4 ms·

The IRS has no idea how much you've donated to Goodwill, paid in medical expenses, or any other number of deductions.

JAlexoid 7y ago
I'll grant you that they don't know your donations and major tax deductibles. But your medical expenses would have to be very high before you would even report them to IRS in the first place. Do you directly spend more than 10% of your gross income on medical expenses? No? Then you can't deduct them. In addition, most medical expense reporting is already reported to IRS. They literally get your whole pay stub information - gross pay, withholdings, 401k, medical deductions, pre-tax expenses, etc... PS: I ran a company in one of the "high regulation" EU countries and the amount of tax prep I do today in USA jumped from 30 min per year for myself and 3 employees to 30h per year myself! Oh... I didn't have to pay anything to file my tax documentation online and I got my estimated tax docs pre-filled by the tax authorities.
toomuchtodo 7y ago
90% of taxpayers don't itemize with the standard deduction expanded to as high as it is now [1]. And if you want to get crazy, all of that data could be reported trivially to the IRS (my health insurance coverage already is [1095-B/C], reporting my health care spend from my insurance company is a few extra bytes on that form electronically sent). It is entirely reasonable to have tax collection agencies send a good faith estimate with a window of time for corrections if you have data they do not have. There are enough threads about the evil that is Intuit that their efforts to block the IRS from offering free tax prep need not be rehashed here. [1] https://taxfoundation.org/90-percent-taxpayers-projected-tcja-expanded-standard-deduction/ https://taxfoundation.org/90-percent-taxpayers-projected-tcj... (Nearly 90 Percent of Taxpayers Are Projected to Take the TCJA’s Expanded Standard Deduction)
- Domenic_S 7y ago
  Most people don't itemize now, that's true, but the IRS has no way to know who will itemize and who won't. We could require all transactions that could theoretically be deductions be sent to the IRS, sure. "Trivially" is not the right word to describe it though. Think about charitable donations to tiny operations that have no IT department trying to figure out SFTP drops to the IRS. I have to correct my cost basis for RSUs almost every year from my eTrade paperwork. Could they do it correctly in the first place? Sure. Could it all be magically calculated for me someday, sure, anything's possible. But seeing how financial companies work from the inside, I chalk it up to incompetence more than Intuit's malice.
  - deleted 7y ago
    [deleted]
  - AnIdiotOnTheNet 7y ago
    > Most people don't itemize now, that's true, but the IRS has no way to know who will itemize and who won't. So just make the people who will itemize fill out a form and go through that whole process. Everyone else can just pay the bill and not worry about it.
  - compiler-guy 7y ago
    The IRS could actually write the software themselves and fully integrate what they already know with the option to fill in what they don't.
    - gamblor956 7y ago
      Yes, they could... If Intuit and HRBlock didn't spend a lot of money each year preventing the IRS from doing exactly that. The IRS has proposed this many times, and have been blocked by Congress just as many times.
  - TallGuyShort 7y ago
    As it is now, the IRS has a pretty good idea of what you owe, but offers virtually no help figuring it out. If you're wrong, they can come after you with punitive fees years later. In my case, they told me my employer had sent them an updated form with a corrected date on it 2 years earlier - which my employer neglected to tell me. I never knew about the mistake and my accountant assumed it was correct too. So not only did I owe $40,000 in back taxes and interest, my request to not pay fines because it was an honest mistake was denied, and I also had to pay $6,000 in fines. Because of a mistake they knew about and didn't tell me about for 2 years, that EVEN A FUCKING PROFESSIONAL TAX ACCOUNTANT MISSED. But no - they don't know in advance who will have additional deductions so why bother with any of it for the 90% that don't? People are already going to, and often paying for, private services that they implicitly trust to tell them what they owe. Why can't the literal authority on the matter tell you first?
- tstrimple 7y ago
  Agreed. I think it would be better for everyone involved (excepting HR Block and their ilk) if the only thing tax payers had to do was file an amendment if their deductions didn't match what the IRS sent out. For the vast majority of people, they wouldn't have to resubmit anything. For those who do have more complicated tax scenarios, it's still dramatically streamlined.

I'll grant you that they don't know your donations and major tax deductibles. But your medical expenses would have to be very high before you would even report them to IRS in the first place. Do you directly spend more than 10% of your gross income on medical expenses? No? Then you can't deduct them. In addition, most medical expense reporting is already reported to IRS. They literally get your whole pay stub information - gross pay, withholdings, 401k, medical deductions, pre-tax expenses, etc... PS: I ran a company in one of the "high regulation" EU countries and the amount of tax prep I do today in USA jumped from 30 min per year for myself and 3 employees to 30h per year myself! Oh... I didn't have to pay anything to file my tax documentation online and I got my estimated tax docs pre-filled by the tax authorities.

toomuchtodo 7y ago

90% of taxpayers don't itemize with the standard deduction expanded to as high as it is now [1]. And if you want to get crazy, all of that data could be reported trivially to the IRS (my health insurance coverage already is [1095-B/C], reporting my health care spend from my insurance company is a few extra bytes on that form electronically sent). It is entirely reasonable to have tax collection agencies send a good faith estimate with a window of time for corrections if you have data they do not have. There are enough threads about the evil that is Intuit that their efforts to block the IRS from offering free tax prep need not be rehashed here. [1] https://taxfoundation.org/90-percent-taxpayers-projected-tcja-expanded-standard-deduction/ https://taxfoundation.org/90-percent-taxpayers-projected-tcj... (Nearly 90 Percent of Taxpayers Are Projected to Take the TCJA’s Expanded Standard Deduction)

Domenic_S 7y ago
Most people don't itemize now, that's true, but the IRS has no way to know who will itemize and who won't. We could require all transactions that could theoretically be deductions be sent to the IRS, sure. "Trivially" is not the right word to describe it though. Think about charitable donations to tiny operations that have no IT department trying to figure out SFTP drops to the IRS. I have to correct my cost basis for RSUs almost every year from my eTrade paperwork. Could they do it correctly in the first place? Sure. Could it all be magically calculated for me someday, sure, anything's possible. But seeing how financial companies work from the inside, I chalk it up to incompetence more than Intuit's malice.
- deleted 7y ago
  [deleted]
- AnIdiotOnTheNet 7y ago
  > Most people don't itemize now, that's true, but the IRS has no way to know who will itemize and who won't. So just make the people who will itemize fill out a form and go through that whole process. Everyone else can just pay the bill and not worry about it.
- compiler-guy 7y ago
  The IRS could actually write the software themselves and fully integrate what they already know with the option to fill in what they don't.
  - gamblor956 7y ago
    Yes, they could... If Intuit and HRBlock didn't spend a lot of money each year preventing the IRS from doing exactly that. The IRS has proposed this many times, and have been blocked by Congress just as many times.
- TallGuyShort 7y ago
  As it is now, the IRS has a pretty good idea of what you owe, but offers virtually no help figuring it out. If you're wrong, they can come after you with punitive fees years later. In my case, they told me my employer had sent them an updated form with a corrected date on it 2 years earlier - which my employer neglected to tell me. I never knew about the mistake and my accountant assumed it was correct too. So not only did I owe $40,000 in back taxes and interest, my request to not pay fines because it was an honest mistake was denied, and I also had to pay $6,000 in fines. Because of a mistake they knew about and didn't tell me about for 2 years, that EVEN A FUCKING PROFESSIONAL TAX ACCOUNTANT MISSED. But no - they don't know in advance who will have additional deductions so why bother with any of it for the 90% that don't? People are already going to, and often paying for, private services that they implicitly trust to tell them what they owe. Why can't the literal authority on the matter tell you first?
tstrimple 7y ago
Agreed. I think it would be better for everyone involved (excepting HR Block and their ilk) if the only thing tax payers had to do was file an amendment if their deductions didn't match what the IRS sent out. For the vast majority of people, they wouldn't have to resubmit anything. For those who do have more complicated tax scenarios, it's still dramatically streamlined.