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We can still appreciate progress. And this is progress. Although if the IRS is gonna audit when I under pay, they technically already know how much I owe. Why

We can still appreciate progress. And this is progress. Although if the IRS is gonna audit when I under pay, they technically already know how much I owe. Why not just tell me? Reckon it's since people also over pay, and there's no refunds for doing that.

ghaff 3y ago
Not at all clear the IRS won’t refund overpayments. I’ve gotten a check in the distant past when I double-paid something.
wolfgang42 3y ago
I have overpaid my taxes several times due to clerical errors, and each time the IRS sent me a letter explaining what happened and a check for the overpaid amount, plus interest. One time I forgot to deposit the check, and after waiting a year they automatically sent me a replacement along with a reminder of why it was they owed me money. My general impression is that they’re tedious and bureaucratic, but scrupulously inclined towards accuracy in both directions.
kelnos 3y ago
> Reckon it's since people also over pay, and there's no refunds for doing that. Sure there are. I've gotten refunds from the IRS when I made a mistake on my tax return and overpaid.
IshKebab 3y ago
Yeah I wonder the same question about UK taxes. If you self-assess they'll still say "actually we calculated your tax and got this number so you owe us £X". The vast majority of people don't need to file taxes but even then it somehow still comes out wrong and you occasionally get a refund.
seanmcdirmid 3y ago
So…they know very little actually. We just got a nasty tax bill from the IRS because when my wife gets an RSU grant, her company sells some stock to pay income tax for that grant. Little did I know, that generates a 1040 for the stock sale (to pay ordinary income taxes) with a cost basis of zero! Instead, you have to adjust the cost basis to the entire sale (or even more!) via supplemental information. Annoying, so I had to learn a bunch of tax rules over one day on the weekend, and in the end the amended return said the IRS owed us money. It’s crazy stuff like this that means the IRS can’t really calculate your taxes for you.
- ghaff 3y ago
  Cost basis stuff has improved over time and I haven’t had problems recently that I know of but I’m sure there are still issues.
  - seanmcdirmid 3y ago
    I’m surprised they can’t just the cost basis directly.
    - ghaff 3y ago
      In years/decades past figuring out cost basis through options and acquisitions could be a real nightmare. To be honest there have been times when I’ve thrown my hands up and just come up with a plausible average. But as I wrote, I think things are mostly pretty good these days. But who knows with things like RSUs you have limited visibility into.
      - seanmcdirmid 3y ago
        We both work at big techs , so first world problem. But her company grants RSUs and sells stock to cover income tax, mine gives less stock and grants cash to cover taxes instead. Which is why I was surprised she was getting 1040s at all. But the stock is sold to cover tax, since a stock grant is taxed as ordinary income, that this generates a 1040 with a cost basis of zero is crazy.
- georgeecollins 3y ago
  True, but 99.5% of Americans don't get RSUs. There are other cases like business expenses and unusual deductions, but again most people don't have those. So the IRS can probably only calculate taxes for 80% of Americans. (I'm guessing, not an expert)
  - PaulDavisThe1st 3y ago
    Last time I looked it up, it is indeed somewhere between 10% and 20% of individuals that file Schedule C to report business income, and thus could not be handled by an automatic IRS tax system. Good guess!
snotrockets 3y ago
Because some people believe that if filing taxes would be easy, people won't object to paying them. There's are multiple groups, all donate a lot to certain politicains, and all are hell bent on trying to eradicate taxation.
zamfi 3y ago
An IRS audit isn’t because you underpaid the amount they think you owe — for that they usually send you a form saying, in their own special language, “hey I think you may not have included this XYZ income in your tax return, we think you owe an extra $ABC”. Instead, it’s because they want to make sure you were truthful in what you reported, and may have some reason to believe you were not. Often, they don’t know how much you owe in this case.
plasmatix 3y ago
Funny enough, a few years ago I got a ~$20 check from the IRS after they made some adjustments to my tax filing. So not only can they do it for you, they can do it better!

ghaff 3y ago

Not at all clear the IRS won’t refund overpayments. I’ve gotten a check in the distant past when I double-paid something.

wolfgang42 3y ago

I have overpaid my taxes several times due to clerical errors, and each time the IRS sent me a letter explaining what happened and a check for the overpaid amount, plus interest. One time I forgot to deposit the check, and after waiting a year they automatically sent me a replacement along with a reminder of why it was they owed me money. My general impression is that they’re tedious and bureaucratic, but scrupulously inclined towards accuracy in both directions.

kelnos 3y ago

> Reckon it's since people also over pay, and there's no refunds for doing that. Sure there are. I've gotten refunds from the IRS when I made a mistake on my tax return and overpaid.

IshKebab 3y ago

Yeah I wonder the same question about UK taxes. If you self-assess they'll still say "actually we calculated your tax and got this number so you owe us £X". The vast majority of people don't need to file taxes but even then it somehow still comes out wrong and you occasionally get a refund.

seanmcdirmid 3y ago

So…they know very little actually. We just got a nasty tax bill from the IRS because when my wife gets an RSU grant, her company sells some stock to pay income tax for that grant. Little did I know, that generates a 1040 for the stock sale (to pay ordinary income taxes) with a cost basis of zero! Instead, you have to adjust the cost basis to the entire sale (or even more!) via supplemental information. Annoying, so I had to learn a bunch of tax rules over one day on the weekend, and in the end the amended return said the IRS owed us money. It’s crazy stuff like this that means the IRS can’t really calculate your taxes for you.

ghaff 3y ago
Cost basis stuff has improved over time and I haven’t had problems recently that I know of but I’m sure there are still issues.
- seanmcdirmid 3y ago
  I’m surprised they can’t just the cost basis directly.
  - ghaff 3y ago
    In years/decades past figuring out cost basis through options and acquisitions could be a real nightmare. To be honest there have been times when I’ve thrown my hands up and just come up with a plausible average. But as I wrote, I think things are mostly pretty good these days. But who knows with things like RSUs you have limited visibility into.
    - seanmcdirmid 3y ago
      We both work at big techs , so first world problem. But her company grants RSUs and sells stock to cover income tax, mine gives less stock and grants cash to cover taxes instead. Which is why I was surprised she was getting 1040s at all. But the stock is sold to cover tax, since a stock grant is taxed as ordinary income, that this generates a 1040 with a cost basis of zero is crazy.
georgeecollins 3y ago
True, but 99.5% of Americans don't get RSUs. There are other cases like business expenses and unusual deductions, but again most people don't have those. So the IRS can probably only calculate taxes for 80% of Americans. (I'm guessing, not an expert)
- PaulDavisThe1st 3y ago
  Last time I looked it up, it is indeed somewhere between 10% and 20% of individuals that file Schedule C to report business income, and thus could not be handled by an automatic IRS tax system. Good guess!

snotrockets 3y ago

Because some people believe that if filing taxes would be easy, people won't object to paying them. There's are multiple groups, all donate a lot to certain politicains, and all are hell bent on trying to eradicate taxation.

zamfi 3y ago

An IRS audit isn’t because you underpaid the amount they think you owe — for that they usually send you a form saying, in their own special language, “hey I think you may not have included this XYZ income in your tax return, we think you owe an extra $ABC”. Instead, it’s because they want to make sure you were truthful in what you reported, and may have some reason to believe you were not. Often, they don’t know how much you owe in this case.

plasmatix 3y ago

Funny enough, a few years ago I got a ~$20 check from the IRS after they made some adjustments to my tax filing. So not only can they do it for you, they can do it better!