7 ms·

90%+ don't itemize because, we tried it, some of us for a couple years, and realize that we've been spending 10s or even 100s of hours of time keeping records,

90%+ don't itemize because, we tried it, some of us for a couple years, and realize that we've been spending 10s or even 100s of hours of time keeping records, feeding them in to the tax software and then get told... Taking the standard deduction (all your work, charitable donations, and other itemizable items still don't cross this threshold). It's really annoying that taxes are even the way they are, it's all just a huge, convoluted mess. For something like 95%+ of the US the government already knows your earnings (W2/etc), banking (INT-whatever), and any brokerage/etc stuff. The only reason the IRS doesn't send a pre-filled out form that says "this is what we believe is owed to whom, - please pay / cash the check, or fill out taxes manually to report where you think we missed data" is PRECISELY because HR Block and Intuit (Turbo Tax) lobby for complicated taxes and no government automation.

Rebelgecko 8y ago
Yeah, it'll definitely depend on your personal situation. When I itemized last year I think I only need to grab 3 documents (W-2 which of course I already had, 1098 with my mortgage interest + property tax, and a charity receipt). If you're itemizing for medical bills or if you donate to many different charities I can see how the paperwork adds up. Maybe you already know this, but the "prefilled form form the IRS" is similar to how a lot of countries do their taxes. From what I've heard the US uses tax writeoffs to influence people's behavior more than other countries do, so I wonder if that approach would lead to fewer people taking certain deductions.
smkellat 8y ago
Things generally not known by the government: deductions & credits you are eligible to take, any changes to your marital status, changes to your address. Often your government cannot find you, has no idea if you're still single/married/widow, and doesn't have the data for credit eligibility. Besides, you're also assuming perfectly accurate reporting of all data elements on income reporting documents by all payers and employers. We don't even have that now. It is a nice idea but in practice it would just overcomplicate things. Changing up the Internal Revenue Code is a better way forward.
- int_19h 8y ago
  In practice there are many countries that don't require citizens to file tax returns, and somehow it all works just fine. Optimize for the most common path - standard deductions etc. Anybody who needs something more complicated will have to do some extra work, but why should everybody be forced to do this when it's rote for most?
NickM 8y ago
Yeah, so this is part of why I like to fill out the forms myself now. I paid a one-time upfront time cost in learning about all the different rules around deductions and whatnot, but now I can pretty confidently know in advance whether I'll be able to itemize in a given year and what records to keep for the particular deductions I'll be taking. If you need to be able answer all of TurboTax's questions to let it figure things out, it's actually more work because you have to keep records on everything since you don't know in advance what's going to be applicable.

Rebelgecko 8y ago

Yeah, it'll definitely depend on your personal situation. When I itemized last year I think I only need to grab 3 documents (W-2 which of course I already had, 1098 with my mortgage interest + property tax, and a charity receipt). If you're itemizing for medical bills or if you donate to many different charities I can see how the paperwork adds up. Maybe you already know this, but the "prefilled form form the IRS" is similar to how a lot of countries do their taxes. From what I've heard the US uses tax writeoffs to influence people's behavior more than other countries do, so I wonder if that approach would lead to fewer people taking certain deductions.

smkellat 8y ago

Things generally not known by the government: deductions & credits you are eligible to take, any changes to your marital status, changes to your address. Often your government cannot find you, has no idea if you're still single/married/widow, and doesn't have the data for credit eligibility. Besides, you're also assuming perfectly accurate reporting of all data elements on income reporting documents by all payers and employers. We don't even have that now. It is a nice idea but in practice it would just overcomplicate things. Changing up the Internal Revenue Code is a better way forward.

int_19h 8y ago
In practice there are many countries that don't require citizens to file tax returns, and somehow it all works just fine. Optimize for the most common path - standard deductions etc. Anybody who needs something more complicated will have to do some extra work, but why should everybody be forced to do this when it's rote for most?

NickM 8y ago

Yeah, so this is part of why I like to fill out the forms myself now. I paid a one-time upfront time cost in learning about all the different rules around deductions and whatnot, but now I can pretty confidently know in advance whether I'll be able to itemize in a given year and what records to keep for the particular deductions I'll be taking. If you need to be able answer all of TurboTax's questions to let it figure things out, it's actually more work because you have to keep records on everything since you don't know in advance what's going to be applicable.