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How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my

How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my deductions.

jonny_eh 3y ago
> possibly with the option to submit extra details they are missing like deductions
Kalium 3y ago
For the most common and most impactful ones, like 1098s, the IRS is aware because they are sent the information directly. Are they going to be aware of all deductions in all cases? You are absolutely correct, there's no way that's correct.
bombcar 3y ago
The standard deduction is now so high ($25,900) that for the vast majority of standard wage-slave Americans, it will not be reached. > In 2017, 47.1 million taxpayers itemized deductions, relative to 15.3 million in 2018. This dramatic shift maps to a more than 19 percentage point drop in itemizers as a percentage of all taxpayers, from 30.90% to 11.47%. The majority of this was people's mortgage deduction went from being more than the standard deduction (so itemization is worthwhile) to being less (so it's not worthwhile). You can roughly estimate what your itemized deduction might be.
mynameisvlad 3y ago
In most countries that have implemented such a system, the government prepares your taxes for you, and then you ok them or ask for adjustments. The vast majority that use standard deductions would just approve it, while those that know their deductions would exceed that can itemize it. Why wouldn't such a system work here? It's not like the act of doing your taxes is what makes your realize you're over the standard deduction. Most people will know if they've done standard or itemized in the past and act off that.
- RandallBrown 3y ago
  > It's not like the act of doing your taxes is what makes your realize you're over the standard deduction. That is exactly how I figured out I should itemize my taxes this year.
  - mynameisvlad 3y ago
    What part of the process prompted you to do that? TurboTax asking you if you want to itemize or not? That's pretty much the extent most Americans think about itemization as it stands, and whether it comes from a tax software or the government, the result is going to be the same.
cstoner 3y ago
The vast majority of people take the standard deduction, so offering a "here's what we think you owe, but if you disagree feel free to do the full return" form would be a huge efficiency gain. Your comment seems like a prime case of perfect being the enemy of good.
- jrochkind1 3y ago
  > The vast majority of people take the standard deduction Unless they are a homeowner, probably. Part of the issue is that the US tax code is a lot more complex than most countries. (And the homeowner-targetted deductions are kind of insane and bad policy too). Still, I don't disagree with the basic premise. They probably know enough to know if itemizing your homeowner-related things would be better for you, and do it that way. You can ask for adjustments, or you could always ignore what they calculate for you and do it all yourself from scratch if you wanted to, a thing I believe you _can_ do in European countries that generally calculate your income taxes for you? Also, I wish our tax code werent' so insane.
  - lotsofpulp 3y ago
    90% of federal tax filers in the US do not itemize, which includes the majority of home owners.
    - tivert 3y ago
      > 90% of federal tax filers in the US do not itemize, which includes the majority of home owners. Isn't that a relatively recent thing? IIRC, the standard deduction was massively increased a few years ago.
      - mikestew 3y ago
        Isn't that a relatively recent thing? Yes, it is. What difference do you think that makes in the present day?
        3y ago
justapassenger 3y ago
With current tax code, not taking standard deduction is more of an exception than a rule. It has to be supported, and you should be able to change it. But there's really no reason today for why IRS doesn't send you "this is what we think you owe, based on this data that we have. Click to accept or add more data". That process would hugely simplify taxes for majority of Americans and wouldn't impact people who have more complex cases.
- jghn 3y ago
  I itemize, but it doesn't save me a ton. I would probably still click that button just to save me the mental headache and time spent.
johnny99k 3y ago
This is why making it this easy is a win for the government. 99% of the people are lazy and will just let them do it, basically giving them free money.
- Taywee 3y ago
  Less money to Intuit and H&R Block and more in my pocket and my government's is a win to me. I'm all for productive businesses, but I'm sick of these tax companies influencing public policy and collecting rent by solving a problem that they are intentionally keeping alive. Imagine a landscaper doing doughnuts on your lawn and then telling you to pay him to fix it, and that's roughly how I view Intuit.
- deleted 3y ago
  [deleted]
ilyt 3y ago
Here in Poland the tax form is pretty much "here is what we know, re-type that into the form and add whatever is missing for deducations". Which you can use free app to download, file and send the filed one. weirdly enough official site also have instruction on how to use PlayOnLinux to run it under Linux
- Taywee 3y ago
  That is really interesting. I wonder if they considered Linux too late in development to shift to something platform agnostic, or just decided that Wine was reliable enough for them to depend on it. It's interesting that anything other than MacOS and windows is even considered at all, even just in the instructions.
- isbvhodnvemrwvn 3y ago
  If you don't want to change anything you can just submit it with one click.
cyberax 3y ago
The government knows about your main itemized deductions like mortgage interest. Then it can just compare it with your standard deduction and select the one that is greater. Of course, you might still want to amend that, but as the first pass it can be quite accurate.
mikestew 3y ago
How would you know if you're going to take the standard deduction without doing your taxes? People wealthy enough to even think that their deductions might exceed the standard deduction are not only in the vast minority, they're also wealthy enough that paying for TurboTax isn't an issue because they have their accountant do the taxes. IOW, you're optimizing for the exception, not the majority case.
- iends 3y ago
  Two DINKs who live in HCOL areas and donate 10% of their income to charity should be thinking about itemizing, though. We’re talking 250k in salary or so, right?
  - mikestew 3y ago
    Your point being...? What percentage of people do you think fit your description? I stand by my "vast minority" statement, if that's what you're driving at. HN is not the general U. S. population.
Rebelgecko 3y ago
Let's not let perfect be the enemy of the good here. Per the IRS's stats, 89% of people take the standard deduction. For those who itemize, the government usually knows about most the things you're itemizing. I'm itemizing this year because of 3 things: taxes paid, mortgage interest, and charitable donations. The government already knows about 2 of those, so they could send me prefilled forms that are 95% complete (W-2, investment 1099, mortgage 1098, mortgage 1099 and other bank account 1099-ints, my form 5498 for my IRA, property taxes, etc). I'd much prefer only having to fill in my charitable donations. It would change a job that takes a couple hours into one that takes maybe 15 minutes.
recursive 3y ago
By deciding to do it. Whether it's economically rational is another question. I've never calculated my deductions. I assume it's ok. But it's a guess, as I've never checked.

How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my deductions.

jonny_eh 3y ago

> possibly with the option to submit extra details they are missing like deductions

Kalium 3y ago

For the most common and most impactful ones, like 1098s, the IRS is aware because they are sent the information directly. Are they going to be aware of all deductions in all cases? You are absolutely correct, there's no way that's correct.

bombcar 3y ago

The standard deduction is now so high ($25,900) that for the vast majority of standard wage-slave Americans, it will not be reached. > In 2017, 47.1 million taxpayers itemized deductions, relative to 15.3 million in 2018. This dramatic shift maps to a more than 19 percentage point drop in itemizers as a percentage of all taxpayers, from 30.90% to 11.47%. The majority of this was people's mortgage deduction went from being more than the standard deduction (so itemization is worthwhile) to being less (so it's not worthwhile). You can roughly estimate what your itemized deduction might be.

mynameisvlad 3y ago

In most countries that have implemented such a system, the government prepares your taxes for you, and then you ok them or ask for adjustments. The vast majority that use standard deductions would just approve it, while those that know their deductions would exceed that can itemize it. Why wouldn't such a system work here? It's not like the act of doing your taxes is what makes your realize you're over the standard deduction. Most people will know if they've done standard or itemized in the past and act off that.

RandallBrown 3y ago
> It's not like the act of doing your taxes is what makes your realize you're over the standard deduction. That is exactly how I figured out I should itemize my taxes this year.
- mynameisvlad 3y ago
  What part of the process prompted you to do that? TurboTax asking you if you want to itemize or not? That's pretty much the extent most Americans think about itemization as it stands, and whether it comes from a tax software or the government, the result is going to be the same.

cstoner 3y ago

The vast majority of people take the standard deduction, so offering a "here's what we think you owe, but if you disagree feel free to do the full return" form would be a huge efficiency gain. Your comment seems like a prime case of perfect being the enemy of good.

jrochkind1 3y ago
> The vast majority of people take the standard deduction Unless they are a homeowner, probably. Part of the issue is that the US tax code is a lot more complex than most countries. (And the homeowner-targetted deductions are kind of insane and bad policy too). Still, I don't disagree with the basic premise. They probably know enough to know if itemizing your homeowner-related things would be better for you, and do it that way. You can ask for adjustments, or you could always ignore what they calculate for you and do it all yourself from scratch if you wanted to, a thing I believe you _can_ do in European countries that generally calculate your income taxes for you? Also, I wish our tax code werent' so insane.
- lotsofpulp 3y ago
  90% of federal tax filers in the US do not itemize, which includes the majority of home owners.
  - tivert 3y ago
    > 90% of federal tax filers in the US do not itemize, which includes the majority of home owners. Isn't that a relatively recent thing? IIRC, the standard deduction was massively increased a few years ago.
    - mikestew 3y ago
      Isn't that a relatively recent thing? Yes, it is. What difference do you think that makes in the present day?
      - 3y ago

justapassenger 3y ago

With current tax code, not taking standard deduction is more of an exception than a rule. It has to be supported, and you should be able to change it. But there's really no reason today for why IRS doesn't send you "this is what we think you owe, based on this data that we have. Click to accept or add more data". That process would hugely simplify taxes for majority of Americans and wouldn't impact people who have more complex cases.

jghn 3y ago
I itemize, but it doesn't save me a ton. I would probably still click that button just to save me the mental headache and time spent.

johnny99k 3y ago

This is why making it this easy is a win for the government. 99% of the people are lazy and will just let them do it, basically giving them free money.

Taywee 3y ago
Less money to Intuit and H&R Block and more in my pocket and my government's is a win to me. I'm all for productive businesses, but I'm sick of these tax companies influencing public policy and collecting rent by solving a problem that they are intentionally keeping alive. Imagine a landscaper doing doughnuts on your lawn and then telling you to pay him to fix it, and that's roughly how I view Intuit.
deleted 3y ago
[deleted]

ilyt 3y ago

Here in Poland the tax form is pretty much "here is what we know, re-type that into the form and add whatever is missing for deducations". Which you can use free app to download, file and send the filed one. weirdly enough official site also have instruction on how to use PlayOnLinux to run it under Linux

Taywee 3y ago
That is really interesting. I wonder if they considered Linux too late in development to shift to something platform agnostic, or just decided that Wine was reliable enough for them to depend on it. It's interesting that anything other than MacOS and windows is even considered at all, even just in the instructions.
isbvhodnvemrwvn 3y ago
If you don't want to change anything you can just submit it with one click.

cyberax 3y ago

The government knows about your main itemized deductions like mortgage interest. Then it can just compare it with your standard deduction and select the one that is greater. Of course, you might still want to amend that, but as the first pass it can be quite accurate.

mikestew 3y ago

How would you know if you're going to take the standard deduction without doing your taxes? People wealthy enough to even think that their deductions might exceed the standard deduction are not only in the vast minority, they're also wealthy enough that paying for TurboTax isn't an issue because they have their accountant do the taxes. IOW, you're optimizing for the exception, not the majority case.

iends 3y ago
Two DINKs who live in HCOL areas and donate 10% of their income to charity should be thinking about itemizing, though. We’re talking 250k in salary or so, right?
- mikestew 3y ago
  Your point being...? What percentage of people do you think fit your description? I stand by my "vast minority" statement, if that's what you're driving at. HN is not the general U. S. population.

Rebelgecko 3y ago

Let's not let perfect be the enemy of the good here. Per the IRS's stats, 89% of people take the standard deduction. For those who itemize, the government usually knows about most the things you're itemizing. I'm itemizing this year because of 3 things: taxes paid, mortgage interest, and charitable donations. The government already knows about 2 of those, so they could send me prefilled forms that are 95% complete (W-2, investment 1099, mortgage 1098, mortgage 1099 and other bank account 1099-ints, my form 5498 for my IRA, property taxes, etc). I'd much prefer only having to fill in my charitable donations. It would change a job that takes a couple hours into one that takes maybe 15 minutes.

recursive 3y ago

By deciding to do it. Whether it's economically rational is another question. I've never calculated my deductions. I assume it's ok. But it's a guess, as I've never checked.