How would you know if you're going to take the standard deduction without doing your taxes? I'm fairly certain the federal government doesn't know about all my deductions.
Your comment seems like a prime case of perfect being the enemy of good.
Unless they are a homeowner, probably.
Part of the issue is that the US tax code is a lot more complex than most countries. (And the homeowner-targetted deductions are kind of insane and bad policy too).
Still, I don't disagree with the basic premise. They probably know enough to know if itemizing your homeowner-related things would be better for you, and do it that way. You can ask for adjustments, or you could always ignore what they calculate for you and do it all yourself from scratch if you wanted to, a thing I believe you _can_ do in European countries that generally calculate your income taxes for you?
Also, I wish our tax code werent' so insane.
In practice, about half as many people itemize today than they did back in 2016.
"Here is what we think you owe/don't owe. If this isn't what you expect, then click this button to add or subtract deductions. Oh and BTW, we know you owned a home last year so we included that too!" Or, "Hey we noticed you took the standard deduction last year so we assumed based on what info we have that this year might be the same so here is the standard answer!"
Isn't that a relatively recent thing? IIRC, the standard deduction was massively increased a few years ago.
Yes, it is. What difference do you think that makes in the present day?
Something we can do differently that seems obvious today could have been a disastrous policy just a few years ago.
The optics of the IRS sending out bills for thousands of dollars more than people rightfully owe are bad, to say the least.
Of course it depends on where you live - in San Francisco if you can afford a house at all you have enough interest to deduct it (especially at today's rates), but other areas have more sane housing prices and lower incomes.
I think you can still easily reach if you, say, tithe 5 or 10% of your (post-tax even!) income (to a church or other 501-c-3) and have a mortgage and pay property taxes in a major metropolitan area. (Also if you're single the standard deduction is half married filing jointly.) (I didn't realize the personal exemption is gone now too!!)
But a quick google says... according to the IRS in 2022, 139.2 out of 154.3 million tax returns took the standard deduction, which is indeed around 90%. (Looks like up from 87% in 2020 maybe). So, true, defintiely most people, but still 10% not.
It looks like maybe pre recent Trump standard deduction changes (which were phased in), as many as 30% of filers itemized. (Still a minority to be sure).
I wonder if charities have seen a big hit in donations, if the itemized deductions people are no longer taking were an incentive.
I guess there was a $300 provision for charitable deductions enacted in 2020 that they are trying to make permanent and larger. Web site wasn't working for me but Google's cache did: https://webcache.googleusercontent.com/search?q=cache:WdabFa...
https://www.nerdwallet.com/article/taxes/tax-deductible-dona...
Which makes sense in a lot of spheres where's there's obligations on both sides. Unfortunately, if myself and the IRS come a disagreement about my filings, I can end up in jail or at the very least deal with an expensive criminal prosecution. If the IRS is wrong, then there's effectively no penalty for them.
The government wants it both ways. People understandably have some apprehension about this.
I think there's a huge gap between facing an audit in most circumstances and those two outcomes...
> Your comment seems like a prime case of perfect being the enemy of good.
And the comments advocating for automatic tax filing seem to be ignoring Chesterton's fence. They seem to be viewing it solely through the lens of revenue collection. However, IIRC, for better or worse, one of the big levers the US government uses to influence individual behavior is incentives implemented via tax policy. It stands to reason that mechanism would stop working if individuals could avoid interacting with the tax rules.
Removing manual filing won't stop people from voting on tax policy.
FWIW, we are in the "on the cusp" boat. Another year or two and our mortgage interest vs principle equation will put us in the standard deduction range. And short of massive changes to either tax law or our income, we'll remain there.
Maybe these are “drastic” changes but they aren’t unusual across the population. Not planning on kids, so that means I’ll have fewer changes than most. But the person I plan to marry has significant changes to income based on commission so I’ll probably be doing taxes this way for a long time!
Why wouldn't such a system work here?
It's not like the act of doing your taxes is what makes your realize you're over the standard deduction. Most people will know if they've done standard or itemized in the past and act off that.
That is exactly how I figured out I should itemize my taxes this year.
That's pretty much the extent most Americans think about itemization as it stands, and whether it comes from a tax software or the government, the result is going to be the same.
It has to be supported, and you should be able to change it. But there's really no reason today for why IRS doesn't send you "this is what we think you owe, based on this data that we have. Click to accept or add more data". That process would hugely simplify taxes for majority of Americans and wouldn't impact people who have more complex cases.
People wealthy enough to even think that their deductions might exceed the standard deduction are not only in the vast minority, they're also wealthy enough that paying for TurboTax isn't an issue because they have their accountant do the taxes.
IOW, you're optimizing for the exception, not the majority case.
> In 2017, 47.1 million taxpayers itemized deductions, relative to 15.3 million in 2018. This dramatic shift maps to a more than 19 percentage point drop in itemizers as a percentage of all taxpayers, from 30.90% to 11.47%.
The majority of this was people's mortgage deduction went from being more than the standard deduction (so itemization is worthwhile) to being less (so it's not worthwhile).
You can roughly estimate what your itemized deduction might be.
Which you can use free app to download, file and send the filed one.
weirdly enough official site also have instruction on how to use PlayOnLinux to run it under Linux
It's interesting that anything other than MacOS and windows is even considered at all, even just in the instructions.
For those who itemize, the government usually knows about most the things you're itemizing. I'm itemizing this year because of 3 things: taxes paid, mortgage interest, and charitable donations. The government already knows about 2 of those, so they could send me prefilled forms that are 95% complete (W-2, investment 1099, mortgage 1098, mortgage 1099 and other bank account 1099-ints, my form 5498 for my IRA, property taxes, etc). I'd much prefer only having to fill in my charitable donations. It would change a job that takes a couple hours into one that takes maybe 15 minutes.
Of course, you might still want to amend that, but as the first pass it can be quite accurate.
Are they going to be aware of all deductions in all cases? You are absolutely correct, there's no way that's correct.
Imagine a landscaper doing doughnuts on your lawn and then telling you to pay him to fix it, and that's roughly how I view Intuit.