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Taxes aren’t hard but people have been encouraged to talk about it like it’s a colonoscopy by Roto-rooter. Someone can have all W-2 income and only take the sta

by acdha 2y ago

Taxes aren’t hard but people have been encouraged to talk about it like it’s a colonoscopy by Roto-rooter. Someone can have all W-2 income and only take the standard deduction, but thanks to that messaging they’ll act like filing your own taxes is incredibly dangerous with a high chance of ruining you for life (I know someone whose parent worked for the IRS as an auditor and they noted that many people ended up neutral or even getting a refund because an audit for someone who wasn’t trying to cheat would usually find deductions that they hadn’t claimed). That’s not accidental: the rich have been funding anti-tax messaging since the introduction of the income tax, and it’s heavily promoted by the media voices they fund. The tax preparation industry is similarly biased since it’s with so profitable for the median voter to think that they need to pay hundreds of dollars every year to fill out a couple of forms.

recursive 2y ago
The reason I think taxes are hard isn't because of messaging. I might be an idiot, but it's because of an experience I had years ago where I was trying to follow the rules and pay taxes on some contracting income. I screwed something up. I ended up corresponding with the IRS dozens of times. Somehow I had recorded some income that never happened. I think I spent more time writing letters than I spent on the contract project. To this day I'm scared of contacting.
- EvanAnderson 2y ago
  > ...where I was trying to follow the rules and pay taxes on some contracting income... You're an exception and, yeah, it sucks. For somebody who has W-2 income, maybe a 1099-INT, and takes the standard deduction filing taxes is painless and simple. I've just accepted the $800 - $1,000 cost per year for preparation of my LLC K-1 and personal taxes as part of the cost of being an exception. It sucks, but I just roll it into my rates.
- acdha 2y ago
  Yeah, I’m not saying that every situation is trivial but the figures I’ve seen have something like 80% of filers using W-2 income so it’s weird when people who don’t have complex property ownership or business arrangements talk like it’s incredibly complicated. Most of us could use Direct File to be just like most other countries in the world, but there’s a now-dominant lobby which tried to block that.
araes 2y ago
Generally agree for most people. Only caveat is for those with mild amounts of savings (not enough to qualify as wealthy). Enough 401k, mild investments over time with disposable income, or transfers from friends / family / inheritance, that the process becomes quite challenging. You make a couple thousand on a decent year in capital gains or dividend distributions, yet end up with rather confusing paperwork piles to deal with at tax time. Finding out it was necessary to note each buy / sell and the holding time individually for the entire year just seemed crazy in the detail necessary. Mild awareness of why the actual wealthy hire accountants and firms with specialized teams and software to deal with those issues. The part that's also not dealt with, at least in terms of those deductions, is that usually they're related to businesses and expenses. The deductions are available, yet often you have to be treating almost your entire life like a business expense every moment. Business cell phone. Business internet. Business supplies. Business ads, website, and marketing. Business travel. Business property depreciation / amortization. Business legal and accounting. Business mileage. Business loan interest. Business meals. A (personal opinion) funny one is "Hire your own children as workers." You can write-off the payment you make to them which reduces your taxes and the income they earn can be tax-free if you pay them less than the standard deduction.
jandrewrogers 2y ago
The minute you save a little money and have a few investments it can start to become complicated quickly. Yet you don't have/make enough money to justify the expense of hiring a professional to properly sort it out. This actually can become a giant headache because it is difficult to be certain that you've done it correctly and not overpaid. Sure, if you only have a W-2 then it is pretty simple. The issue is that over time people have a tendency to accrue other tax reportable activities as a function of age. It actively discourages people from making some types of potentially productive investments because of the additional tax complexity.

by acdha 2y ago

recursive 2y ago

The reason I think taxes are hard isn't because of messaging. I might be an idiot, but it's because of an experience I had years ago where I was trying to follow the rules and pay taxes on some contracting income. I screwed something up. I ended up corresponding with the IRS dozens of times. Somehow I had recorded some income that never happened. I think I spent more time writing letters than I spent on the contract project. To this day I'm scared of contacting.

EvanAnderson 2y ago
> ...where I was trying to follow the rules and pay taxes on some contracting income... You're an exception and, yeah, it sucks. For somebody who has W-2 income, maybe a 1099-INT, and takes the standard deduction filing taxes is painless and simple. I've just accepted the $800 - $1,000 cost per year for preparation of my LLC K-1 and personal taxes as part of the cost of being an exception. It sucks, but I just roll it into my rates.
acdha 2y ago
Yeah, I’m not saying that every situation is trivial but the figures I’ve seen have something like 80% of filers using W-2 income so it’s weird when people who don’t have complex property ownership or business arrangements talk like it’s incredibly complicated. Most of us could use Direct File to be just like most other countries in the world, but there’s a now-dominant lobby which tried to block that.

araes 2y ago

Generally agree for most people. Only caveat is for those with mild amounts of savings (not enough to qualify as wealthy). Enough 401k, mild investments over time with disposable income, or transfers from friends / family / inheritance, that the process becomes quite challenging. You make a couple thousand on a decent year in capital gains or dividend distributions, yet end up with rather confusing paperwork piles to deal with at tax time. Finding out it was necessary to note each buy / sell and the holding time individually for the entire year just seemed crazy in the detail necessary. Mild awareness of why the actual wealthy hire accountants and firms with specialized teams and software to deal with those issues. The part that's also not dealt with, at least in terms of those deductions, is that usually they're related to businesses and expenses. The deductions are available, yet often you have to be treating almost your entire life like a business expense every moment. Business cell phone. Business internet. Business supplies. Business ads, website, and marketing. Business travel. Business property depreciation / amortization. Business legal and accounting. Business mileage. Business loan interest. Business meals. A (personal opinion) funny one is "Hire your own children as workers." You can write-off the payment you make to them which reduces your taxes and the income they earn can be tax-free if you pay them less than the standard deduction.

jandrewrogers 2y ago

The minute you save a little money and have a few investments it can start to become complicated quickly. Yet you don't have/make enough money to justify the expense of hiring a professional to properly sort it out. This actually can become a giant headache because it is difficult to be certain that you've done it correctly and not overpaid. Sure, if you only have a W-2 then it is pretty simple. The issue is that over time people have a tendency to accrue other tax reportable activities as a function of age. It actively discourages people from making some types of potentially productive investments because of the additional tax complexity.