5 ms·

If it's that complicated and they are doing audits anyways, can't they just automatically apply EITC without relying on people to figure out this stuff and how

If it's that complicated and they are doing audits anyways, can't they just automatically apply EITC without relying on people to figure out this stuff and how to claim it?

kube-system 4y ago
No because tax prep companies have lobbied our legislators to make that illegal (and many would politically be against the data collection that would be logically necessary to determine many of the common credits/deductions)
- jabbany 4y ago
  The second thing could be easy to deal with though, just make data sharing be a consent based process. You can opt in to auto-filing by allowing data sharing with the IRS. People who appreciate the convenience can opt in and those who don't can just not (instead manually providing the requisite documents/proofs/numbers just like today).
  - kube-system 4y ago
    Not infrequently, the data involves third party cooperation, so it's not really that simple.
- LorenPechtel 4y ago
  They already have the data to auto-prepare most tax returns. That would be very bad news for the tax prep companies, though. There also is the problem that if they auto-prepare returns they're telling the taxpayer exactly what they know and thus how the taxpayer can cheat with a low probability of detection. I don't think that's an adequate reason against automating it, though. What I would like to see is say March 1 they mail out pre-filled tax forms, except every line has an extra box on it that's empty. If you think it's right you simply sign and return it with payment if needed. If you have minor disagreements with it (for example, it's unlikely they'll know everything for schedule A) you can fill in the extra boxes with the correct values. You may then either propagate those numbers through and pay the adjusted amount, or you can ignore this part, they update the return with your new numbers and send you a bill. Lastly you can bin it and do it yourself from scratch.
  - kube-system 4y ago
    Yes, that's a very reasonable proposal that I would personally be in favor of. Although, the consequences of the "default" values are something that both sides of the aisle are almost certain to take issue with. The left will likely not be happy that the default values result in "overcharging" those due social credits, and the right will not be happy that the default values make it easy to get away with failing to report income that isn't 1099/W2. This would likely result in arguments over how to solve that problem ... this is the data collection issue I'm referring to.
  - sokoloff 4y ago
    See https://www.irs.gov/individuals/get-transcript https://www.irs.gov/individuals/get-transcript to get the IRS to show you what they have on your account. We do this every year to double check that we haven’t missed anything. It’s usually incomplete on April 15, but tends to be pretty complete by mid-summer (and 4868 gives you an automatic extension of time to file [but not to pay]) There’s no secrecy need at play here.
NovemberWhiskey 4y ago
No, because a question like "which of these non-cohabiting parents is factually speaking the one that's actually raising the child" is not something you can automatically discover. The EITC is actually a social welfare measure masquerading as a tax policy, and subject to all the problems that implies.
Retric 4y ago
It is automated just after the fact. It’s very easy to validate if 1 dependent is claimed by 2 people and then send an automated letter.

If it's that complicated and they are doing audits anyways, can't they just automatically apply EITC without relying on people to figure out this stuff and how to claim it?

kube-system 4y ago

No because tax prep companies have lobbied our legislators to make that illegal (and many would politically be against the data collection that would be logically necessary to determine many of the common credits/deductions)

jabbany 4y ago
The second thing could be easy to deal with though, just make data sharing be a consent based process. You can opt in to auto-filing by allowing data sharing with the IRS. People who appreciate the convenience can opt in and those who don't can just not (instead manually providing the requisite documents/proofs/numbers just like today).
- kube-system 4y ago
  Not infrequently, the data involves third party cooperation, so it's not really that simple.
LorenPechtel 4y ago
They already have the data to auto-prepare most tax returns. That would be very bad news for the tax prep companies, though. There also is the problem that if they auto-prepare returns they're telling the taxpayer exactly what they know and thus how the taxpayer can cheat with a low probability of detection. I don't think that's an adequate reason against automating it, though. What I would like to see is say March 1 they mail out pre-filled tax forms, except every line has an extra box on it that's empty. If you think it's right you simply sign and return it with payment if needed. If you have minor disagreements with it (for example, it's unlikely they'll know everything for schedule A) you can fill in the extra boxes with the correct values. You may then either propagate those numbers through and pay the adjusted amount, or you can ignore this part, they update the return with your new numbers and send you a bill. Lastly you can bin it and do it yourself from scratch.
- kube-system 4y ago
  Yes, that's a very reasonable proposal that I would personally be in favor of. Although, the consequences of the "default" values are something that both sides of the aisle are almost certain to take issue with. The left will likely not be happy that the default values result in "overcharging" those due social credits, and the right will not be happy that the default values make it easy to get away with failing to report income that isn't 1099/W2. This would likely result in arguments over how to solve that problem ... this is the data collection issue I'm referring to.
- sokoloff 4y ago
  See https://www.irs.gov/individuals/get-transcript https://www.irs.gov/individuals/get-transcript to get the IRS to show you what they have on your account. We do this every year to double check that we haven’t missed anything. It’s usually incomplete on April 15, but tends to be pretty complete by mid-summer (and 4868 gives you an automatic extension of time to file [but not to pay]) There’s no secrecy need at play here.

NovemberWhiskey 4y ago

No, because a question like "which of these non-cohabiting parents is factually speaking the one that's actually raising the child" is not something you can automatically discover. The EITC is actually a social welfare measure masquerading as a tax policy, and subject to all the problems that implies.

Retric 4y ago

It is automated just after the fact. It’s very easy to validate if 1 dependent is claimed by 2 people and then send an automated letter.