Just a reminder -- since a lot of people don't know about it -- the IRS has had "Free File Fillable Forms" [1, 2] for many years. Everyone (no income limits) can use it to e-file for free.
The difference is that instead of being a "wizard" interface like other tax software, it's just online fillable versions of the tax forms, that do 99% of the math for you based on the values you enter and automatically add forms and link values between forms as necessary.
I've used it for well over a decade, and at the end of the day it's just the same "doing your taxes" that my parents and grandparents did, but on your computer and easier. For anyone who has an engineer mindset it's entirely doable, even if you have to Google a few things to make sure you're doing it right (e.g. what's a qualified dividend vs. a regular one?). The real secret is keeping a PDF of your previous year's return next to you while you do this year's, because you'll usually just be filling out mostly the same lines in the same way with different values.
> Just a reminder -- since a lot of people don't know about it -- the IRS has had "Free File Fillable Forms" [1, 2] for many years. Everyone (no income limits) can use it to e-file for free.
I did not know that, thanks! Looking into it, according to Wikipedia it's "operated by a private organization, the Free File Alliance" [1], which is a "public-private partnership with the Internal Revenue Service (IRS) to provide free electronic tax filing services" [2]. The Missouri company you list is one of the "7 participating Alliance members" [2].
I honestly don't know what a "public-private partnership" means, or how that's different from the IRS just contracting a company to build a product. But it seems awfully integrated into the IRS's website, so there's clearly a "partnership" -- it can't be total randos (hopefully??).
I don't see any obvious red flags in the privacy policy, is there something to be worried about?
I had to give up on e-filing with Free Fillable Forms last year because it claimed an arithmetic error where none existed and it would not allow me to e-file until that non-error was corrected.
The same forms I ultimately generated with both TaxHawk's and H&R Block's software were identical to those I wasn't allowed to submit with FFF.
Hah, I can't e-file my taxes at all, because it is not possible to e-file as "married, filing separately" if one has a non-resident alien spouse (without SSN or ITIN). Aka married overseas, US hadn't yet granted a visa yet, no point in trying to obtain an ITIN (that's harder than having to mail the form).
The form is totally fine - according to IRS, one just needs to write "NRA" ("non-resident alien") instead of spouse's SSN and that's it. But for some technical reason (despite, AFAIK, IRS having at least 4 iterations of XML schemas) e-filing is said to be not possible - one gotta print and mail it.
Worse, I had to explain how this works to "specialists" at H&R Block, as they almost made a mistake of suggesting to file my returns as "single" (glad I did my own research, huh). And I can't use FreeTaxUSA because they don't support such scenario either.
Edit: Upd: freefilefillableforms.com doesn't let me type in "NRA" in that field either. (Doesn't really matter, works for me as long as I get a PDF out of this)
Yes. Just click submit at the end, and in somewhere between 15 minutes and a couple of hours you'll get a response from the IRS whether it was accepted or rejected with an error message of what didn't match up.
(Sometimes it takes me 2 or 3 tries because I mistyped a number from a W2 or missed a line or something.)
My state has its own iFile system that works pretty flawlessly as a pseudo-wizard but actually a free fillable form. It expects you to file federal taxes first so your 1040 can be used to fill in the details.
Just send the taxpayer a bill that says what the IRS think they owes. That information is already there! It's already being calculated! Just print and send!
(I am being somewhat facetious here, as I'm aware there's always vastly more complexity to anything being done by a bureaucracy the size of the federal government than meets the eye, but still.)
> That information is already there! It's already being calculated!
This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.
That's to say, the system you described probably isn't ever going to materialize. The IRS is not some omnipotent entity. They're going to need something akin to TurboTax that asks you a bunch of questions and juxtaposes that with things they know for certain like your net income and net losses that are reported throughout the year. That system also needs to be able to read and adapt to evolving tax code as time goes on.
>This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.
The child tax credit and other tax credits are bad examples. The IRS isn't going to bust your front door open because you didn't take a tax credit. What would end up happening under the push tax system is:
IRS: "We think you owe $4,200.69 in taxes"
Parents: "Not so fast! We had quadruplets this year, we're taking a credit!"
IRS: "Yikes, we'll give you $2,000 this year as a refund, good luck."
(I obviously have no idea what the tax credit for quadruplets is, this is not tax advice.)
It just doesn't make sense that we need to ask these questions every tax year: "Did you have kids? Did you get married? How much money did you make according to the W2 your employer already sent us? What other income did you make according to the 1099s we were already sent by other institutions?"
All of this just so a small group of people can be... checks notes... reminded to take a child tax credit? They can always just put a cute little reminder about the various tax credits on the bill.
The only other examples are highly-regulated or people who are already operating under the table (in which case the IRS already doesn't know and the IRS will continue to not know). Business tax returns are almost always going to have to continue as the IRS pulling the information, but for normal people, tax returns should not be a burden.
Interestingly, enough, this is yet another thing to add to the list of things that are impossible to do (according to the Internet) but are already done by someone else that I've encountered in the US:
1. Final price including tax
2. Fiber to the home
3. Optional tax returns
4. High speed rail
5. Unarmed alternatives to police
Of those, the following have (despite being impossible to do though already done) managed to find themselves unimpossibled:
1. Fiber to the home (I had it)
2. High speed rail (Acela)
3. Unarmed alternatives to police (Camden, NJ)
The fascinating thing about the Internet is all these things that just are so impossible to do (usually in the US) but are somehow already done elsewhere and then, given time, the impossible is done. At the rate of impossibilities, I think we might actually be the case that dS<0 is possible globally.
The system proposed above is how other countries such as the UK already do it, so hypothesizing that it’s impossible is an easily refutable position.
In countries that do auto withholding/filing, you still need to tell the tax authority about any tax events, but for most workers, most years don’t require you to take any action.
They didn't stop the IRS from telling us what they know and what they expect, and if it's accurate and you don't dispute their information, you pay the bill and attest you have no other income.
I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.
For those incredibly rare events, the IRS doesn't need perfect omniscience. For the vast majority of the population, for the vast majority of their years filing taxes, it can be extremely simple. A checkbox "did you have a kid, get married or divorced, or die this year" will pretty much cover it for most people.
Business taxes are different. That's fine. Accountants are a cost of doing business.
It's completely true for most people. "And a new paper estimates that at least 41 percent of American households — some 62 million tax filing units — could have their entire tax returns handled this way with no further intervention necessary." https://www.vox.com/23055489/irs-automatic-filing-prepopulat...
Even if that's too high of an estimate, there are absolutely 10s of millions of people for whom the IRS already has the correct amount of taxes calculated based on the forms they receive from other entities. Sure, you might have to ask people a few questions, but my statement is accurate for an enormous percent of the population.
Weird that in other countries it tends to work as described. My experience is from European countries is that most information is automatically filled in, then you fill the corrections. Most years you don't have to correct or add any information as they have already all of it.
It must be pretty disappointing to be a tech-savvy American who has a rough idea of the extent of surveillance that the NSA performs yet is also aware of how little benefit you're able to get from it.
It's sad that the IRS can't prefile taxes. The information is there.
Make a buffer of $3k: you don't owe a return unless the difference between what they have per-calculated and what owe is over that. This would eliminate 95% of returns and tax documents.
The IRS doesn't have to have facts on your marriage and children; all w2 employees already keep a w4 up to date with this information - or at least are legally bound to.
That is the lobby portion. There is also a fairly large portion of the country that doesn't want to make it easier to file taxes because it encourages complacency with having the government take some of your money.
Not just them. There's a whole contingency of right wing (both D & R) donors who ask for making taxes frustrating for most, as they don't want people to look favorably on the act of paying taxes, to keep people like the late Justice Holmes Jr. a minuscule minority.
That corporatism is a part of it, but not the entire story. It's not like the IRS is a helpless victim of capitalist lobbying here. The IRS, and all parts of government, like having power over peoples' lives.
If even the IRS doesn't know what their own rules are within the many pages of vague, complicated, and contradictory rules, what chance does an average person have to not mess up at least one thing in their taxes? The immense complexity of the tax code and the chance for getting something wrong gives them power to theoretically try and ruin anybody they want to go after, or at least have them have a lot of influence over peoples lives.
Governments want power and influence, and the IRS isn't going to vote to give away their own power. Having everybody being afraid of the IRS and making people jump through hoops gives them power and influence. This type of power isn't something that will go away with a fight.
Almost every deduction I take is report both by myself as well as the relevant 3rd party. They literally get a report from brokerages on stock transactions and yet I also have to calculate cost basis and all that. Why?!
You don't have to calculate cost basis since the brokerages started reporting it several years ago. You just enter the total form your 1099-Bs onto the Schedule D.
There are a few cases (some crypto 1099s) where they tell you the basis on the statement, but don't actually send that to the IRS since it's not a security. In that case, you'd copy
There are a few scenarios where the brokerage doesn't know the right basis though--examples would be a wash sale across two different accounts.
You don’t have to. If the bases are all reported to the irs, you just need to put the totals on schedule D.
It’s amazing how much whining there is about these forms. A smart high schooler could do even a moderately complicated tax return. It’s when you own a business of some kind (including investment properties) that things get hard.
That the US makes it a labyrinthine game of special exceptions and complexity belies the obvious gamification geared towards the rich and to frustrate everyone that goes well past any excuse of bureaucracy. It's not a conspiracy theory, it's obvious wealth transfer from everyone not obscenely rich or obscenely poor disproportionately excluding centamillionaires and billionaires.
This is why the IRS sending you a pre-filled return would help with such a situation. Right now the employer can make mistakes and you don't even know.
In one year I had some "extra income" besides my job and had to file a return and pay some extra money.
The next year they asked me what my "extra income" was for that year and when the letter got lost by me they just assumed the same amount as the prior year and sent me the bill for that.
After the initial shock and beating myself up for that mistake, I could simply file a correction and got it fixed with no problem.
A direct e-file, obviously, is great, but I really just want to get a document near the beginning of the year where the IRS tells me what they believe my taxes owed/returned should be. Let me accept/verify or contest it and make everyone's lives easier. Anyone who'd need to contest/change theirs, probably already has an accounting firm handling all this anyways.
Any time this comes up, its good to bring up California's 2005 pilot program; ReadyReturn. "When the FTB launched the ReadyReturn website, Intuit sued and lobbied California legislators to kill the program."
Not really ... Americans for Tax Reform (Grover Norquist) .. a very influential conservative group, opposes this because they want people to associate taxes with pain. If its easier to do, its less pain.
> Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
> The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
> If an audit is not resolved, we may request extending the statute of limitations for assessment tax. The statute of limitations limits the time allowed to assess additional tax. It is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds. Extending the statute gives you more time to provide further documentation to support your position; request an appeal if you do not agree with the audit results; or to claim a tax refund or credit. It also gives the IRS time to complete the audit and provides time to process the audit results.
> You don't have to agree to extend the statute of limitations date. However if you don't agree, the auditor will be forced to make a determination based upon the information provided.
So it's three years, but they sometimes go back six years. But they can also go back an arbitrary amount of years, so the three / six is completely meaningless.
It's not nebulous at all, it's incredibly fixed by law.
3 years (from the later of date of filing or the due date) to audit any return, for any reason. The 3 year statute of limitations applies to taxpayers seeking refunds by filing an amended return. Note that because the amended return is essentially a new return, the IRS gets 3 years to audit the amended return.
6 years (from the later of date of filing or the due date) to audit a return with a substantial undereporting of gross income or overstatement of deductions in credits resulting in a 25% or more understatement of taxable income
No deadline for returns that were not filed. Because obviously you can't audit a return that hasn't been filed.
There is also no deadline for fraudulent returns. Fraud is something more than the type of things that would trigger a 6-year audit window, like trying to avoid tax entirely, or taking advantage of a deduction or credit for which it's clear that the taxpayer wouldn't qualify for without some active effort to falsify their return. (Think Wesley Snipes.)
They can go extend the statute of limitations *if you agree*.
So, the statute of limitations seems… pretty ironclad. I don’t understand the issue you’re raising. If you don’t want them to look further back, don’t consent to extending the statute of limitations?
I absolutely agree with this. I have CPA's and lawyers do my taxes and I still get the IRS arguing about what I owe and by the time they tell me I am already receiving a penalty. Battling it out with the IRS takes ages and the IRS courts that's really a thing are only open part of the year which can drag things out even longer leading to more penalties even if they agree the original amount was incorrect.
The government can’t magically know what your expenses and deductions are. Got married, had a baby, used a home office, paid a plumber to fix your rental property? Deducting mortgage interest?
If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.
> If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.
I think their point was that this case should be "log in, check the totals match, click OK", not an hour of your time.
Or better yet, not require you to do anything if you believe your withholdings were sufficient.
And taxes have never taken "just" an hour of my time. It's an entire afternoon of frustrated reading up on tax esoterica so I can figure out e.g. whether I should itemize or take the standard deduction (which I always wind up doing anyway). And 14 other things that I promptly forget about.
How many people have expenses and deductions that impact their taxes AND that the government doesn't know about?
Something like 85% of people take the standard deduction. I itemize most years, and pretty much everything I itemize (taxes and mortgage interest) are things the government already knows about. I think the only exception is charitable donations.
It would be a great time saver to just get a form from the IRS saying "here's everything we know, edit any mistakes or things we missed".
Marriage and birth are both a matter of public record, are they not? The government wouldn’t need magic to know those things, when that information is registered with the government. Employers could also report work situations to the government, as could mortgage companies. If the details of your mortgage debt is readily available to agencies that determine your credit score, why should it not be available to the government as well?
It would be a lot easier in most cases then you’re making it out to be - and even in exceptional cases, you would only have to address those exceptions, and skip the drudgery of regurgitating all the information the government could have easily found for itself.
This is true. But my browser cannot possibly know whether I want:
- page zoom at 100% or different
- hardware acceleration on or off
- autofill on
- history tracked
- cookies recorded
And it is able to do it. Software engineering is usually far ahead of most other fields, it is true, but I think this concept https://en.wikipedia.org/wiki/Default_(computer_science) is transferable without it being too much trouble.
What if I mess up my 1040EZ? I input something wrong and take more of a deduction than I should get?
You end up with a situation where if the IRS ignores it, then I’m getting away with paying less than my fair share. If they don’t ignore it, then it’s a lot of unavoidable hassle for me.
If the IRS gives me their calculations (which they do already!) then I know the baseline they’re using. If something looks wrong, or they don’t cover some scenarios in my life, I can simply adjust those situations from the IRS baseline.
This leads to a much more transparent, less stressful, more efficient process.
I think the less discussed part about this is the philosophical aspect of it as well. The current system frames the IRS-taxpayer relationship as adversarial. Now, this may be naturally true for 2-3% of high earners. But it’s not for 90+% of people who are basically just receiving a paycheck.
Starting with the IRS baseline allows the process for that 90+% to be more collaborative as opposed to adversarial, with either side trying to see how much they can get away with in the latter system.
> the IRS tells me what they believe my taxes should be
File for an extension. Then after April 15, download your wage & income transcripts from the IRS. Use that to reconcile with your own records and file before October
I just wanted to add that an extension is not an extension to the time you have to pay your taxes.
So if you file for an extension, don’t pay anything by April 15, and then it turns out you owe $1000 in taxes in October, you will now have to pay $1000 + penalty + interest on the $1000.
Filing for an extension only extends the time to file your taxes. Not the time to pay your taxes (I think the one exception to this was when COVID hit, where even the date to pay taxes was extended, but I’m not a 100% sure).
We have that in Germany. It's called a "pre-filled tax declaration" and even if things differ in the end, you can still use it as base for your actual declaration. Though I still pay the 15€ a year for a tool for convenience
> but I really just want to get a document near the beginning of the year where the IRS tells me what they believe my taxes owed/returned should be.
This is what we have in New Zealand, and it's wonderful; most people simply don't need to do anything other than check their assessment and get on with their lives. Even if you've got e.g. investments you can usually do your filing with no more effort than taking the PAYE (income tax) assessment and bolting on your additional sources of income.
Much like the US banking system, it bemuses me how backward the US is in this regard.
So what you’re proposing would work for most individuals. I don’t agree with the “accounting firm handling all this” for the remaining thought (unless you count TurboTax as an accounting firm).
It should be done in such a way that preparing and filing your tax returns doesn't share your financial information with some company that uses it for other purposes.
I have some faith we'll get this right, because I can see some details of how the IRS does things (despite the complexity nightmare handed to them by lawmakers), and the impression I get is that there must be a lot of people there who are working conscientiously and effectively.
The government should send everyone an itemized bill that you can correct. The idea that we have to figure it out ourselves is unnecessary and has created significant emotional/financial pain and an entire cottage industry of nonsense. Of course when this was being piloted, guess who paid to squash it? The cottage industry.
A non-US perspective (Irish). My employer reports my pay, deductions, benefits in kind, income tax, etcetera every month to the Revenue (goes by the acronym PAYE - Pay As You Earn). At any point up to three years after the end of a tax year, I can log in and adjust my tax credits, such as medical, carer benefit (ie, taking care of someone long term) and so on. I'll get refunds within a week if I'm owed one; I just did this for 2021's tax credits for working from home (electric, natural gas, broadband). The only paper paperwork I have to do at the moment is capital gains on shares or property.
I have no idea if this approach is compatible with the various state and federal taxes that the US has to deal with; I just know it's so much easier now than when I was a student in the US.
I'm not an expert, but I think the state/local issues just complicate the implementation. But that sounds wildly better than our increasingly archaic rituals.
Meh.. every year this happens around tax season. Every year Intuit and grover norquist ensures the momentum crashes and burn. lets see how many days after April 15 this gets dumped.
The scope of the study predetermines its outcome. The reality is there is no need for the vast majority of Americans to file anything. The IRS has all of their pay information and must merely send a bill or refund. The only thing a taxpayer in this scenario would need to file for is a mistake.
There is no rub. Here[1] are 2010 numbers from the IRS showing 42% of Americans used 1040A or EZ. Many more /could have/. Since 2010 the standard deduction has gone up and there's no reason for a lot of people to itemize.
In many other countries the government provides you a pre-filled form. You can sign and return or file your own with relevant "loopholes."
There are two groups of people who want to keep tax filing difficult. Grover Norquist feels if paying taxes is too easy people won't be angry about it. This increases support for cutting taxes. The other group are tax preparers, like Intuit.
Somewhere around 90% of Americans take the standard deduction and the IRS is in a better position to judge eligibility for most of the adjustments outside that (e.g. EITC) than many taxpayers are. There's always going to be a way to fill out your own taxes for people with complicated tax situations, so there's no harm in simplifying things and reducing mistakes/fraud for the vast, vast majority of people.
Most people don't qualify for those. If you think you can (legally) pay less tax, great, go for it. I'm sure you'd still be able to file taxes the hard way if you want. That's how it works in most non-US countries. The government tells you how much you owe, and you can either accept it or file paperwork demonstrating that you can pay less than that.
They actually do know about all the loopholes you're using. Using a loophole isn't about changing how you file your taxes, it's changing how you live your life to be more tax-efficient.
Readit News
The difference is that instead of being a "wizard" interface like other tax software, it's just online fillable versions of the tax forms, that do 99% of the math for you based on the values you enter and automatically add forms and link values between forms as necessary.
I've used it for well over a decade, and at the end of the day it's just the same "doing your taxes" that my parents and grandparents did, but on your computer and easier. For anyone who has an engineer mindset it's entirely doable, even if you have to Google a few things to make sure you're doing it right (e.g. what's a qualified dividend vs. a regular one?). The real secret is keeping a PDF of your previous year's return next to you while you do this year's, because you'll usually just be filling out mostly the same lines in the same way with different values.
[1] https://www.irs.gov/e-file-providers/free-file-fillable-form...
[2] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...
Just a reminder, because even *less* people know. This is a third party service not run by the IRS. In past years it was Intuit, this year it looks like according to the site's privacy policy: https://www.freefilefillableforms.com/home/privacy_statement... that it's these randos out in Missouri: https://www.olt.com/main/home/default.asp
I honestly don't know what a "public-private partnership" means, or how that's different from the IRS just contracting a company to build a product. But it seems awfully integrated into the IRS's website, so there's clearly a "partnership" -- it can't be total randos (hopefully??).
I don't see any obvious red flags in the privacy policy, is there something to be worried about?
[1] https://en.wikipedia.org/wiki/Free_File#Free_File_Fillable_F...
[2] https://en.wikipedia.org/wiki/Free_File_Alliance
Deleted Comment
The same forms I ultimately generated with both TaxHawk's and H&R Block's software were identical to those I wasn't allowed to submit with FFF.
The form is totally fine - according to IRS, one just needs to write "NRA" ("non-resident alien") instead of spouse's SSN and that's it. But for some technical reason (despite, AFAIK, IRS having at least 4 iterations of XML schemas) e-filing is said to be not possible - one gotta print and mail it.
Worse, I had to explain how this works to "specialists" at H&R Block, as they almost made a mistake of suggesting to file my returns as "single" (glad I did my own research, huh). And I can't use FreeTaxUSA because they don't support such scenario either.
Edit: Upd: freefilefillableforms.com doesn't let me type in "NRA" in that field either. (Doesn't really matter, works for me as long as I get a PDF out of this)
(Sometimes it takes me 2 or 3 tries because I mistyped a number from a W2 or missed a line or something.)
Deleted Comment
I tried their fillable forms, but you have to do the math manually and are very error prone
(I am being somewhat facetious here, as I'm aware there's always vastly more complexity to anything being done by a bureaucracy the size of the federal government than meets the eye, but still.)
This is a common misconception, especially on HN. For the average tax payer this might be truthy, but only insofar as the IRS is aware of certain tax events. If you had a kid, the IRS might be able to correlate that you and someone had a child, and they might, depending on the county registrar, be able to determine you're married. This gets even more complicated with business interests and finance in the small business realm.
That's to say, the system you described probably isn't ever going to materialize. The IRS is not some omnipotent entity. They're going to need something akin to TurboTax that asks you a bunch of questions and juxtaposes that with things they know for certain like your net income and net losses that are reported throughout the year. That system also needs to be able to read and adapt to evolving tax code as time goes on.
The child tax credit and other tax credits are bad examples. The IRS isn't going to bust your front door open because you didn't take a tax credit. What would end up happening under the push tax system is:
IRS: "We think you owe $4,200.69 in taxes"
Parents: "Not so fast! We had quadruplets this year, we're taking a credit!"
IRS: "Yikes, we'll give you $2,000 this year as a refund, good luck."
(I obviously have no idea what the tax credit for quadruplets is, this is not tax advice.)
It just doesn't make sense that we need to ask these questions every tax year: "Did you have kids? Did you get married? How much money did you make according to the W2 your employer already sent us? What other income did you make according to the 1099s we were already sent by other institutions?"
All of this just so a small group of people can be... checks notes... reminded to take a child tax credit? They can always just put a cute little reminder about the various tax credits on the bill.
The only other examples are highly-regulated or people who are already operating under the table (in which case the IRS already doesn't know and the IRS will continue to not know). Business tax returns are almost always going to have to continue as the IRS pulling the information, but for normal people, tax returns should not be a burden.
1. Final price including tax
2. Fiber to the home
3. Optional tax returns
4. High speed rail
5. Unarmed alternatives to police
Of those, the following have (despite being impossible to do though already done) managed to find themselves unimpossibled:
1. Fiber to the home (I had it)
2. High speed rail (Acela)
3. Unarmed alternatives to police (Camden, NJ)
The fascinating thing about the Internet is all these things that just are so impossible to do (usually in the US) but are somehow already done elsewhere and then, given time, the impossible is done. At the rate of impossibilities, I think we might actually be the case that dS<0 is possible globally.
In countries that do auto withholding/filing, you still need to tell the tax authority about any tax events, but for most workers, most years don’t require you to take any action.
I wouldn't care if I over pay. After paying someone hundreds in fees to do my taxes I don't usually get much of any money back. I'd rather let the government keep $400 than give it to a tax company that probably won't actually help me in an audit.
Business taxes are different. That's fine. Accountants are a cost of doing business.
It's completely true for most people. "And a new paper estimates that at least 41 percent of American households — some 62 million tax filing units — could have their entire tax returns handled this way with no further intervention necessary." https://www.vox.com/23055489/irs-automatic-filing-prepopulat...
Even if that's too high of an estimate, there are absolutely 10s of millions of people for whom the IRS already has the correct amount of taxes calculated based on the forms they receive from other entities. Sure, you might have to ask people a few questions, but my statement is accurate for an enormous percent of the population.
It's sad that the IRS can't prefile taxes. The information is there.
This is roughly what the UK does.
The IRS doesn't have to have facts on your marriage and children; all w2 employees already keep a w4 up to date with this information - or at least are legally bound to.
https://www.propublica.org/article/inside-turbotax-20-year-f...
Here's an interesting and relevant news story.
https://news.yahoo.com/irs-urges-millions-taxpayers-delay-15...
If even the IRS doesn't know what their own rules are within the many pages of vague, complicated, and contradictory rules, what chance does an average person have to not mess up at least one thing in their taxes? The immense complexity of the tax code and the chance for getting something wrong gives them power to theoretically try and ruin anybody they want to go after, or at least have them have a lot of influence over peoples lives.
Governments want power and influence, and the IRS isn't going to vote to give away their own power. Having everybody being afraid of the IRS and making people jump through hoops gives them power and influence. This type of power isn't something that will go away with a fight.
There are a few cases (some crypto 1099s) where they tell you the basis on the statement, but don't actually send that to the IRS since it's not a security. In that case, you'd copy
There are a few scenarios where the brokerage doesn't know the right basis though--examples would be a wash sale across two different accounts.
It’s amazing how much whining there is about these forms. A smart high schooler could do even a moderately complicated tax return. It’s when you own a business of some kind (including investment properties) that things get hard.
That the US makes it a labyrinthine game of special exceptions and complexity belies the obvious gamification geared towards the rich and to frustrate everyone that goes well past any excuse of bureaucracy. It's not a conspiracy theory, it's obvious wealth transfer from everyone not obscenely rich or obscenely poor disproportionately excluding centamillionaires and billionaires.
I don't think I want a system where my employer could financially ruin me by misreporting income to the government.
In one year I had some "extra income" besides my job and had to file a return and pay some extra money.
The next year they asked me what my "extra income" was for that year and when the letter got lost by me they just assumed the same amount as the prior year and sent me the bill for that.
After the initial shock and beating myself up for that mistake, I could simply file a correction and got it fixed with no problem.
https://en.wikipedia.org/wiki/CalFile#ReadyReturn
https://www.propublica.org/article/inside-turbotax-20-year-f...
Not really ... Americans for Tax Reform (Grover Norquist) .. a very influential conservative group, opposes this because they want people to associate taxes with pain. If its easier to do, its less pain.
https://www.propublica.org/article/how-the-maker-of-turbotax...
For example here's the info on self-employed / business audits: https://www.irs.gov/businesses/small-businesses-self-employe...
> How far back can the IRS go to audit my return?
> Generally, the IRS can include returns filed within the last three years in an audit. If we identify a substantial error, we may add additional years. We usually don't go back more than the last six years.
> The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly most audits will be of returns filed within the last two years.
> If an audit is not resolved, we may request extending the statute of limitations for assessment tax. The statute of limitations limits the time allowed to assess additional tax. It is generally three years after a return is due or was filed, whichever is later. There is also a statute of limitations for making refunds. Extending the statute gives you more time to provide further documentation to support your position; request an appeal if you do not agree with the audit results; or to claim a tax refund or credit. It also gives the IRS time to complete the audit and provides time to process the audit results.
> You don't have to agree to extend the statute of limitations date. However if you don't agree, the auditor will be forced to make a determination based upon the information provided.
So it's three years, but they sometimes go back six years. But they can also go back an arbitrary amount of years, so the three / six is completely meaningless.
3 years (from the later of date of filing or the due date) to audit any return, for any reason. The 3 year statute of limitations applies to taxpayers seeking refunds by filing an amended return. Note that because the amended return is essentially a new return, the IRS gets 3 years to audit the amended return.
6 years (from the later of date of filing or the due date) to audit a return with a substantial undereporting of gross income or overstatement of deductions in credits resulting in a 25% or more understatement of taxable income
No deadline for returns that were not filed. Because obviously you can't audit a return that hasn't been filed.
There is also no deadline for fraudulent returns. Fraud is something more than the type of things that would trigger a 6-year audit window, like trying to avoid tax entirely, or taking advantage of a deduction or credit for which it's clear that the taxpayer wouldn't qualify for without some active effort to falsify their return. (Think Wesley Snipes.)
So, the statute of limitations seems… pretty ironclad. I don’t understand the issue you’re raising. If you don’t want them to look further back, don’t consent to extending the statute of limitations?
How complex are your taxes that you need more than one CPA and lawyers to do them?
If none of these things apply to you and your taxes are really just a single w2 income it’s pretty simple to just fill out a paper 1040 form (or even 1040ez). You just need your w2 and an hour of time.
I think their point was that this case should be "log in, check the totals match, click OK", not an hour of your time.
Or better yet, not require you to do anything if you believe your withholdings were sufficient.
And taxes have never taken "just" an hour of my time. It's an entire afternoon of frustrated reading up on tax esoterica so I can figure out e.g. whether I should itemize or take the standard deduction (which I always wind up doing anyway). And 14 other things that I promptly forget about.
Something like 85% of people take the standard deduction. I itemize most years, and pretty much everything I itemize (taxes and mortgage interest) are things the government already knows about. I think the only exception is charitable donations.
It would be a great time saver to just get a form from the IRS saying "here's everything we know, edit any mistakes or things we missed".
It would be a lot easier in most cases then you’re making it out to be - and even in exceptional cases, you would only have to address those exceptions, and skip the drudgery of regurgitating all the information the government could have easily found for itself.
- page zoom at 100% or different
- hardware acceleration on or off
- autofill on
- history tracked
- cookies recorded
And it is able to do it. Software engineering is usually far ahead of most other fields, it is true, but I think this concept https://en.wikipedia.org/wiki/Default_(computer_science) is transferable without it being too much trouble.
You end up with a situation where if the IRS ignores it, then I’m getting away with paying less than my fair share. If they don’t ignore it, then it’s a lot of unavoidable hassle for me.
If the IRS gives me their calculations (which they do already!) then I know the baseline they’re using. If something looks wrong, or they don’t cover some scenarios in my life, I can simply adjust those situations from the IRS baseline.
This leads to a much more transparent, less stressful, more efficient process.
I think the less discussed part about this is the philosophical aspect of it as well. The current system frames the IRS-taxpayer relationship as adversarial. Now, this may be naturally true for 2-3% of high earners. But it’s not for 90+% of people who are basically just receiving a paycheck.
Starting with the IRS baseline allows the process for that 90+% to be more collaborative as opposed to adversarial, with either side trying to see how much they can get away with in the latter system.
The first two would be minor corrections. The latter two would naturally require more attention and detail, but they don't apply to most people.
> Deducting mortgage interest?
The IRS has my 1098s. They know the mortgage interest, principal, and origination date.
Sure, if you have a bunch of weird expenses/deductions you can file, but for most people, the numbers the government has are already correct.
File for an extension. Then after April 15, download your wage & income transcripts from the IRS. Use that to reconcile with your own records and file before October
So if you file for an extension, don’t pay anything by April 15, and then it turns out you owe $1000 in taxes in October, you will now have to pay $1000 + penalty + interest on the $1000.
Filing for an extension only extends the time to file your taxes. Not the time to pay your taxes (I think the one exception to this was when COVID hit, where even the date to pay taxes was extended, but I’m not a 100% sure).
This is what we have in New Zealand, and it's wonderful; most people simply don't need to do anything other than check their assessment and get on with their lives. Even if you've got e.g. investments you can usually do your filing with no more effort than taking the PAYE (income tax) assessment and bolting on your additional sources of income.
Much like the US banking system, it bemuses me how backward the US is in this regard.
So what you’re proposing would work for most individuals. I don’t agree with the “accounting firm handling all this” for the remaining thought (unless you count TurboTax as an accounting firm).
I have some faith we'll get this right, because I can see some details of how the IRS does things (despite the complexity nightmare handed to them by lawmakers), and the impression I get is that there must be a lot of people there who are working conscientiously and effectively.
Totally agree. The IRS is not the problem but the people in Congress who do everything they can to obstruct them.
I have no idea if this approach is compatible with the various state and federal taxes that the US has to deal with; I just know it's so much easier now than when I was a student in the US.
In many other countries the government provides you a pre-filled form. You can sign and return or file your own with relevant "loopholes."
There are two groups of people who want to keep tax filing difficult. Grover Norquist feels if paying taxes is too easy people won't be angry about it. This increases support for cutting taxes. The other group are tax preparers, like Intuit.
[1] http://www.freeby50.com/2012/12/what-percent-of-people-file-...