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Comment by ijhuygft776 | Hacker News Reader

Our documents should not be sent automatically to the IRS if the IRS won't figure out our taxes.

Speaking generally, but the IRS as an institution would love to be able to move to automated tax filing.

The thing that is blocking that happening is intense lobbying by intuit (and a few others) plus anti-tax groups. See https://www.propublica.org/article/how-the-maker-of-turbotax... for what was probably that best quick summary from about 10 years ago.

Can they figure out our taxes without our returns? For simple stuff like paychecks maybe. What if you are self-employed? What if you are a contractor? What if you barter or pay cash?

of course it would not cover all cases... but I'm guessing that it would cover most people... why would I want them to have my files if all they are going to do is use them against me anyways?

> but I'm guessing that it would cover most people...

Do you have any reason to believe that?

Are they your documents? Can you accrue taxes independently?

> Do you have any reason to believe that?

just from my personal experiences... either way, the IRS has that info, if they assume people are honest... not sure why it isn't public.

Well, they might have all the info sometimes but we don't know how often or if they even do. How would the IRS know if they know everything? What evidence do they have of absence?

There are 36 countries that manage to do return-free taxes. They seem to have a base rate that covers most (~64% in the UK) people. The US tax code is way more complicated than one base rate for everyone. It's unclear to me how anything other than income tax is handled in these countries. Does the UK have a capital gains tax? Tax deductions?

In the UK, payroll and savings income is taxed at source and around 80-85% of people don't need to complete a tax return. You only need to complete one if you have other income, if you're self-employed with over £1000 revenue, had capital gains over £6000, or earn over £100,000. Almost everyone completes these online, and you can do it directly on the government site. For simple cases that only takes a few minutes. It took me about an hour this year because I've been bad at keeping track of side project income. The form itself is easy.

Thanks for the explanation, I only did a quick search. Is there a capital gains tax in the UK? Do you have tax deductions?

Edit: I looked it up.

Yes, the UK has capital gains taxes and they must be calculated by the taxpayer.

https://www.gov.uk/capital-gains-tax/reporting-and-paying-ca...

There are also deductions for savings and dividends. Those deductions look a lot like the US deductions. They also (sometimes?) have to be calculated by the taxpayer.

https://www.gov.uk/apply-tax-free-interest-on-savings

There used to be relatively generous yearly allowances for savings (£1,000) dividends (£2,000) and CGT (£12,300) which meant most people would be exempt and not have to fill in a tax return.

Saving interest is often paid gross but if you go over the savings allowance and don't fill in a tax return HMRC will just automatically take more tax from your payslip.

There is also a £20,000/year ISA allowance which shields investment from tax so any holdings within an ISA can be ignored for tax purposes.

However, the dividend and CGT allowances have been reduced recently as the government tries to find ways to raise more revenue without raising the headline tax rates, and the £20k ISA allowance hasn't been raised for years despite inflation.

So as it stands, in the future a lot more people will have to start filling in tax returns.

Thanks for that context.

Interest and capital gains come in sooner for Americans. Plus we have way more deductions. I can deduct business use of a home office and personal vehicle. That’s not something the IRS can know.

They will figure out your taxes (according to whatever information they have at the time) and retaliate if you file something that doesn't jibe.

They just won't do it before you do. That way, they might learn things they didn't yet know, from people who decide (as legally obligated) to divulge additional information. I assume that they assume that far fewer people would divulge additional information, if their "you talk first, I talk second" tactic went away.

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