4 ms·

Income is only part of the equation. You also need a mechanism to track all business expenses and various itemized deductions. That basically implies that you

by mdakin 17y ago

Income is only part of the equation. You also need a mechanism to track all business expenses and various itemized deductions. That basically implies that you can't automate it without having all transactions tracked and categorized. Which would be kind of scary!

charlesju 17y ago
You mean access to your bank accounts? They do that already.
kscaldef 17y ago
Most people don't deduct business expenses, and most people don't have sufficient medical expenses to exceed the 7.5% threshold. For the small number of people who do, they would amend their forms. As for other deductions, state income tax & property taxes are already known to some governmental agency, just need to pass it on up. My bank sends me a total of my mortgage interest together with my other tax forms, I'm sure they could file that with the IRS too. The only other common deduction I can think of is charitable contributions. It would be a bit of work to set up, but it seems within the realm of reason to have charitable organizations provide that information to a centraal system as well.
- mdakin 17y ago
  Anyone running a small business (well over 10,000,000 people in the USA) will be deducting business expenses. It would be silly (nuts?) to fill out Schedule C but not deduct business expenses. I suspect an even larger number of people currently itemize deductions. Medical expenses are one of about a million possible deduction types. And if you're keeping records you can often beat the standard deduction. If you can't solve these two cases and can only solve the simplest cases what's the point really? People with such simple tax situations can do them in an hour or two anyway. The burden it would place on government and industry just does not seem justified. The "complex" returns still need to be "amended", processed, audited, etc. The very cases which consume the most time and effort today would still be consuming the most time and effort with no savings given a piecemeal simple-case-only automation effort.
dctoedt 17y ago
Sales taxes could be tracked by credit-card companies, which could provide a year-end report of total sales taxes paid, for use in computing federal income tax liability. (Sales taxes were deductible this year, but there's always the question whether Congress will renew the deduction or better yet make it permanent.) I've suggested this to AmEx, but have never gotten a response.

by mdakin 17y ago

charlesju 17y ago

You mean access to your bank accounts? They do that already.

kscaldef 17y ago

Most people don't deduct business expenses, and most people don't have sufficient medical expenses to exceed the 7.5% threshold. For the small number of people who do, they would amend their forms. As for other deductions, state income tax & property taxes are already known to some governmental agency, just need to pass it on up. My bank sends me a total of my mortgage interest together with my other tax forms, I'm sure they could file that with the IRS too. The only other common deduction I can think of is charitable contributions. It would be a bit of work to set up, but it seems within the realm of reason to have charitable organizations provide that information to a centraal system as well.

mdakin 17y ago
Anyone running a small business (well over 10,000,000 people in the USA) will be deducting business expenses. It would be silly (nuts?) to fill out Schedule C but not deduct business expenses. I suspect an even larger number of people currently itemize deductions. Medical expenses are one of about a million possible deduction types. And if you're keeping records you can often beat the standard deduction. If you can't solve these two cases and can only solve the simplest cases what's the point really? People with such simple tax situations can do them in an hour or two anyway. The burden it would place on government and industry just does not seem justified. The "complex" returns still need to be "amended", processed, audited, etc. The very cases which consume the most time and effort today would still be consuming the most time and effort with no savings given a piecemeal simple-case-only automation effort.

dctoedt 17y ago

Sales taxes could be tracked by credit-card companies, which could provide a year-end report of total sales taxes paid, for use in computing federal income tax liability. (Sales taxes were deductible this year, but there's always the question whether Congress will renew the deduction or better yet make it permanent.) I've suggested this to AmEx, but have never gotten a response.