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Those deductions and credits (mostly) apply to people itemizing their deductions. About 30% of households itemize - the remaining 70% take the standard deductio

Those deductions and credits (mostly) apply to people itemizing their deductions. About 30% of households itemize - the remaining 70% take the standard deduction. [EDIT - since the tax changes in 2018, the numbers are closer to 10% itemize/90% standard deduction] And most of the common items are known to the IRS... mortgage and mortgage interest, property taxes, state taxes, education credits, retirement savings. Common items that could be known to the IRS (but aren't necessarily today)... charitable giving, medical expenses, self-employed healthcare premiums. The IRS could, relatively easily, email/SMS/snail-mail you a pre-filled tax return with the info they do have. If nothing needs updated, you just (e-)sign and provide payment info.

lazide 3y ago
Most of the economy (as in cash flow) is through businesses, and what you’re saying doesn’t apply to them.
- alistairSH 3y ago
  So...? There are 131,000,000 households in the US. Something like 40% of people surveyed use tax prep software (at $50+/year). That's a massive waste of money that society could use on something useful.
  - lazide 3y ago
    Someone asked why it was happening in the US. I pointed out why. That not everyone agrees that it is a waste, or that society would find a better use for it is of course going to be a matter of opinion. Which some folks are heavily incentivized to weigh in on (to the point it may be a large percentage or all of their net worth), and to others it’s $50/yr.
pclmulqdq 3y ago
That's not really true. Itemized deductions are a small part of this, and so are the individual tax credits. Business accounting and post-tax investment are actually the big items here, and are impossible for the IRS to do for you. I'm afraid that if you get a stock grant from your employer, that puts you beyond where the IRS can send you a pre-filled form that is correct.
- alistairSH 3y ago
  I'm afraid that if you get a stock grant from your employer, that puts you beyond where the IRS can send you a pre-filled form that is correct. Sure, but that's a tiny fraction of the population. Nobody is saying the IRS should send you a fixed return. Only that they should send what they have, and if nothing needs changed, great, society is better off.
  - frumper 3y ago
    Lots of deductions and credits are on top of the standard deduction. School expenses, child credits, child care expenses, retirement savings, EIC credits and student loan interest are some very common things.
    - semi 3y ago
      Imagine if all you had to do at tax time was enumerate those deductions, instead of that and the rest of doing your taxes
- kelnos 3y ago
  There's no reason why this has to be the case, though. Brokerages are already required to report lots of things about their clients to the IRS. No reason why "stock grant from employer" couldn't be one of them. (Regardless, these stock grants usually end up as W-2 income, so I'm not sure why you think this isn't covered already. Stock option grants often need some special handling, though.) In any case, most Americans do not care about this. I'm getting tired of the "10% of taxpayers couldn't fully use this system, so let's not bother" type arguments.
  - pclmulqdq 3y ago
    The reason why this has to be the case in terms of brokerage accounting is that there are different ways to account for your purchases and sales of securities that can result in different levels of tax. Brokerages usually allow you to choose one on your 1099-B if you want (despite the fact that this may be hidden). You are only allowed to use one accounting method across all of your accounts. If you only have one brokerage account, they can make the tax-minimizing choice for you automatically, but if not, you have to make sure they use the same method. Certainly stock grants end up as W-2 income, but unless you automatically sell all of them, your choice of accounting methods matters. Many people I know have at least 2, one for employment-related stock and the other for their own trading. You don't even need options to get an accounting problem. Also, I think you have a very narrow view of who actually cares about special tax circumstances. Teachers have several special credits. So do students. So do people who save for retirement. Not to mention people who run a small business or a side hustle. This isn't a 10% situation, this is more like 30-50% in any given year, and almost nobody files a bog-standard return every year for their entire life. It would be nice, however, if the IRS told you about all of the W-2s and 1099s they got before you had to file your taxes. The good news is that you can do this if you file for an extension on your taxes and check an obscure section of the IRS website - many accountants do it.

lazide 3y ago

Most of the economy (as in cash flow) is through businesses, and what you’re saying doesn’t apply to them.

alistairSH 3y ago
So...? There are 131,000,000 households in the US. Something like 40% of people surveyed use tax prep software (at $50+/year). That's a massive waste of money that society could use on something useful.
- lazide 3y ago
  Someone asked why it was happening in the US. I pointed out why. That not everyone agrees that it is a waste, or that society would find a better use for it is of course going to be a matter of opinion. Which some folks are heavily incentivized to weigh in on (to the point it may be a large percentage or all of their net worth), and to others it’s $50/yr.

pclmulqdq 3y ago

That's not really true. Itemized deductions are a small part of this, and so are the individual tax credits. Business accounting and post-tax investment are actually the big items here, and are impossible for the IRS to do for you. I'm afraid that if you get a stock grant from your employer, that puts you beyond where the IRS can send you a pre-filled form that is correct.

alistairSH 3y ago
I'm afraid that if you get a stock grant from your employer, that puts you beyond where the IRS can send you a pre-filled form that is correct. Sure, but that's a tiny fraction of the population. Nobody is saying the IRS should send you a fixed return. Only that they should send what they have, and if nothing needs changed, great, society is better off.
- frumper 3y ago
  Lots of deductions and credits are on top of the standard deduction. School expenses, child credits, child care expenses, retirement savings, EIC credits and student loan interest are some very common things.
  - semi 3y ago
    Imagine if all you had to do at tax time was enumerate those deductions, instead of that and the rest of doing your taxes
kelnos 3y ago
There's no reason why this has to be the case, though. Brokerages are already required to report lots of things about their clients to the IRS. No reason why "stock grant from employer" couldn't be one of them. (Regardless, these stock grants usually end up as W-2 income, so I'm not sure why you think this isn't covered already. Stock option grants often need some special handling, though.) In any case, most Americans do not care about this. I'm getting tired of the "10% of taxpayers couldn't fully use this system, so let's not bother" type arguments.
- pclmulqdq 3y ago
  The reason why this has to be the case in terms of brokerage accounting is that there are different ways to account for your purchases and sales of securities that can result in different levels of tax. Brokerages usually allow you to choose one on your 1099-B if you want (despite the fact that this may be hidden). You are only allowed to use one accounting method across all of your accounts. If you only have one brokerage account, they can make the tax-minimizing choice for you automatically, but if not, you have to make sure they use the same method. Certainly stock grants end up as W-2 income, but unless you automatically sell all of them, your choice of accounting methods matters. Many people I know have at least 2, one for employment-related stock and the other for their own trading. You don't even need options to get an accounting problem. Also, I think you have a very narrow view of who actually cares about special tax circumstances. Teachers have several special credits. So do students. So do people who save for retirement. Not to mention people who run a small business or a side hustle. This isn't a 10% situation, this is more like 30-50% in any given year, and almost nobody files a bog-standard return every year for their entire life. It would be nice, however, if the IRS told you about all of the W-2s and 1099s they got before you had to file your taxes. The good news is that you can do this if you file for an extension on your taxes and check an obscure section of the IRS website - many accountants do it.