What's puzzling is that the IRS seems to calculate your taxes anyway; if there's a disparity, then they send you a correction a few weeks later.
Why can't they do this beforehand so you have the option of just clicking "OK" and being done with it?
Why can't they do this beforehand so you have the option of just clicking "OK" and being done with it?
The question to "Why can't they do that" is simply "they could and it would save tons of money and headaches, but it goes the American Dream (21st century edition) that once you have a profitable business, nobody is to take it away from you.
For my part, I hope someone out there is managing to claim those Ottoman Turkish Empire Settlement payments. All I know is that the Empire hasn't existed in 100 years but is something my tax code asks me about every year.
But if you are self employed, you have to hire an accountant. It is not a legal obligation but there are so many things that can go wrong that you are putting your business at risk if you don't.
You have to have your books in order anyway, and tax filing is usually as simple as copying over some numbers from the bookkeeping software and then Skatteverket (Swedish IRS) will suggest what is probably the best deductions and periodizations available for you. For my one man consulting business it takes less than an hour, and requires nothing more than having my accounting in order.
At the end of the year, you go into SAT (Mex IRS) page to file your taxes and they provide you with a list of your money Input and Output, and they tell you how much you owe in Taxes or how much you are owed by them.
You still can add other things that were missed by the system.
(Single young people downvoting me. The IRS doesn’t know how many kids live with you, what you pay in mortgage interest, and whether you’re still married to your spouse, all of which are necessary to calculate even simple tax situations.)
IRS can send you pre-filled taxes using status from last year or provide webpage with a checkbox.
But if what you say is true and the IRS can't calculate what you owe, that would mean they have absolutely no idea what you should be paying and you could get away with paying basically anything you want as long as you're not randomly selected for audit.
The IRS has some information about what you make obviously, because employers withhold your income. But they have very little information about deductions. Of course the IRS could calculate a maximum tax amount and put the burden on you to apply for deductions, but Republicans would flip their shit because it’d be a huge effective tax increase. They want tax season to be painful every year.
Which gets to the point that is whizzing by everyone’s head. Intuit and Quickin aren’t single handedly lobbying to keep tax filing complicated. You could probably crowd fund an opposition if that was true. Intuit and Quicken are leveraging a political situation that exists for other reasons.
I live in Scandinavia and that's how it works here: you basically get a proposal based on what the tax office knows (salaries, local capital gains/losses, interest deductions if you have mortgage etc.), and then you submit diffs, if any, and they calculate everything based on that.
I've only ever had to change my tax proposal when I've married/divorced/had kids or had activity in a brokerage firm abroad (who wouldn't report my gains directly to my local authorities). Buying and selling property also shows up automatically as the registration process goes through the government anyway.
Now the tax authorities have even stopped sending any papers with a return envelope. They just point to the online service where you can easily augment whatever fields that might be missing input.
But forget about the IRS automatically collecting what could possibly be relevant from everyone. If some of that stuff isn't automatically reported, there's no reason to force reporting, The IRS would operate as it already does, choose a percentage to audit and get those records from that percentage (0.6% of total filers or 933k people, including 15% of people who make over $15mil) anyway. (That panopticon you're worried about? Don't worry, it's only watching approximately a million people per year, no big deal, right? I realize 1 million is not 327 million, but I have difficulty getting upset about broader financial surveillance (you could even make it optional, so only people who think they're likely to get audited would opt in) when 1 million people per year already get that treatment, plus harassment (granted some of them brought it on themselves, but many did not and just made stupid errors that a better system would have avoided completely, or didn't make any errors and the IRS is just fishing)
The vast majority of people only end up reporting stuff the IRS already knows about (W-2, 1099, marital status and children that were already reported for the last N years, etc.) What good does it do to have people manually file the same information employers and financial institutions already file? If the IRS is not getting some information, and someone's going to lie and tell them it's all good when they get a summary and tax bill, they're going to lie on their taxes even if they're preparing them manually.
All the current system is, is a hand-out and make work scheme for tax preparation people and companies.
Can you cut the fucking hyperbole? In this thread you're being obstinate and snarky about what the IRS can't possibly know about you. You're demonstrably wrong about some of them (e.g. mortgage interest), and half a dozen people are suggesting practical ways for the IRS to learn about some of the other things, or for you to correct them.
Enough.
And killing the mortgage interest deduction would be great, so we can make it work for those people too.
(current policy is that they already have that advantage over poor people)
The poor pay less in taxes. It would not surprise me to find that if you could trace the entire effects perfectly that poor renters are net beneficiaries of the policies particularly now that the owner-occupied MID has effectively been eliminated for houses on the low end and it was previously capped on the high end already.
Now, it mostly directly benefits landlords, which I’m sure is entirely a coincidence... (Our income tax system is based on taxing income/profits, meaning that eliminating business interest, including commercial mortgages, as a deduction is incongruous and a non-starter.)
False, by the same logic of land value taxes.
The supply of land is fixed and cannot respond to changes in supply or demand. Or to changes in cost structure, including both taxes and subsidies on the land itself (excluding improvements).
Landlords eat LVT. And they pocket the mortgage subsidy. Tax codes pick and choose among taxable and exemt income and costs all the time. Your objection is patently absurd.
That seems to mismatch with fairly well-established economic doctrine, possibly to the extent of being Nobel Prize worthy if proven.
Its lack of Nobel-worthiness is based on its obviousness, not novelty.
https://en.wikipedia.org/wiki/Land_value_tax
https://www.economist.com/free-exchange/2015/04/01/why-henry...
The main sticking point is that the wealthy enjoy teir free money.
https://www.economist.com/the-economist-explains/2014/11/10/...
I've provided you seveal refeences, please do read them. The Wikipedia article explains and diagrams the dynamic very clearly.
This thread is about the deductibility of mortgage interest for owner-occupied vs rented properties.
From a British perspective, the US tax system seems utterly bizarre, because most people here have never filed a tax return. Taxes for regular employees are deducted at source by the employer. Everyone has a tax code that reflects what allowances they are entitled to; if your circumstances change, you just call the tax helpline, inform them of the change and they update your tax code. Self-employed people do have to submit a tax return, but you can do it all online and the tax agency offers free training on how to do it.
There is literally no reason why salaried employees should have to do their own taxes.
https://www.citizensadvice.org.uk/debt-and-money/tax/how-to-...
This article (or something similar) pops up on HN every six months, and it’s stupid every time. It’s shocking to me that people find the idea credible because it doesn’t even pass the smell test. Even if this was about lobbying, there is no way Intuit and H&R Block can outspend all the people who have an interest in simpler tax filing. Seriously, Intuit spends $2.5 million per year on lobbying—there are dozens of things that raise more on crowdfunding each year, such as the “Opal Nugget Ice Maker.” Last year, a board game raised more money on Kickstarter than Intuit and H&R Block spent lobbying.
The UK is a very different country than the US, and much more comfortable with both central government control and taxes. Switzerland also has manual tax filing, and the US is much more similar to Switzerland in terms of taxes as a fraction of GDP, guns per capita, federalism, etc.
It's the same argument ad nauseum about every political issue since before the civil war. The US is unique, the US electorate have strong and immutable views, the US cannot learn from anyone else. Time and time again, educated people dismiss the possibility of change, dismiss the possibility of persuasion and compromise and reconciliation, dismiss the possibility of shifting the Overton window and changing the zeitgeist. That isn't common sense, it's political nihilism. The consequences of that nihilistic ideology are writ large on the American political landscape and they are proving to be disastrous.
(For the same reason, the $5 million in NRA lobbying each year is not why we don't pass laws limiting access to semi-automatic weapons for "disturbed adolescents." It's voters like me who are morally opposed to the government keeping a list of who can and cannot exercise their 2nd amendment rights. The lobbying is just so the NRA can remind politicians how many of us there are.)
BTW--"sensible gun reform" has majority support.
For example, Grover Norquist has no personal stake in keeping tax filing complicated (he doesn’t own stock in Intuit or H&R Block as far as I know). But he spends a lot of time on the issue for ideological reasons. You’re telling me that there’s not a billionaire Democrat who could throw $5 million a year at the tax issue for funsies? Or public unions who would benefit from simpler tax filing allowing taxes to be raised more easily? If it was just a matter of outspending Intuit and H&R Block, someone would do it. But I could give you $10 million a year (double what the tax companies spend) for this issue, and you would not be able to lobby tax simplification into law.
Grover Norquist absolutely has an interest in keeping taxes complex, it’s his entire basis for influence and power. His fight is about lowering taxes anyways, not complexity.
Here’s the flip side to your stance. If lobbying has no influence, why do privately held businesses spend so much on it each year? Wouldn’t these rational actors stop wasting money if there was no ROI?
You’re missing the point of the Grover Norquist example. Why is tax filing something Grover Norquist cares about? He’s rich—this doesn’t affect him directly. And he doesn’t make any money off tax preparation. He campaigns against tax filing simplification because it taps into a very large anti-tax movement that he’s part of. It is that movement that keeps tax filing complicated. Intuit and H&R Block don’t create that movement through lobbying; they lobby to tie their issue into the larger movement.
As to the amount of lobbying: private companies don’t spend much money on lobbying every year. Total US lobbying expenditures is $3.5 billion, out of a $20 trillion economy (and a $4 trillion federal budget). (And that’s not just companies, but includes public interest organizations.) If lobbying had direct, non-speculative impacts on legislation, companies would do a lot more of it. Look at the tax filing example. H&R Block makes more than $3 billion in revenue each year. If lobbying had direct results, they wouldn’t be able to protect that cash cow with less than $3 million a year in lobbying. A competitor would come in and outbid them for legislation. (Indeed, corporation versus corporation lobbying is probably the most typical kind. E.g. all the money Google spends on copyright lobbying is best seen as a proxy war with Hollywood over whether copyrights should be weak, which favors distributors like Google, or strong, which favors Hollywood.)
Of course lobbying is important enough that companies do it. But it’s not transactional like people make it out to be. Lobbying involves hiring professionals to make presentations to staffers about specific issues, tying them into general platforms that politicians already believe. Tax filing is a great example. Intuit and H&R Block aren’t going in and spending $5 million to convince people who love taxes to oppose automatic tax filing. They’re using that money to lobby legislators who already want Americans to be outraged each year in April 15. They connect their specific issue to the larger platform the politician already supports. “Simpler tax filing is the first step to Danish style 60% tax rates.” Then, they educate the legislator about relevant pending legislation. “Elizabeth Warren has introduced an automatic tax filing bill.” And they arm the legislator with arguments and white papers they need to oppose the lesilation. “Making deductions opt-in will result in a $45 billion effective tax increase on seniors, who will be to scared to challenge the ‘bill’ sent by the IRS.”
You still haven’t provided any evidence. Your comments in this thread are mostly ideological arguments.
From the article about them directly lobbying against bills on this issue:
==The disclosures show that Intuit as recently as 2011 lobbied on two bills, both of which died, that would have allowed many taxpayers to file pre-filled returns for free. The company also lobbied on bills in 2007 and 2011 that would have barred the Treasury Department, which includes the IRS, from initiating return-free filing.==
bribery is the only possible explanation for congress refusing to do what their constituents plainly want.
There will never be a direct link made because no politician will say, “I am voting against this bill because Intuit took me to a nice dinner and contributed $100k to my re-election campaign.” We do have evidence that constituents want taxes simplified, bills have been presented to fix this problem, companies lobbied against the bills, and the bills died. What’s your theory?
No party has as much direct interest in this issue as tax preparers. That they haven’t been outspent is not itself evidence of anything.
I do agree it is interesting that the GOP campaigned that way, incidentally. Regardless of what degree of support for complicated taxes there may or may not have been, support for simplified taxes in the large, populist wing of the Republican Party plus presumably broad support in the Democratic Party should mean more changes to tax collection soon.
It's not that there can't be such people, it's that there hasn't been any credible evidence provided to prove there actually are such people. That both sides of the political spectrum use the same language is pretty strong evidence that there is broad support ideologically for a simpler tax code.
Bringing up Grover Norquist seems like a red herring, as he is himself a lobbyist. His organization, Americans for Tax Reform, describes itself as a group that "believes in a system in which taxes are simpler, flatter, more visible, and lower than they are today." [1] Yet, they are used by rayiner as an example of an organization ideologically opposed to simpler taxes and tax filing. If anything, we should be adding ATR's own $5 million of annual spending to the total lobbying dollars being spent against a simpler system.
==should mean more changes to tax collection soon.==
This is the central point. The tax code was just completely overhauled and it included almost zero simplification, even though it's main proponents used that exact messaging in their sales pitch.
The article suggests that the lack of action is, at least in part, because of lobbying. It provides the evidence of lobby spending related to this topic and the ultimate death of those bills. The also have a quote from Former California Republican legislator Tom Campbell, he says he "never saw as clear a case of lobbying power putting private interests first over public benefit."
[1] https://www.sourcewatch.org/index.php/Americans_for_Tax_Refo...
The difference is that these companies keep spending the money hooking up with the right people (lobbyists) that get them results. Sure the public, charitable companies, trusts, and so on could compete with them for politicians. They don't, though. So, the lobbyists getting politicians fame, fortune, and re-election are the ones that win since those are what politicians are all about. That's also why the companies lobbyists work for seem to get all this legislation that benefits them at our expense despite so many good reasons to not do that... if they worked for us.
Lobbying, if applied, should be one of first things to consider that might motivate a politician's actions. The evidence favors that it does here in the U.S. a lot. It and votes from popular/hated topics seem to drive most of political, decision making.
If your marital status changed, or the number of dependents living with you changed, they can't calculate the taxes.
For most people these will not have changed.
The IRS could calculate taxes under the assumption of no changes, then send the taxpayer a report of assumptions made. If any of the assumptions are invalid, the taxpayer would only need to file corrections for those items.
This is completely doable, and in fact is done in many advanced countries today. Even better, it fits in the the GOP rhetoric about wanting to make the same tax form “fit on a postcard” [0]
[0] https://www.msn.com/en-us/news/other/everything-you-need-to-...
They can guess based on the prior year, which generally only changes during two years per kid. If they're wrong, you correct it on the form and send it back.
> what you pay in mortgage interest
Your mortgage lender files form 1098 with the IRS with interest you've paid. The IRS already knows this.
> and whether you’re still married to your spouse
Same as the kid situation. They guess based on the prior year, and if you've gotten married or divorced recently, you correct it on the form and send it back.
All of these issues are either not issues, or are trivially worked around.
As someone who has never filled in tax in my life: it's mind-boggling that the people in the US have to do it.
1. Fill in the obvious things like your name.
2. Click "submit" and let it highlight what's missing. Fill in those things.
3. Repeat until it stops throwing exceptions.
(I'm not in the USA, but Canada.)
You could lie on the tax return by not reporting income, or claiming some false deductions and credits; the difference could be thousands of dollars.
They will only be checking the false version for arithmetic or logic errors.
The result might be, say, having to pay $50 more due to some mistake, even when actually it should be $5000 more due to lying.
What this story is about is that the government could provide some service, like a website, where you can just put in your info and have it do the detailed calculations and form filling for you: essentially a government-run version of the software that Intuit and other vendors sell.
The government can't just do this without any input from you, though. They can't just send you a bill for you to agree with or dispute.
Personally, my taxes are simple enough that I could do them with the book if I wanted. I've found suitable tax software that doesn't cost me and is fairly easy to use. I'm not sure what it's like in America, but if you don't have a family, own property, run a business, or make a bunch of income from investments, doing taxes with a calculator really isn't that difficult.
Is that what we want?
2) There are probably less bureaucratic ways to deal with subsidising medical expenses. Single payer is the nuclear option, but also applying the tax credit in-store and letting the business apply could be a thing?
If you owe lots of taxes, and the IRS sends you their calculations, you might discover that they are unaware of some of your income. Well... guess they don't need to know!
I knew a guy who didn't pay taxes for nearly 10 years, this is a kid that was doing minimum wage work so he didn't think he needed to. IRS sends a letter going 'we think we owe you about 3,000. call us'
They make money from people who don't optimise their taxes
And, of course, if you don't drive, none of this applies.
Turns out if you want to appeal your cook county tax, you need a current drivers license
Yes.
> I have never once notified the DMV of anything, and have driven for years with old addresses on my license.
You might want to fix that. In some states it's a misdemeanor rather than an infraction.
> And, of course, if you don't drive, none of this applies.
True, but I was only addressing the inaccurate information, because it could have consequences for people who believe it is true.
Sure, that might work.
But a likely scenario is the officer will ask your name and DOB and look you up on his MDT and now you've got three tickets (including whatever you were pulled over for because now it is definitely not going to be a warning) instead of just one.
Another scenario is the officer discovers you have your license and are just refusing to show your license. In California, and other states, you've now escalated a simple ticket to a misdemeanor with large fine and possible jail time.
Another scenario is you just update your address with the DMV and don't risk compounding your problems during a traffic stop.
I don't at all see how you could get in trouble for "refusing" to show your license. You'd just say you didn't realize you had it. (This is relevant to my interests; in Chicago, your DL is also your bond on tickets, and also, when you get a new license, you get a paper temp license day-of, good for several months, and the real license in the mail; I'm holding on to the paper temp and denying possession of the real one if I'm ever pulled over, because getting bonded DL's back is a giant pain.)
I'd be interested in knowing whether you could point me to a state that explicitly says not updating your address is a misdemeanor.
Sure. It's a misdemeanor in Minnesota (171.11): http://mncourts.gov/mncourtsgov/media/scao_library/Statewide...
I was also going to say North Carolina, but it appears they've changed it: http://www.theeastcarolinian.com/news/article_5137386e-2256-...
I think it was a speed trap(I got a ticket for going 64 in a 55) and he knew he could get an extra infraction if my address was out of date which probably happened a lot with college students because they move a lot, don't update their address, and are dumb enough to admit it to a cop.
I finished filing my taxes two weeks ago, a day after the pre-filled form became available online on the revenue service's website (works in all modern browsers, on all operating systems).
It took five minutes (two incomes, mortgage, bank accounts, all filled in correctly by employers and banks). Most of that time was spent authenticating myself and my partner.
Anyone fighting this in the US should make a bunch of videos showing average people from these countries filing their taxes in the blink of an eye.
If you’re single, one job, no house or investments, filing taxes in the US is a breeze.
Beyond that it gets messy.
I own a house in a household with two incomes: taxes took five minutes for both of us.
There were some minor kinks, but in my opinion it was a success. Being self-employed I didn't get to use it, but saw how it works. I filed taxes on-line directly from my book keeping software and it took me ~20min, including getting my wife's pre-filled taxes from the govt service to combine with mine.
Here it is copy paste from the CRA website:
There are several ways to send your tax return to the CRA. Ultimately, this may be dependent on how you decided to complete your return.
- By software (electronically) If you selected a NETFILE certified software, it will communicate directly with the NETFILE application servers and transmit all required information on your behalf directly to the CRA via the web service.
- By paper: Mail your completed income tax package to your tax centre.
- By phone: Follow the instructions in the invitation letter for File my Return that you received from the CRA.
"By software" means using certified software, like Intuit's TurboTax. This is the very racket they seek to protect.
In it, there's an option to login to the CRA via your bank account (oauth?) and it will populate a bunch of data for you.
https://www.irs.gov/filing/free-file-do-your-federal-taxes-f...
Otherwise we're just talking about state taxes which the federal government has no control over.
I expect to see this on some Facebook/reddit post, but on HN it is depressing to see how many people don't realize that what this comment describes has existed for decades.