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It feels so weird that US doesn't have such system where as Second/Third world country like India excels in some of them. Online Tax Filing (preloaded with all

It feels so weird that US doesn't have such system where as Second/Third world country like India excels in some of them. Online Tax Filing (preloaded with all the tax data, nothing to declare extra, just 5 clicks). In fact there are third party sites/apps (freetaxfiler) which automates the entire process.

stueynz 3y ago
From another part of the world - if the IRS has all the data why aren’t they sending refunds/demands for payment without any clicks at all.
- dghlsakjg 3y ago
  1. Politics. Funding the IRS sufficiently is, sadly, controversial. Additionally, tax filing is a multi-billion dollar industry, and they lobby politicians very heavily to make it hard to file taxes. 2. The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Most people could answer about 5-10 simple questions and the IRS would have everything they need (this is basically how tax filing firms/software get it done after you give them all of the information that the IRS already has). A minority have more complex tax situations, but these people likely already have a personal accountant, or are running a business.
  - jjav 3y ago
    > The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Well, not quite. The IRS knows 100% of what the average person is going to put in their tax return. So just automate that. There is a small percentage of people with more complex tax situations. Yes, they will need to file a tax return. Percentage-wise, it is very few people.
- oliwarner 3y ago
  They don't have all the data. Your tax office wouldn't automatically know about self employment, investment earnings, your private business expenses, collected rent, profit from reselling things, etc, and they'd expect you to declare them via some form of self-assessment. The US takes one step further by allowing a plethora of non-earning items to be declared as deductions on your return (mortgage interest, healthcare expenses, kids, etc) which the IRS needs to be told about.
  - jjav 3y ago
    > They don't have all the data. For nearly all people, they do. They do know your investment earnings (brokerages report that) and your mortgage interest (loan companies report that) and your kids. That covers, just about everyone. Sure, a few people have personal businesses and rent incomes and all kinds of complex things. So the rational thing to do is build an automated system that covers the needs of 99+% of people, and for the few ones that it doesn't work, let them opt out and do a traditional tax return filing.
RodgerTheGreat 3y ago
It's not an accident. Lobbyists in the US have spent decades working to hamper the operations of the IRS for a variety of reasons (including limiting their capacity to investigate tax evasion on the part of the people funding the lobbying), and to protect the interests of middlemen like tax services companies.
- atmavatar 3y ago
  There's also the side bonus that making filing taxes as painful as possible ratchets up the public's irritation at paying them, thus making tax cuts an even more popular policy goal.
  - imtringued 3y ago
    How does cutting taxes make them less irritating? The government can offer you tax rebates or tax credits or deductions that are difficult to obtain. The amount of tax you pay might even go up when the taxes get more complicated. When I do my tax returns I'm not complaining about the amount at all but about gathering the information. If anything, it distracts from how much I am paying. It's much easier to check how much money you've paid to the government by looking at your monthly salary slip than doing anything tax return related.

stueynz 3y ago

From another part of the world - if the IRS has all the data why aren’t they sending refunds/demands for payment without any clicks at all.

dghlsakjg 3y ago
1. Politics. Funding the IRS sufficiently is, sadly, controversial. Additionally, tax filing is a multi-billion dollar industry, and they lobby politicians very heavily to make it hard to file taxes. 2. The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Most people could answer about 5-10 simple questions and the IRS would have everything they need (this is basically how tax filing firms/software get it done after you give them all of the information that the IRS already has). A minority have more complex tax situations, but these people likely already have a personal accountant, or are running a business.
- jjav 3y ago
  > The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Well, not quite. The IRS knows 100% of what the average person is going to put in their tax return. So just automate that. There is a small percentage of people with more complex tax situations. Yes, they will need to file a tax return. Percentage-wise, it is very few people.
oliwarner 3y ago
They don't have all the data. Your tax office wouldn't automatically know about self employment, investment earnings, your private business expenses, collected rent, profit from reselling things, etc, and they'd expect you to declare them via some form of self-assessment. The US takes one step further by allowing a plethora of non-earning items to be declared as deductions on your return (mortgage interest, healthcare expenses, kids, etc) which the IRS needs to be told about.
- jjav 3y ago
  > They don't have all the data. For nearly all people, they do. They do know your investment earnings (brokerages report that) and your mortgage interest (loan companies report that) and your kids. That covers, just about everyone. Sure, a few people have personal businesses and rent incomes and all kinds of complex things. So the rational thing to do is build an automated system that covers the needs of 99+% of people, and for the few ones that it doesn't work, let them opt out and do a traditional tax return filing.

RodgerTheGreat 3y ago

It's not an accident. Lobbyists in the US have spent decades working to hamper the operations of the IRS for a variety of reasons (including limiting their capacity to investigate tax evasion on the part of the people funding the lobbying), and to protect the interests of middlemen like tax services companies.

atmavatar 3y ago
There's also the side bonus that making filing taxes as painful as possible ratchets up the public's irritation at paying them, thus making tax cuts an even more popular policy goal.
- imtringued 3y ago
  How does cutting taxes make them less irritating? The government can offer you tax rebates or tax credits or deductions that are difficult to obtain. The amount of tax you pay might even go up when the taxes get more complicated. When I do my tax returns I'm not complaining about the amount at all but about gathering the information. If anything, it distracts from how much I am paying. It's much easier to check how much money you've paid to the government by looking at your monthly salary slip than doing anything tax return related.