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Remember, Americans have to file taxes separately to the State and Federal government. The Federal government has little authority to dictate State taxes. The p

Remember, Americans have to file taxes separately to the State and Federal government. The Federal government has little authority to dictate State taxes. The paperwork is in part a coordination problem between the State and Federal governments. Basic taxes are trivial in the US if you just work to live, it is essentially one page. However, there is an extremely long and fat tail where the government has no way of knowing the correct details to compute your taxes. There are myriad subsidies and offsets that have to be accounted for, many of which depend on what State you live in. If you earn a lot of money, like the tech people that frequent this website, you are much more likely to find yourself in that fat tail. It can become esoteric quite quickly. The Federal tax code has to accommodate the completely independent tax codes of all 50 States in a reasonable way.

RajT88 1y ago
It is not that complex. RSU's or options are pretty straightforward. Deductions can get esoteric if you sold a bunch of stock. Even then, not that bad.
- jandrewrogers 1y ago
  Congratulations on having simple taxes. It can definitely get more complex. There is a reason Americans spend staggering amounts of time and money on tax preparation. It is simple until it isn’t.
  - mulmen 1y ago
    Yes, the reason is Intuit.
  - projektfu 1y ago
    Yes, it's complicated because the tax code has been designed for special cases, where there is an opportunity cost to identify and use the special case, but that can be paid for with large enough savings. If hiring that tax preparer/accountant costs $1000 more, but reduces the tax by $1001, then it is economically worthwhile. But in reality, most people are not able to use these provisions and of those who technically can, only a few can use them efficiently. If you mostly have income from wages, interest, and dividends, your tax is hard to reduce using special provisions and your return is easy to file. If you have a lot of income from business investments, property, minerals, esoteric securities, gambling, etc., then you have more places where you can use these things, and your taxes are accordingly complex.
- Thorrez 1y ago
  RSUs are not straightforward: https://news.ycombinator.com/item?id=43676698 https://news.ycombinator.com/item?id=43676698 And options are worse.
  - RajT88 1y ago
    All right, I guess I see your point. If you company doesn't handle the complexity, it can be a nightmare. Where I've worked, they withhold the necessary number of shares from RSU's and it just gets taxed as W-2 income. Then, it shows up with the taxed cost basis in Fidelity so you don't get double taxed when selling shares. It doesn't appear like they have to factor in travel into that equation - that's only for your salary. As far as options, it was similar where I was receiving them. The only issue I ever had exercising options was when the company whose stock I was trading changed names, and then the IRS suddenly believed all those options were 0 cost basis and wanted a bunch of money. That took two rounds of letters and a call to HR to get sorted out. Granted - laws have changed since then - that fiasco was 18 years ago.
    - fragmede 1y ago
      AMT
    - Thorrez 1y ago
      >Where I've worked, they withhold the necessary number of shares from RSU's and it just gets taxed as W-2 income. Then, it shows up with the taxed cost basis in Fidelity so you don't get double taxed when selling shares. The same as where I work (Schwab though for me, not Fidelity). However, they don't track wash sales for me. Do they track wash sales for you? From what I understand, federal law tells brokers to track wash sales for regular stock purchases and sales, but not for stock from vested RSUs, but still requires the stock holder to track wash sales for stock from vested RSUs. >It doesn't appear like they have to factor in travel into that equation - that's only for your salary. My employer also doesn't generally track travel for the purposes of taxes. But the state laws say I need to do it and file taxes based on my tracking.
      - 1y ago
Jolter 1y ago
Even so, Direct File was possible. Until it wasn’t.
pjc50 1y ago
If they genuinely can't work out what you owe, why bother paying it at all? Shouldn't there be a massive tax evasion problem?
- sgerenser 1y ago
  There is actually a pretty massive tax evasion problem. Or at least the IRS is pretty sure there is, but they don’t have the resources to go after even a small fraction of them. The only thing that keeps people honest is the worry that if they lie, the IRS might already know (based on e.g. 1099 reports that go to the IRS), or they’ll get audited (which actually happens very infrequently).

RajT88 1y ago

It is not that complex. RSU's or options are pretty straightforward. Deductions can get esoteric if you sold a bunch of stock. Even then, not that bad.

jandrewrogers 1y ago
Congratulations on having simple taxes. It can definitely get more complex. There is a reason Americans spend staggering amounts of time and money on tax preparation. It is simple until it isn’t.
- mulmen 1y ago
  Yes, the reason is Intuit.
- projektfu 1y ago
  Yes, it's complicated because the tax code has been designed for special cases, where there is an opportunity cost to identify and use the special case, but that can be paid for with large enough savings. If hiring that tax preparer/accountant costs $1000 more, but reduces the tax by $1001, then it is economically worthwhile. But in reality, most people are not able to use these provisions and of those who technically can, only a few can use them efficiently. If you mostly have income from wages, interest, and dividends, your tax is hard to reduce using special provisions and your return is easy to file. If you have a lot of income from business investments, property, minerals, esoteric securities, gambling, etc., then you have more places where you can use these things, and your taxes are accordingly complex.
Thorrez 1y ago
RSUs are not straightforward: https://news.ycombinator.com/item?id=43676698 https://news.ycombinator.com/item?id=43676698 And options are worse.
- RajT88 1y ago
  All right, I guess I see your point. If you company doesn't handle the complexity, it can be a nightmare. Where I've worked, they withhold the necessary number of shares from RSU's and it just gets taxed as W-2 income. Then, it shows up with the taxed cost basis in Fidelity so you don't get double taxed when selling shares. It doesn't appear like they have to factor in travel into that equation - that's only for your salary. As far as options, it was similar where I was receiving them. The only issue I ever had exercising options was when the company whose stock I was trading changed names, and then the IRS suddenly believed all those options were 0 cost basis and wanted a bunch of money. That took two rounds of letters and a call to HR to get sorted out. Granted - laws have changed since then - that fiasco was 18 years ago.
  - fragmede 1y ago
    AMT
  - Thorrez 1y ago
    >Where I've worked, they withhold the necessary number of shares from RSU's and it just gets taxed as W-2 income. Then, it shows up with the taxed cost basis in Fidelity so you don't get double taxed when selling shares. The same as where I work (Schwab though for me, not Fidelity). However, they don't track wash sales for me. Do they track wash sales for you? From what I understand, federal law tells brokers to track wash sales for regular stock purchases and sales, but not for stock from vested RSUs, but still requires the stock holder to track wash sales for stock from vested RSUs. >It doesn't appear like they have to factor in travel into that equation - that's only for your salary. My employer also doesn't generally track travel for the purposes of taxes. But the state laws say I need to do it and file taxes based on my tracking.
    - 1y ago

Jolter 1y ago

Even so, Direct File was possible. Until it wasn’t.

pjc50 1y ago

If they genuinely can't work out what you owe, why bother paying it at all? Shouldn't there be a massive tax evasion problem?

sgerenser 1y ago
There is actually a pretty massive tax evasion problem. Or at least the IRS is pretty sure there is, but they don’t have the resources to go after even a small fraction of them. The only thing that keeps people honest is the worry that if they lie, the IRS might already know (based on e.g. 1099 reports that go to the IRS), or they’ll get audited (which actually happens very infrequently).