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The IRS does not actually have all the information placed on the tax return. For instance, all interest is charged as income for tax purposes, but 1099-INT is

The IRS does not actually have all the information placed on the tax return. For instance, all interest is charged as income for tax purposes, but 1099-INT is only issued for $10 and above. Similar restrictions exist for 1099-MISC but at a higher threshold, if you are a freelancer who receives a lot of small 1099 income from multiple sources, the IRS has no way of knowing that. Conversely, if you’re eligible to itemize deductions, the IRS has no way of knowing what you gave to charities over the year. That’s entirely self reported and they only even ask for the receipts if you get audited. Charities don’t send records of their donors to the IRS.

vonmoltke 8y ago
> Charities don’t send records of their donors to the IRS. In fact, charities are prohibited from valuing donations of property for the donor. The donor must do that, and justify the valuation if audited.
kelnos 8y ago
I always hear this argument, but all this just doesn't matter. It's optimizing for the wrong things. The majority of taxpayers are not in that situation. They would benefit greatly from an IRS-provided pre-filled tax return. For people that are in this situation, the IRS will send them a pre-filled tax return with incorrect data. Then they have the choice to either start with the pre-filled form and make corrections, or start from scratch with their own data. They are no worse off (and possibly much better off, if the corrections are minor) than they are under the current regime. Regarding itemized deductions, with the 2018 tax year changes, the standard deduction is so much higher (and SALT deductions so much limited), that even fewer people than before will itemize. And the percentage of people who itemize already wasn't that high. But again: people who do itemize could merely correct the pre-filled form the IRS sends, or start from scratch if they really want to.
- javagram 8y ago
  This is true. I still file using the itemized deductions but that’s because I am a single software developer, live in a high-tax state, and have a decent amount of charitable donations which get me above the standard deduction threshold. I suspect we will eventually see an IRS prefilled form, anti-tax activists and the tax filing industry can only hold it off so long. Some amount of people will end up overpaying their taxes because they choose to use the prefill rather than itemizing, and some people will feel more entitled to cheat on their taxes (e.g. waiters not reporting cash tips) but then we already see that happen today anyway.

vonmoltke 8y ago

> Charities don’t send records of their donors to the IRS. In fact, charities are prohibited from valuing donations of property for the donor. The donor must do that, and justify the valuation if audited.

kelnos 8y ago

I always hear this argument, but all this just doesn't matter. It's optimizing for the wrong things. The majority of taxpayers are not in that situation. They would benefit greatly from an IRS-provided pre-filled tax return. For people that are in this situation, the IRS will send them a pre-filled tax return with incorrect data. Then they have the choice to either start with the pre-filled form and make corrections, or start from scratch with their own data. They are no worse off (and possibly much better off, if the corrections are minor) than they are under the current regime. Regarding itemized deductions, with the 2018 tax year changes, the standard deduction is so much higher (and SALT deductions so much limited), that even fewer people than before will itemize. And the percentage of people who itemize already wasn't that high. But again: people who do itemize could merely correct the pre-filled form the IRS sends, or start from scratch if they really want to.

javagram 8y ago
This is true. I still file using the itemized deductions but that’s because I am a single software developer, live in a high-tax state, and have a decent amount of charitable donations which get me above the standard deduction threshold. I suspect we will eventually see an IRS prefilled form, anti-tax activists and the tax filing industry can only hold it off so long. Some amount of people will end up overpaying their taxes because they choose to use the prefill rather than itemizing, and some people will feel more entitled to cheat on their taxes (e.g. waiters not reporting cash tips) but then we already see that happen today anyway.