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Before everyone gets too excited: This will probably only apply to simple tax situations: If you have more than these, you might not be able use it: #Income re

Before everyone gets too excited: This will probably only apply to simple tax situations: If you have more than these, you might not be able use it: #Income reporting W-2 wage income Social Security and railroad retirement income Unemployment compensation Interest of $1,500 or less #Credits Earned Income Tax Credit Child Tax Credit Credit for Other Dependents #Deductions Standard deduction Student loan interest Educator expenses

jaywalk 3y ago
It'll only apply to simple tax situations for this initial pilot launch.
amalcon 3y ago
On the other hand, that's a whole lot of people -- probably almost everyone who is not a homeowner, and quite a few who are.
- ghaff 3y ago
  That list suggests that if you have a 1099 (which I assume is most people with meaningful savings), you probably won't qualify.
  - bigbillheck 3y ago
    I think there are probably a lot fewer people with meaningful savings than you might think.
    - ghaff 3y ago
      It looks like about half have brokerage accounts although some of those are probably just 401Ks and there's obviously a strong correlation with income levels.
      - jancsika 3y ago
        I'd bet once you start digging down into the details, having a brokerage account becomes less and less relevant as a metric for who can pay simple taxes. For example, how many of those respondents in the Gallup poll answered yes only because they have a Simple IRA? For those respondents, their contributions don't preclude them from taking the "simple tax" branch when filing taxes. (That's the "simple" part-- well, one of the simple parts, at least for the employee.) Moreover, there were some changes to simple IRA administration in Secure 2.0 act that make automatic enrollment mandatory (for the employer to do 3% matching or whatever). So the category of respondent I mentioned above-- who technically has a brokerage account but can file simple taxes-- is likely to grow quite a bit in the next few years and decades. Edit: I'd also be interested in how many people with simple IRAs contribute anything more than the 3% matching-- I'd bet its more than a majority. Perhaps that could change now that Secure 2.0 lets them contribute to a Roth IRA.
    - kgermino 3y ago
      Especially meaningful savings with taxable interest. Yes, most people with more than a few hundred bucks in savings accounts will get a 1099-INT, but a lot of people just use checking accounts and if you're at a big bank like Chase even savings account interest is so low you still might be under the $10 threshold. The average American's investments (if they have any at all) are in retirement accounts so they'd avoid those taxes too.
      - junar 3y ago
        "Interest of $1,500 or less" is eligible according to the announcement. Dividends and capital gains are not mentioned, and presumably not eligible.
  - deleted 3y ago
    [deleted]
  - amalcon 3y ago
    > Interest of $1,500 or less The only 1099 that most people will get, even with meaningful savings, meets this description.
    - greyface- 3y ago
      "Gig work" typically results in 1099 rather than W-2 income, and is common.
      - smt88 3y ago
        Gig work is not common[1]. It just gets disproportionate attention. 1. https://www.pewresearch.org/internet/2021/12/08/the-state-of-gig-work-in-2021/ https://www.pewresearch.org/internet/2021/12/08/the-state-of...
        greyface- 3y ago
        Your [1] shows 4% of Americans currently engaged in gig work, and 16% of Americans having ever done gig work. What's your threshold for 'common'?
        smt88 3y ago
        Definitely more than 4% at any given time. At least 20%, I'd say. In the context of the IRS providing a useful filing tool, covering 96% of Americans' income sources would be fantastic.
LordDragonfang 3y ago
See, this is the thing that gets me. For almost anyone who fits in this box, you shouldn't have to file in the first place. Not "shouldn't have to pay", but literally, "should not have to send documents to the government telling them how much you owe them" - because they already have all of that information. They should just give you an itemized breakdown and ask if it's correct.
- tombert 3y ago
  Yeah, this has been my frustration too; I got audited by the IRS in 2021 because I forgot to declare stock sales, and so I owe about $8,000: $7,000 for the missing taxes and a $1,000 fine. I wasn't terribly mad about the money (if I owe $7,000 then that's what I owe, it was my fault), but what I was mad about was the fact that I had to do anything in 2021 at all. If the IRS knows enough to know what I owe them, then why exactly do I have to file, just to have them validate that the numbers I give them match the numbers that they have on file.
  - Kon-Peki 3y ago
    They don’t know enough to know how much you owe them, but they do know that you got $xx,xxx from a brokerage account and that the tax would be $7,000 unless there were some things unknown to them that would make it a lower amount. You didn’t tell them about any of those things, so they assumed the full amount but were perfectly willing to be shown that that this assumption was wrong.
    - fire 3y ago
      my favorite part is how brokerages like morgan stanley don't report the cost basis when they report your sales to the irs, and for no reason I can find. This means that if you don't report sales from your side so you can note the cost basis, the irs assumes a cost basis of 0 and calculates owed tax on the entire sale value - this applies to stuff like RSU grants as well, and trips up a great many people entering the tech sector ( especially young people who may not have much tax filing experience ) I legitimately don't know why brokerages don't all include the cost basis by default ( or why they aren't required to by law )
fire 3y ago
w2 only would mean independent contractors , like gig workers, won't be able to use it, right? since they get 1099's and not w2's?
roshin 3y ago
As an expat, I assume that there will be no soon changes to the complicated tax filing that I have to do. Although I am exempt from paying taxes to Uncle Sam, the "tax" that I have to pay to an accountant to fill out the complicated forms is more than enough to make me want to get rid of my citizenship, if that in itself wasn't so expensive.
- personomas 3y ago
  Just do it yourself man, it's not that hard. Use your past ones as an example. I've been doing mine for 7 years (I live in Germany)
  - koblas 3y ago
    Are you filling forms yourself or using a service? I'm doing the expat thing and it's still like 90 pages for the final filing.

jaywalk 3y ago

It'll only apply to simple tax situations for this initial pilot launch.

amalcon 3y ago

On the other hand, that's a whole lot of people -- probably almost everyone who is not a homeowner, and quite a few who are.

ghaff 3y ago
That list suggests that if you have a 1099 (which I assume is most people with meaningful savings), you probably won't qualify.
- bigbillheck 3y ago
  I think there are probably a lot fewer people with meaningful savings than you might think.
  - ghaff 3y ago
    It looks like about half have brokerage accounts although some of those are probably just 401Ks and there's obviously a strong correlation with income levels.
    - jancsika 3y ago
      I'd bet once you start digging down into the details, having a brokerage account becomes less and less relevant as a metric for who can pay simple taxes. For example, how many of those respondents in the Gallup poll answered yes only because they have a Simple IRA? For those respondents, their contributions don't preclude them from taking the "simple tax" branch when filing taxes. (That's the "simple" part-- well, one of the simple parts, at least for the employee.) Moreover, there were some changes to simple IRA administration in Secure 2.0 act that make automatic enrollment mandatory (for the employer to do 3% matching or whatever). So the category of respondent I mentioned above-- who technically has a brokerage account but can file simple taxes-- is likely to grow quite a bit in the next few years and decades. Edit: I'd also be interested in how many people with simple IRAs contribute anything more than the 3% matching-- I'd bet its more than a majority. Perhaps that could change now that Secure 2.0 lets them contribute to a Roth IRA.
  - kgermino 3y ago
    Especially meaningful savings with taxable interest. Yes, most people with more than a few hundred bucks in savings accounts will get a 1099-INT, but a lot of people just use checking accounts and if you're at a big bank like Chase even savings account interest is so low you still might be under the $10 threshold. The average American's investments (if they have any at all) are in retirement accounts so they'd avoid those taxes too.
    - junar 3y ago
      "Interest of $1,500 or less" is eligible according to the announcement. Dividends and capital gains are not mentioned, and presumably not eligible.
- deleted 3y ago
  [deleted]
- amalcon 3y ago
  > Interest of $1,500 or less The only 1099 that most people will get, even with meaningful savings, meets this description.
  - greyface- 3y ago
    "Gig work" typically results in 1099 rather than W-2 income, and is common.
    - smt88 3y ago
      Gig work is not common[1]. It just gets disproportionate attention. 1. https://www.pewresearch.org/internet/2021/12/08/the-state-of-gig-work-in-2021/ https://www.pewresearch.org/internet/2021/12/08/the-state-of...
      - greyface- 3y ago
        Your [1] shows 4% of Americans currently engaged in gig work, and 16% of Americans having ever done gig work. What's your threshold for 'common'?
        smt88 3y ago
        Definitely more than 4% at any given time. At least 20%, I'd say. In the context of the IRS providing a useful filing tool, covering 96% of Americans' income sources would be fantastic.

LordDragonfang 3y ago

See, this is the thing that gets me. For almost anyone who fits in this box, you shouldn't have to file in the first place. Not "shouldn't have to pay", but literally, "should not have to send documents to the government telling them how much you owe them" - because they already have all of that information. They should just give you an itemized breakdown and ask if it's correct.

tombert 3y ago
Yeah, this has been my frustration too; I got audited by the IRS in 2021 because I forgot to declare stock sales, and so I owe about $8,000: $7,000 for the missing taxes and a $1,000 fine. I wasn't terribly mad about the money (if I owe $7,000 then that's what I owe, it was my fault), but what I was mad about was the fact that I had to do anything in 2021 at all. If the IRS knows enough to know what I owe them, then why exactly do I have to file, just to have them validate that the numbers I give them match the numbers that they have on file.
- Kon-Peki 3y ago
  They don’t know enough to know how much you owe them, but they do know that you got $xx,xxx from a brokerage account and that the tax would be $7,000 unless there were some things unknown to them that would make it a lower amount. You didn’t tell them about any of those things, so they assumed the full amount but were perfectly willing to be shown that that this assumption was wrong.
  - fire 3y ago
    my favorite part is how brokerages like morgan stanley don't report the cost basis when they report your sales to the irs, and for no reason I can find. This means that if you don't report sales from your side so you can note the cost basis, the irs assumes a cost basis of 0 and calculates owed tax on the entire sale value - this applies to stuff like RSU grants as well, and trips up a great many people entering the tech sector ( especially young people who may not have much tax filing experience ) I legitimately don't know why brokerages don't all include the cost basis by default ( or why they aren't required to by law )

fire 3y ago

w2 only would mean independent contractors , like gig workers, won't be able to use it, right? since they get 1099's and not w2's?

roshin 3y ago

As an expat, I assume that there will be no soon changes to the complicated tax filing that I have to do. Although I am exempt from paying taxes to Uncle Sam, the "tax" that I have to pay to an accountant to fill out the complicated forms is more than enough to make me want to get rid of my citizenship, if that in itself wasn't so expensive.

personomas 3y ago
Just do it yourself man, it's not that hard. Use your past ones as an example. I've been doing mine for 7 years (I live in Germany)
- koblas 3y ago
  Are you filling forms yourself or using a service? I'm doing the expat thing and it's still like 90 pages for the final filing.