would have put the correct information if they had paid someone or bought software to do it for them. So I disagree with your premise.
  - dragonwriter 8y ago
    > They could always implement something like TurboTax. That's a reasonable option, but a far cry from "pre-filled forms." Something “like TurboTax” that also precompleted information that was tied to forms that are already filed directly by third parties with the IRS would be essentially equivalent to pre-filled forms for a very large number of filers. > How can the IRS collect information on your filing status and family/dependent situation that would be simpler than just asking you to file a tax return? Filing status and dependent information is a small fraction of the information content of a tax return, so having you file just that would itself be simpler than asking you to file a tax return; additionally, it is information that changes infrequently, so once you've filed it once, they could prepopulate it and require updated filings of that information only if changes occurred.
    - hundt 8y ago
      > Filing status and dependent information is a small fraction of the information content of a tax return, so having you file just that would itself be simpler than asking you to file a tax return True, although that was just one example. Another example is the credit for education expenses. Here are the requirements for the American Opportunity Credit, the best one: * Be pursuing a degree or other recognized education credential * Be enrolled at least half time for at least one academic period beginning in the tax year * Not have finished the first four years of higher education at the beginning of the tax year * Not have claimed the AOTC or the former Hope credit for more than four tax years * Not have a felony drug conviction at the end of the tax year The IRS + the schools could theoretically figure out only three of those five requirements. I guess four if all states reported felony convictions to the IRS. If you don't meet those requirements, there is another one available with different rules for which expenses qualify. This is not an uncommon tax situation! I helped a lot of lower/middle-class taxpayers prepare their returns through a free IRS service a few years ago, and this came up all the time. > once you've filed it once, they could prepopulate it and require updated filings of that information only if changes occurred But changes occur all the time. So the information would not be accurate for long, and you have no way of knowing when it has become wrong. In the case of the education credits, a common occurrence is that the student ceases to be a dependent of the parent (an issue which depends on how much support the parent gives the child, something the IRS has no way of knowing), meaning who is entitled to the credits changes. Even for simpler things, like which of your children qualify for the child tax credit, changes are not extremely rare. It's not that hard to guess when changes might have happened based on additional information. But this basically requires the IRS to reimplement TurboTax, or at least a crappy version of it that kicks people out of scope whenever things are not trivial. Without those types of inquiries I think the confidence that a given return is correct would be extremely low, absent a serious simplification of the tax code. Edit in response to your edit: > Something “like TurboTax” that also precompleted information that was tied to forms that are already filed directly by third parties with the IRS would be essentially equivalent to pre-filled forms for a very large number of filers. Yeah, that would be awesome! I definitely agree that a "TurboTax lite" that was synced with the government info and allowed you to click through a bunch of screens confirming various things would be a pretty good experience. Although I actually think the real TurboTax is pretty close to this for simple situations, because they can import your information from major payroll providers, brokerages, etc.

by hundt 8y ago

scott_s 8y ago

So then you take what the IRS gives you, modify it with new information and send it back in. You’re arguing against having an easier starting point.

Spooky23 8y ago

That's all data that the IRS either has already or can collect more simply. So, because 20 million households can't have a form auto-filled, we should forget about the other 100 million? The other upshot is that the expense and non-compliance from a tax perspective would probably drive more W-2 employees in situations where 1099 status is being abused. (ie. probably 40%)

hundt 8y ago
> That's all data that the IRS either has already or can collect more simply. How can the IRS collect information on your filing status and family/dependent situation that would be simpler than just asking you to file a tax return? It's not just a matter of who lives where, you know. They could always implement something like TurboTax. That's a reasonable option, but a far cry from "pre-filled forms." > So, because 20 million households can't have a form auto-filled, we should forget about the other 100 million? Well the issue is that the IRS has no way of knowing which of the households are the "easy" ones, because that is determined by facts not reported to them (except on a 1040). They can guess, but I think they would be wrong pretty frequently. I think you have the underlying premise that the IRS guessing wrong has no cost, because you can just correct it. But my suspicion is that a lot of people would just file with the incorrect information, either willingly or unwillingly, and many of those people would have put the correct information if they had paid someone or bought software to do it for them. So I disagree with your premise.
- dragonwriter 8y ago
  > They could always implement something like TurboTax. That's a reasonable option, but a far cry from "pre-filled forms." Something “like TurboTax” that also precompleted information that was tied to forms that are already filed directly by third parties with the IRS would be essentially equivalent to pre-filled forms for a very large number of filers. > How can the IRS collect information on your filing status and family/dependent situation that would be simpler than just asking you to file a tax return? Filing status and dependent information is a small fraction of the information content of a tax return, so having you file just that would itself be simpler than asking you to file a tax return; additionally, it is information that changes infrequently, so once you've filed it once, they could prepopulate it and require updated filings of that information only if changes occurred.
  - hundt 8y ago
    > Filing status and dependent information is a small fraction of the information content of a tax return, so having you file just that would itself be simpler than asking you to file a tax return True, although that was just one example. Another example is the credit for education expenses. Here are the requirements for the American Opportunity Credit, the best one: * Be pursuing a degree or other recognized education credential * Be enrolled at least half time for at least one academic period beginning in the tax year * Not have finished the first four years of higher education at the beginning of the tax year * Not have claimed the AOTC or the former Hope credit for more than four tax years * Not have a felony drug conviction at the end of the tax year The IRS + the schools could theoretically figure out only three of those five requirements. I guess four if all states reported felony convictions to the IRS. If you don't meet those requirements, there is another one available with different rules for which expenses qualify. This is not an uncommon tax situation! I helped a lot of lower/middle-class taxpayers prepare their returns through a free IRS service a few years ago, and this came up all the time. > once you've filed it once, they could prepopulate it and require updated filings of that information only if changes occurred But changes occur all the time. So the information would not be accurate for long, and you have no way of knowing when it has become wrong. In the case of the education credits, a common occurrence is that the student ceases to be a dependent of the parent (an issue which depends on how much support the parent gives the child, something the IRS has no way of knowing), meaning who is entitled to the credits changes. Even for simpler things, like which of your children qualify for the child tax credit, changes are not extremely rare. It's not that hard to guess when changes might have happened based on additional information. But this basically requires the IRS to reimplement TurboTax, or at least a crappy version of it that kicks people out of scope whenever things are not trivial. Without those types of inquiries I think the confidence that a given return is correct would be extremely low, absent a serious simplification of the tax code. Edit in response to your edit: > Something “like TurboTax” that also precompleted information that was tied to forms that are already filed directly by third parties with the IRS would be essentially equivalent to pre-filled forms for a very large number of filers. Yeah, that would be awesome! I definitely agree that a "TurboTax lite" that was synced with the government info and allowed you to click through a bunch of screens confirming various things would be a pretty good experience. Although I actually think the real TurboTax is pretty close to this for simple situations, because they can import your information from major payroll providers, brokerages, etc.