5 ms·

The IRS can simplify the process, sure. And if you are living alone, have no children, and don't care about taking advantage of any special credits or deduction

by motbob 6y ago

The IRS can simplify the process, sure. And if you are living alone, have no children, and don't care about taking advantage of any special credits or deductions, then a "file for me" button would be fine. (Though the process for those taxpayers is already in a good place--I filed my taxes for free in about 30 minutes this year.) But if you, say, have children, the IRS will not be able to "file for you" in any meaningful sense. Whether you are allowed to claim dependents on tax returns is a complicated question that is highly fact-specific. Happily, the IRS does not have cameras in my house checking to see if my children are living with me. I have to report that information to the IRS myself. Drive for Uber? Your taxes are also gonna be pretty complicated, and there's no way the IRS can do them for you. After all, they don't have any information on how many miles you drove for Uber and what other business expenses you might have had. Right now, the system we have is pretty good. Most people qualify for free filing, and free-file tools get better every year. At worst, there is an issue of consumer education (psst, you might be able to find a better/cheaper tax filing option than Turbotax).

kleer001 6y ago
> Right now, the system we have is pretty good. Not compared to other countries it isn't. Not by a long shot. Video with transcript below: https://www.pbs.org/newshour/show/dreading-taxes-countries-show-us-theres-another-way https://www.pbs.org/newshour/show/dreading-taxes-countries-s... Get the heck out of here with your bull pucky
- motbob 6y ago
  Maybe it's "bull pucky" to you, but I have vivid memories of my parents agonizing over taxes as a child. The agony they went through is much ameliorated now due to advances in technology. And thank you for the link, but this news segment basically is big on opinion, low on specifics. Feel free to link me to a detailed article on how non-U.S. countries handle self-employment or dependent tax issues and whether/how those things are easier elsewhere.
  - chrisseaton 6y ago
    Most importantly, most countries do it by simply having much higher thresholds for complicated tax rules applying to you. In the UK quite a few people don't pay any tax at all, and the vast majority don't pay enough tax to have to file any return. What impact does a dependent have on your tax that needs to make it so complicated? I have relatively complicated taxes due to two jobs and some unusual deductions, but having a child doesn't really have any impact on my tax return in the UK.
    - bluGill 6y ago
      Children are hard if the parents are separated. You get child support to figure out. And who gets what share of the tax credit is tricky as well. (This is one way for one parent to abuse the other - file fast and claim all the credits, whoever files second now has to prove the first did the wrong thing at their expense)
    - motbob 6y ago
      Well, if you are a simple family where everyone is biologically related and living together, then things are pretty simple in the end. The issues come up with mixed families, divorced parents, etc. As for the dollar values, if you make $30,000 and have 2 kids, you can usually get a $6,000 tax credit or more. The U.S.'s support for working low-income families is carried out through the tax system. Put another way, tax credits are one of the U.S.'s most important social safety nets.
      - mixmastamyk 6y ago
        Not a problem, you enter dependents into the wizard, and take them out when/if they move out. No matter the situation, they accept your word for it. If an audit occurs you will have to prove things with documentation and be held liable for mistakes or fraud. It's basically a five-minute task that you appear to believe should make tax filing take hours? I did taxes once in NZ, you go to a website where they have all the data ready. Then you go next, next, finish, adding a deduction or dependent here and there. Takes 15-30 mins.
- RC_ITR 6y ago
  Sure, but that would require a significant shift away from our current deduction-based approach. Good luck prying that out of the cold dead hands of boomers (and eventually Gen X)
  - bluGill 6y ago
    A large part of it has been. The standard deduction is high enough now that most people can't take advantage of the deduction based approach. Of course most tax people will tell you to save all receipts, they will happily charge you to look through them and calculate that they are not big enough to matter. If people knew how simple their taxes really were most people wouldn't be willing to pay as much for it.
    - ghaff 6y ago
      I've itemized the past couple of years for various reasons and I have some other complexities. But, yeah, most people--especially if they don't have a mortgage--are just going to take the standard deduction.
    - RC_ITR 6y ago
      That ignores the effect of wealth inequality in the US. You may not know a lot of people who itemize, but our elite / political class does at almost a 100% rate. So long as they want / use it, it will 'trickle down' to others. https://www.taxpolicycenter.org/briefing-book/what-are-itemized-deductions-and-who-claims-them#:~:text=In%20recent%20years%2C%20about%2030,and%20medical%20and%20dental%20expenses https://www.taxpolicycenter.org/briefing-book/what-are-itemi....
jorblumesea 6y ago
Most countries have their version of the IRS "file for you" without any of those difficulties. Everyone reports tax information to the central authority which determines how much you owe. Even complex things like 1099-B, 1099-Div etc. Which is how the current system works anyways, it just eliminates the hassle. There's almost no scenario where the IRS cannot do this stuff. Think about this fact: your W-2, 1099 investments and most other financial information is already reported to the IRS. They have it already. Absolutely bonkers that people accept anything less than just being sent a bill or check once a year. > Right now, the system we have is pretty good. Yeah, big disagree there. If you've ever done taxes in another country you will realize how idiotic taxes are in the US. Australia is literally, 10 minutes per year, and even complex things like investments, stocks...
- djrogers 6y ago
  Yes, those docs are filed with the IRS, but charitable contributions, child status (are they dependents or not this year?), expenses (home office, side hustle, property management etc), and many other things aren't. If all your tax returns reference are the handful of items you mention, your tax return can be done in a matter of minutes on a short form. Yes, it could be better, but it's a fantasy to think it should be as simple as getting a bill from the IRS at the end of the year.
  - jorblumesea 6y ago
    These are easily done and in other countries, are fairly simple. Sure it turns your 10 minute tax affair into a 25 minute one. Declaring child status is just a simple form box. Declaring "side hustle" money is a similar affair. Charitable contributions just register with the IRS instead of it going directly to you like a 1099 or W2. It's still a far cry from the "entire Saturday morning" affair, even using online tax software.
runako 6y ago
I came here to write something along these lines. For the simplest cases, filing is free and really easy now. Everyone who needs TurboTax now would need something roughly as complicated until our entire tax regime is overhauled. Adding to the types of really common situations where you do have to provide context the IRS doesn't already have: - side-hustle contracting (IRS doesn't know what expenditures are for the business) - stock sales (your broker may not know your basis) - home improvements eligible for tax deductions - sold a home (IRS won't know your basis or selling price) - did you move for a job? IRS won't know whether you are eligible for tax deductions. - crypto gains/losses - inheritances (basis again) I'm curious whether other countries have simpler tax codes that permit simpler filing?
- ghaff 6y ago
  >- stock sales (your broker may not know your basis) This used to be a real nightmare especially when there were acquisitions in stock, splits, etc. There were a couple times over the years when I just said F' it and put down a reasonable number. But these days, unless you have some pretty old investments, the brokerages generally track your basis.
  - runako 6y ago
    > the brokerages generally track your basis. Yes, but IIRC if you transfer investments between brokers you are back to tracking basis yourself (if you're lucky, the new broker will allow you to enter the basis after the transfer). But agree in the general case that it's not a problem for younger people. (Gen X and older may indeed have some of those pretty old investments lurking in their portfolios.)
    - ghaff 6y ago
      That's not universally the case at least. I transferred some shares a month or so ago (in a horribly manual process I might add) and the cost basis was transferred over. I fall into the older bucket but I guess my old 401(K) must have had basis added when it merged with an IRA and none of my other investments lack basis information.
chrisseaton 6y ago
If you think the IRS aren't able to work out how much tax you need to pay... how do you think they're catching people who don't pay enough tax? They must already know!
- compiler-guy 6y ago
  They don't already know. Sometimes they have suspicions, and then perform an audit, or request more information about a particular detail, by which they get the information they might need. Only then do they actually know. For example, you yourself may have filed with the status, "Married, filing separately", but the other person in your relationship may have filed with the status, "Single". The IRS has no idea who is right without actually talking to the two of you. And because they don't know which status is correct, they don't know how much each of you owe.
  - mixmastamyk 6y ago
    They do know almost everything and learning more every day. Of course there are extenuating circumstances, which you will list and have to prove if a question comes up. This is not an excuse for tax filing being more difficult than it needs to be.
    - compiler-guy 6y ago
      The great-grandparent's claim is that they already know. They don't already know. I can list two dozen things off the top of my head that they don't already know. Should tax filing be easier? Sure. But, "They already know how much you owe." is patently false.
      - mixmastamyk 6y ago
        It's an approximation, and they will come looking for it if you don't file. So yes, it does have some level of truth (and force) behind it.
ghaff 6y ago
>Most people qualify for free filing For that matter, everyone qualifies for free filing--although in practice it gets too complicated for most past some point. I know it sounds like something savages would do but it's actually possible to just fill out the forms by hand if your taxes are fairly simple. I use an accountant who I've been using for years but if you just have a W-2, a 1099 or two, and just use the standard deduction, it'ls likely pretty simple to just fill out a 1040 form and a state tax form.
namdnay 6y ago
I don’t understand the argument. You go from stating that in some cases, the ziRS can’t prefill your taxes correctly - sure, we all agree here, that’s the same in every other country. And then you go on to say that’s why you need TurboTax. Huh? Why not just have the same input boxes as TurboTax, but on irs.gov? That’s what pretty much every other developed country has

by motbob 6y ago

kleer001 6y ago

> Right now, the system we have is pretty good. Not compared to other countries it isn't. Not by a long shot. Video with transcript below: https://www.pbs.org/newshour/show/dreading-taxes-countries-show-us-theres-another-way https://www.pbs.org/newshour/show/dreading-taxes-countries-s... Get the heck out of here with your bull pucky

motbob 6y ago
Maybe it's "bull pucky" to you, but I have vivid memories of my parents agonizing over taxes as a child. The agony they went through is much ameliorated now due to advances in technology. And thank you for the link, but this news segment basically is big on opinion, low on specifics. Feel free to link me to a detailed article on how non-U.S. countries handle self-employment or dependent tax issues and whether/how those things are easier elsewhere.
- chrisseaton 6y ago
  Most importantly, most countries do it by simply having much higher thresholds for complicated tax rules applying to you. In the UK quite a few people don't pay any tax at all, and the vast majority don't pay enough tax to have to file any return. What impact does a dependent have on your tax that needs to make it so complicated? I have relatively complicated taxes due to two jobs and some unusual deductions, but having a child doesn't really have any impact on my tax return in the UK.
  - bluGill 6y ago
    Children are hard if the parents are separated. You get child support to figure out. And who gets what share of the tax credit is tricky as well. (This is one way for one parent to abuse the other - file fast and claim all the credits, whoever files second now has to prove the first did the wrong thing at their expense)
  - motbob 6y ago
    Well, if you are a simple family where everyone is biologically related and living together, then things are pretty simple in the end. The issues come up with mixed families, divorced parents, etc. As for the dollar values, if you make $30,000 and have 2 kids, you can usually get a $6,000 tax credit or more. The U.S.'s support for working low-income families is carried out through the tax system. Put another way, tax credits are one of the U.S.'s most important social safety nets.
    - mixmastamyk 6y ago
      Not a problem, you enter dependents into the wizard, and take them out when/if they move out. No matter the situation, they accept your word for it. If an audit occurs you will have to prove things with documentation and be held liable for mistakes or fraud. It's basically a five-minute task that you appear to believe should make tax filing take hours? I did taxes once in NZ, you go to a website where they have all the data ready. Then you go next, next, finish, adding a deduction or dependent here and there. Takes 15-30 mins.
RC_ITR 6y ago
Sure, but that would require a significant shift away from our current deduction-based approach. Good luck prying that out of the cold dead hands of boomers (and eventually Gen X)
- bluGill 6y ago
  A large part of it has been. The standard deduction is high enough now that most people can't take advantage of the deduction based approach. Of course most tax people will tell you to save all receipts, they will happily charge you to look through them and calculate that they are not big enough to matter. If people knew how simple their taxes really were most people wouldn't be willing to pay as much for it.
  - ghaff 6y ago
    I've itemized the past couple of years for various reasons and I have some other complexities. But, yeah, most people--especially if they don't have a mortgage--are just going to take the standard deduction.
  - RC_ITR 6y ago
    That ignores the effect of wealth inequality in the US. You may not know a lot of people who itemize, but our elite / political class does at almost a 100% rate. So long as they want / use it, it will 'trickle down' to others. https://www.taxpolicycenter.org/briefing-book/what-are-itemized-deductions-and-who-claims-them#:~:text=In%20recent%20years%2C%20about%2030,and%20medical%20and%20dental%20expenses https://www.taxpolicycenter.org/briefing-book/what-are-itemi....

jorblumesea 6y ago

Most countries have their version of the IRS "file for you" without any of those difficulties. Everyone reports tax information to the central authority which determines how much you owe. Even complex things like 1099-B, 1099-Div etc. Which is how the current system works anyways, it just eliminates the hassle. There's almost no scenario where the IRS cannot do this stuff. Think about this fact: your W-2, 1099 investments and most other financial information is already reported to the IRS. They have it already. Absolutely bonkers that people accept anything less than just being sent a bill or check once a year. > Right now, the system we have is pretty good. Yeah, big disagree there. If you've ever done taxes in another country you will realize how idiotic taxes are in the US. Australia is literally, 10 minutes per year, and even complex things like investments, stocks...

djrogers 6y ago
Yes, those docs are filed with the IRS, but charitable contributions, child status (are they dependents or not this year?), expenses (home office, side hustle, property management etc), and many other things aren't. If all your tax returns reference are the handful of items you mention, your tax return can be done in a matter of minutes on a short form. Yes, it could be better, but it's a fantasy to think it should be as simple as getting a bill from the IRS at the end of the year.
- jorblumesea 6y ago
  These are easily done and in other countries, are fairly simple. Sure it turns your 10 minute tax affair into a 25 minute one. Declaring child status is just a simple form box. Declaring "side hustle" money is a similar affair. Charitable contributions just register with the IRS instead of it going directly to you like a 1099 or W2. It's still a far cry from the "entire Saturday morning" affair, even using online tax software.

runako 6y ago

I came here to write something along these lines. For the simplest cases, filing is free and really easy now. Everyone who needs TurboTax now would need something roughly as complicated until our entire tax regime is overhauled. Adding to the types of really common situations where you do have to provide context the IRS doesn't already have: - side-hustle contracting (IRS doesn't know what expenditures are for the business) - stock sales (your broker may not know your basis) - home improvements eligible for tax deductions - sold a home (IRS won't know your basis or selling price) - did you move for a job? IRS won't know whether you are eligible for tax deductions. - crypto gains/losses - inheritances (basis again) I'm curious whether other countries have simpler tax codes that permit simpler filing?

ghaff 6y ago
>- stock sales (your broker may not know your basis) This used to be a real nightmare especially when there were acquisitions in stock, splits, etc. There were a couple times over the years when I just said F' it and put down a reasonable number. But these days, unless you have some pretty old investments, the brokerages generally track your basis.
- runako 6y ago
  > the brokerages generally track your basis. Yes, but IIRC if you transfer investments between brokers you are back to tracking basis yourself (if you're lucky, the new broker will allow you to enter the basis after the transfer). But agree in the general case that it's not a problem for younger people. (Gen X and older may indeed have some of those pretty old investments lurking in their portfolios.)
  - ghaff 6y ago
    That's not universally the case at least. I transferred some shares a month or so ago (in a horribly manual process I might add) and the cost basis was transferred over. I fall into the older bucket but I guess my old 401(K) must have had basis added when it merged with an IRA and none of my other investments lack basis information.

chrisseaton 6y ago

If you think the IRS aren't able to work out how much tax you need to pay... how do you think they're catching people who don't pay enough tax? They must already know!

compiler-guy 6y ago
They don't already know. Sometimes they have suspicions, and then perform an audit, or request more information about a particular detail, by which they get the information they might need. Only then do they actually know. For example, you yourself may have filed with the status, "Married, filing separately", but the other person in your relationship may have filed with the status, "Single". The IRS has no idea who is right without actually talking to the two of you. And because they don't know which status is correct, they don't know how much each of you owe.
- mixmastamyk 6y ago
  They do know almost everything and learning more every day. Of course there are extenuating circumstances, which you will list and have to prove if a question comes up. This is not an excuse for tax filing being more difficult than it needs to be.
  - compiler-guy 6y ago
    The great-grandparent's claim is that they already know. They don't already know. I can list two dozen things off the top of my head that they don't already know. Should tax filing be easier? Sure. But, "They already know how much you owe." is patently false.
    - mixmastamyk 6y ago
      It's an approximation, and they will come looking for it if you don't file. So yes, it does have some level of truth (and force) behind it.

ghaff 6y ago

>Most people qualify for free filing For that matter, everyone qualifies for free filing--although in practice it gets too complicated for most past some point. I know it sounds like something savages would do but it's actually possible to just fill out the forms by hand if your taxes are fairly simple. I use an accountant who I've been using for years but if you just have a W-2, a 1099 or two, and just use the standard deduction, it'ls likely pretty simple to just fill out a 1040 form and a state tax form.

namdnay 6y ago

I don’t understand the argument. You go from stating that in some cases, the ziRS can’t prefill your taxes correctly - sure, we all agree here, that’s the same in every other country. And then you go on to say that’s why you need TurboTax. Huh? Why not just have the same input boxes as TurboTax, but on irs.gov? That’s what pretty much every other developed country has