What they don't know is your income from sources like rental income or crypto. They also don't know deductions you are going to claim. In this case you will have to provide the details. Still free to lodge your returns online.
The U.S is unique in forcing its citizens to waste countless hours and pay hundreds/thousands of dollars every year doing the useless unnecessary work of "filing taxes". Why is the system still this backwards? Either plain ignorance of there being a superior alternative, or a broken political system that can't get anything done. My guess is it's a combination of both.
I’m a South African citizen, I get an SMS that a pre-filled-in tax return is available online.
I can then log in to their online portal and accept it or amend it and submit it electronically.
Currently I can usually just accept and submit it.
Some years I might need to add or tweak income and expenses, but broadly speaking they are pretty correct.
They have all the income and benefit details from standard corporate employers, expense and contribution info from medical aids (something like medical insurance, but a bit more sane as far as I can tell), investment and banking contributions from financial service providers, etc.
You can opt for extra deductions which require extra paperwork from your side. And they don’t always have income info from side hustles or correct expense info from “unusual” arrangements between you and your spouse. Sometimes your $BIGCORP’s finance department can declare your benefits incorrectly which needs fixing.
But for most middle-class income earners I suspect they can just log in and click accept.
You can pay money and use a tax consultant to see if they can navigate the current rules for a better result, but unless you have a complicated setup you don’t need to.
Intuit lobbying hard to keep tax rules complex.
(copy and pasted from another comment)
If you want a narrow target, you can blame the GOP activists on the US Supreme Court, or if you want to go beyond that, blame the GOP senators/presidents who appointed them, the Federalist Society, the GOP donor base, GOP-aligned media organizations, etc.
Gutting campaign finance restrictions was a vast judicial overreach, performed for partisan advantage and the benefit of corrupt wealthy patrons.
https://en.wikipedia.org/wiki/Americans_for_Tax_Reform#Oppos...
It’s undoubtedly true that some US politicians have gotten bribes, defrauded partners or constituents, embezzled money from their campaigns or the government, used inside information to trade stocks, etc. But even if all of those were impossible, the nature of the US campaign finance system would create plenty of perverse incentives.
Sure, but it's not like they don't have a choice. Regardless of any incentives, they're the only ones actually empowered to make these decisions. Lobbying, offers of bribes, campaign financing promises, etc. do not in any sense detract from their ability and responsibility to make the right choices.
You can’t un-screw a system by just telling the people inside who were selected for their mendacity and corruption to “make the right choices”.
Of course not, but it's still the politicians (on both sides of the aisle) who are ultimately at fault for abusing their position and failing in their duty to their constituents, not the lobbyists for merely making suggestions or offering deals in their own self-interest. Restricting lobbying or campaign contributions wouldn't do anything to improve existing politicians' "mendacity and corruption". They'll just find other, less public, ways to serve themselves rather than their constituents.
In a democracy, it is the voters who are ultimately at fault.
But perhaps more to the point, it is the system that is at fault, and the system is very complex: institutions, physical infrastructure, social mores, common beliefs, canonical media and stories, traditions, language, ....
You can’t just point fingers at individual people in a large imperfect system and pretend that swapping them would fix it. Troubleshooting and improving large complex systems is really hard and improvements are usually incremental, except sometimes in extraordinary crises.
But the US is unique in the developed world as making filing taxes hell even if you don’t try to minmax them, and that is primarily due to tax filing companies lobbying against the IRS doing what everybody else does (and secondarily due to the GOP very much wanting filing taxes to be as painful and error prone as possible, and for it to be as expensive as possible for the IRS).
But the US tax code is an order of magnitude larger than the Swedish one. Which probably means that it is several orders of magnitude more complex (however that might be defined).
That's ~20 years before Sweden got everything prefilled for some of the population. As an example.
If you are not getting a VAT refund then you are paying VAT and it is in your interest that everyone does, so most consumers would select the box. The transfer is recorded, consumers would be complicit in the fraud if they didn't tick the box and that's enough excuse for both sides to want to play ball.
cries in German
If you do end up filing your taxes, you can access the prefilled tax statements. Software to do that is free and easy. If you want software advising you on how to get a bigger refund, you'll have to pay maybe $10-20, though the $5 software from Aldi works fine for me.
German taxes are really horrible, in general. They expect you to pay in advance for expected untaxed income (based on the previous year's return). Working out the taxes on the income from some ETF is a nightmare, unless your platform does it for you. Unless you really understand the system and can file your own taxes, then low-wage freelance work just doesn't make sense as the cost of doing the taxes can be higher than your income. This means people are trapped into not working.
You can negotiate to have your advances reduced but the government really doesn't like it when businesses (including freelancers and solo entrepreneurs) have a high difference between their advances and the actual taxes. This also goes for declaring your VAT (which depending on how much you make you'll have to do monthly or quarterly as an advance and then alongside your income tax) and while in that case you basically set the advance yourself you'll get in trouble if it doesn't match your actual VAT (difference between charged and paid).
You can file your own taxes and if you're a regular employee there are tons of non-commercial orgs you can go to that will assist you in doing that but if you're a "business" (even if it's just you and you haven't incorporated) they'll often not help you.
BTW the reason you can just forego filing your own taxes as an employee if you just want to be taxed on your wages (and don't have anything else to declare, e.g. interest on savings) is that your employer already had to do the taxes on your wages and benefits for you. So it's not like the government just does them themselves, it's just done by payroll instead of you.
Now, with the 300 Euros of fuel relief, every employee will have to file taxes on said 300 Euros.
If you are legally able to claim deductions, pre-filled tax forms that do not contain those deductions are by definition wrong, even though you may agree with individual form items. While this can be related to innocent mistakes and the sheer inability of the state to know the necessary information, sometimes it appears to be deliberate: The classic example is the Pendlerpauschale, which does not appear in Elster pre-filled tax forms even though the state does have all necessary information (address of your flat / address of your employer) to fill it.
If you accept these faulty forms, you will almost always pay more taxes than you have to.
It may be unusual, but it's certainly not unique; I have to fill in a tax-return every year, because I receive rental income. Anyone in the UK that receives income that isn't taxed at source by their employer has to complete one.
The last one I completed was 21 pages long, with notes for each page; a lot of the time I spent was scrabbling through my filing cabinet searching for my evidence.
That rental income plus my state pension and bank interest are the only taxable income I receive.
At one time I was a company director, and had to fill in personal tax returns. I folded the company, and returned to salaried employment, taxed at source; it took me a decade to get the tax authorities to stop sending me tax return forms that I was required by law to complete.
The first £1,000 is tax free (presumably the cost of admin makes it easier to let that go).
And up to £2,500 you just have to phone / email HMRC.
Hearing about how taxes work in other countries makes me grateful for the system we have here.
Most people never have to file a return. The people that do have a more complicated arrangement and probably need to summarise expenses, etc.
The allowances are more so ordinary people taking in a lodger don't get caught up in tax requirements.
You could probably choose to pay yourself a PAYE salary from a limited company and not need to complete a personal tax return.
Of course, TurboTax/Intuit also lobbies to keep taxes more difficult to protect their profits.
https://www.washingtonpost.com/blogs/post-partisan/wp/2015/0...
Until or unless everything is centralized and cash ceases to exist, I don't know how they'd really do it. In South Korea do waiters live on tips? Because in the US, almost all money made in the restaurant service industry comes from unrecorded cash tips; the actual wages are extremely low. The restaurant will attempt to estimate their workers tips and cover the taxes out of the fixed wages, but... this doesn't even get into all the other cash industries like stripping or moonlighting as a dominatrix. The US's tax attitude seems to be: You're on your honor, and most of the time we won't catch you, but not even Jesus can help if we do.
I should be a pretty typical middle-class example. Two salaries (me + spouse), a mortgage, limited other deductions. Yet every year I have to wait for various forms that the government already has, enter the values on paper or pay for tax software, hope I don’t fat finger a value, and wait 7-10 years for an audit. Heck, since Trump increased the standard deduction, I’ll probably be taking that soon (mortgage interest is near that threshold now), but still can’t just click a button at irs.gov that says “yup, that’s right, here’s my bank info for refund/payment”
The IRS could generate online forms (or snail mail) with what they know and let us add deductions and other income. They should know salary/wages, they could know investment income (not sure if broker report to the IRS, or just send forms to filers).
Even if the filer has to manually enter deductions, credits, etc, doing it on an IRS site has several benefits... no $50+ fee for H&R/TaxCut/etc, no $500+ for a CPA (for fairly typical tax situations), no worrying about whether online submission processed correctly (because you'd be submitting directly to the IRS instead of relying on a 3rd party to submit for you). Multiply that time/money/stress savings across the population and it's a MASSIVE benefit to society.
Fuel and food, no tax.
School supplies, shoes, clothing, any item under $100, no tax. Over $100, ramp it up.
Diamond rings, 100% tax.
Alcohol and cigarettes, 20-30%.
Used cars, no tax.
New cars, 10% up to 100%. Credits if they're electric or extremely fuel-efficient.
Playstations, high end sneakers, Smart TVs, iPhones, rims, jewelry, expensive furnishings, rugs, anything better than your basic washer/drier: 100% tax.
Books: Free and subsidized by the government, as many as you want, any book ever written.
Healthcare: Free.
College: Free.
Basically under my plan, as long as you get stuff you need for your family, you pay no tax. If you get stuff you want for your pleasure, you pay tax on it.
How's that regressive?
The only real downside I see is the potential for a massive black market in luxury goods, tobacco and alcohol. But legalizing and taxing pot and prostitution should take some of the sting out of that.
I consider myself pretty high income. If I was just taxed on consumption, I would bet I'd pay probably half as much tax as I do now.
Low earners drive some shit cars, while you and me can (probably) afford a brand new Audi. How is that fair? /s
>>Which you and I could easily afford.
That's the key part here. You tax those who can afford it the most.
Neither. There is awareness of the alternatives, and the political system can get things done for it's real constituents. The problem is a malevolent political system that primarily serves a class whose interests are opposed to the mass of the citizenry, to wit, a narrow capitalist elite.
(People will point to the tax prep industry, it's lobbying, etc., and that is part of the problem; an bigger part, however, is the political faction favoring lower taxes in general for the elites that likes to maximize the perceived pain of taxes for the masses to generate support for elite-favoring tax cuts; they are adamantly opposed to procedural simplification that minimizes the pain they leverage.)
At the beginning of the year, you get a bill for that year based on what they think you will owe. This bill is due on October 31, i.e. you need to pay your estimated income tax before you have earned all that income. This is especially strange because most people will get a 13th month salary at the end of October (your annual salary is split into 13 months, the extra comes in time for Christms presents?). You are expected to save adequately to be able by the end of October.
Banking secrecy is not dead in Switzerland. There are no longer anonymous accounts, and banks share information with foreign governments. However, there is banking secrecy between the banks and the government. On the other hand, we pay a wealth tax each year (it's small), so you need to declare each account and how much you had in it on December 31.
To create an equal playing field between house owners and renters, house owners pay an imputed rent cost for how much they would have paid in rent for their house. This is added to their income before taxes are calculated. In my case, this means my assessed income is around 25k higher than it otherwise would be.
There is no automatic form filling in my state, but there is free tax software (Java app which runs everywhere), and it is pretty easy to use. If you have questions, the local tax office will nicely respond via "secure email" in 1-2 days.
Taxes are very progressive and family friendly. With 4 kids and one income we pay 6.5% combined local/state/federal on income of around 120k (plus imputed rent).
There are no property taxes. For the wealth tax, most people who own houses never pay off their mortgages. They will typically have a mortgage for 50% of the house value (which can be quite high, a typical house where I live is between 800k and 1000k, and more in bigger cities). The interest can be deducted, and the mortgage amount from the wealth tax.
wait, I thought this only applied to US citizens, not Green Card holders