4 ms·

What I don't understand is, if I make a mistake (e.g. missing a schedule or wrong number) in the form 1040 and send it to IRS, I'll be guaranteed to receive a C

What I don't understand is, if I make a mistake (e.g. missing a schedule or wrong number) in the form 1040 and send it to IRS, I'll be guaranteed to receive a CP notice from them later asking me to pay the missing tax and penalty. Clearly IRS has their own algorithm to calculate everything based on what they got (which is exactly the same as what I have, W-2, 1099, etc., for most Americans) anyways. If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year? Why not just send me a pre-filled 1040 that their internal algorithm calculates and ask for my approval, like those Europeans do? How is this more "prone to raise tax"?

codeduck 5y ago
In the UK it's possible to see a running estimate of your current tax position and the estimate for the end of the year. HMRC issues you a tax code which is used by your employer to determine how much tax they should be deducting each pay period. This means that in most cases you get no nasty surprises at the end of the year. I've always found the US tax system bizarre.
deleted 5y ago
[deleted]
1123581321 5y ago
They don’t know everything. They automatically compare your return against information they’ve received from other parties (W-2s, 1099s, other tax returns’ dependents’ social security numbers, mostly) so you will get a notification if your return contradicts those in an obvious way. Beyond that, you need to be audited to get a notice. Audits range in their degree of inspection so most people just get a letter, but those kinds of audits usually just focus on one/two easy-to-discover issues. They certainly could develop the ability to do your return for you, but it would be an effort.
- jeltz 5y ago
  They do not know everything here in Sweden either but they still give you prefilled forms with what they do know (based on what other parties like employers and banks have submitted) and then you can add the rest yourself plus add corrections if you disagree with them. Seems less work and less back and forth.
  - 1123581321 5y ago
    Most Americans are pretty close to that level right now with autofill from their previous year. Granted, it’s provided by private companies in partnership with the IRS.
jaywalk 5y ago
> If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year? The tax preparation industry has successfully lobbied to stop the IRS from being able to do this.
Izkata 5y ago
I see it as a trust thing: Doing the taxes myself, I know why I owe (or get returned) as much as I do. Then again, I don't use TurboTax/etc, I do it by hand every year so it isn't a black box for me.
kazinator 5y ago
What would happen is that tons of people would want to know exactly what that algorithm is: they would want to know what exact rules are being applied to the information they have submitted, and they would want to validate the calculations themselves. Just in the name of transparency. Still, it would be a good option for those who don't want to know. I.e. have the option of doing a return which you calculate yourself (which is then corrected, based on the input values in it). Or the option of just submitting the inputs and having them do everything.

codeduck 5y ago

In the UK it's possible to see a running estimate of your current tax position and the estimate for the end of the year. HMRC issues you a tax code which is used by your employer to determine how much tax they should be deducting each pay period. This means that in most cases you get no nasty surprises at the end of the year. I've always found the US tax system bizarre.

deleted 5y ago

[deleted]

1123581321 5y ago

They don’t know everything. They automatically compare your return against information they’ve received from other parties (W-2s, 1099s, other tax returns’ dependents’ social security numbers, mostly) so you will get a notification if your return contradicts those in an obvious way. Beyond that, you need to be audited to get a notice. Audits range in their degree of inspection so most people just get a letter, but those kinds of audits usually just focus on one/two easy-to-discover issues. They certainly could develop the ability to do your return for you, but it would be an effort.

jeltz 5y ago
They do not know everything here in Sweden either but they still give you prefilled forms with what they do know (based on what other parties like employers and banks have submitted) and then you can add the rest yourself plus add corrections if you disagree with them. Seems less work and less back and forth.
- 1123581321 5y ago
  Most Americans are pretty close to that level right now with autofill from their previous year. Granted, it’s provided by private companies in partnership with the IRS.

jaywalk 5y ago

> If IRS already know precisely how much tax I owe, and whatever I "claim" has no power, why do I need to play the game of "cat and mouse", every year? The tax preparation industry has successfully lobbied to stop the IRS from being able to do this.

Izkata 5y ago

I see it as a trust thing: Doing the taxes myself, I know why I owe (or get returned) as much as I do. Then again, I don't use TurboTax/etc, I do it by hand every year so it isn't a black box for me.

kazinator 5y ago

What would happen is that tons of people would want to know exactly what that algorithm is: they would want to know what exact rules are being applied to the information they have submitted, and they would want to validate the calculations themselves. Just in the name of transparency. Still, it would be a good option for those who don't want to know. I.e. have the option of doing a return which you calculate yourself (which is then corrected, based on the input values in it). Or the option of just submitting the inputs and having them do everything.