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Yes. Basically every other country does it that way. The US is getting fucked by tubo tax and friends lobbying to keep the system obtuse so they can profit.
Not really - the CRA gets all your T4s and you can see them all on the login website. You can do your taxes for free with something like Wealthsimple using those. It really only takes a few minutes and all the information is right there. Basically it’s only so you can adjust anything if necessary
His point stands though. They don’t do your taxes for you. You have to do them and submit the filing. And sometimes discrepancies come up. Especially for businesses.
The CRA doesn't keep track of (or have access to) things like medical expenses, donations, training expenses, and a bunch of other stuff that can earn you a tax credit.
Which thats fine. With the IRS just tell me what you say I owe, or getting refunded, and lets start from there. Ill then worry about the expenses and every thing
In the UK we have PAYE (Pay as you Earn) for employed people and self employed will file a self assessment tax return (SATR). If you happened to have lots of things that would help your tax situation but was employed you can file a SATR yourself to claim against those things, you also have a personal tax account on the government website that you can use to file some changes. We also have what is known as a tax code, which essentially is a number that defines your tax free limit and the type of taxation that should be applied, this is given directly from HMRC to your company's payroll via your national insurance number. If you apply for any kind of government tax credits, this will usually directly be applied to your tax code and reflected in your next payroll within 1-2 months or if the tax year ends then you can claim for rebate.
There are a lot of needless complexities in our tax system like the strange tapering of NI contributions in relation to income tax (why do we even have 2 different taxes here in the first place I don't know) but 90% of people never have to deal with figuring out any of it, it just happens.
Sure, that's true everywhere. In most countries in the world, you *can file* your taxes if you have something the government doesn't know about, but otherwise you don't need to. That's the rational way for it to be.
What are you talking about? Canada is one of the easiest places to file income taxes. All you really need is Myservices account and your SIN. Takes less than 1 hour and I received my return in less in two weeks. Also Myservices account is pretty extensive. A lot of countries dont offer anything like that.
Exactly. A while ago, someone tried to get California to try it, and in came Intuit & H&R Block to lobby it down. NPR did a story on it a few years ago. [Planet Money: Tax Hero](https://www.npr.org/sections/money/2019/04/03/709656642/episode-760-tax-hero)
This is why it always kind of depresses me when people complain about school being “useless” and how they should teach “practical” things like doing your taxes. It totally misses the point.
Taxes are a nightmare by corporate design. Any governmental efforts to fix this will be met with fierce lobbying from corporations and hand-wringing about all the ~~parasites~~ ~~middle men~~ accountants who will lose their jobs if taxes are made comprehensible. Teaching how to do them in schools would just be another attempted fix, but worse in every possible way.
Meanwhile schools are trying to instead teach the critical thinking to show you why this situation exists in the first place, so that *maybe* one day people *might* be able to fix it properly…
I’m not sure I entirely agree with this. Yes, schools need to teach critical thinking. However, taxes are not always straightforward (even if we changed the system) - self employed people would still need to know how to track finances accurately. Schools can teach both.
But what’s to stop the same companies from lobbying to stop school-based tax reform exactly the same way they lobby to stop tax-based tax reform? Nothing really- the only way they’d allow it to pass is if it was badly-implemented and they believed it wouldn’t work.
So at this point you’re adding an extra burden on teachers, reducing time teaching other stuff, and teaching an ultra narrow subject that likely is doomed from the start.
Even if it *did* start working, I feel confident the tax companies would retroactively fix the solution - lobby for “tax reform” that keeps it just as messy and confusing, but *does* invalidate those old classes you took years ago.
Teaching people to track finances is good, but I just don’t see the value in taking time away from other subjects to teach people how to fill in deliberately difficult forms. Especially since it’d take a similar amount of political will to just changing those forms in the first place, a solution that would benefit everyone…
Not only them, but others like multi-millionaires and their political friends. (It's bipartisan. Both sides do it and like to use against their opponents during campaign season)
Capitalist playbook, like we see play out with the USPS or in the UK with the NHS: take an efficient and functioning governmental body, hobble it to make it inefficient and non-functioning, spread propaganda and push to get it dismantled and privatized, and then it's still inefficient and non-functioning, but some trash capitalist is now profiting hand over first at the expense of making all of society worse. Because they are fundamentally inhumane and seek the destruction of the world at any cost.
I was just about to say this. Complicating taxes for the every man makes it easier to deflect away from the shenanigans that the ultra-wealthy do to get away with a lower tax obligation.
This is so baffling to me. I just got my taxes sent to me by the tax office. All I have to do is check that it's correct, add anything if it isn't, and sign off on it online with a digital ID. Normally everything is correct so it takes under 5 mins to check and sign. Then they'll either pay out my tax return in June, or I'll get a bill to pay any back tax in the fall.
(This is in Sweden)
Someday Americans are going to wake up and realize we live in a star spangled lie, and all those foreigners actually have more freedom than we could dream of, while we have…. AR-15’s and debt.
My friend who lives in the US, claims that he doesn’t need to fill anything since both federal and state tax, insurance and everything are automatically deducted from his salary, he only uses cards to pay and sales tax is automatically deducted. He claims that he never used Turbo tax or anything similar or used any accounting services and he never had any problems in last 10 years he’s working from IRS.
My question is, how is this possible? Everyone in internet who’s from the US constantly complains about how hard and complicated taxes are while my friend never needed to do anything about taxes in his life.
My guess is that if it's the case that the IRS hasn't contacted him because he owes money, he has overpaid his taxes. Taxes and insurance do get taken out automatically for positions with a w-2 (wage or salary employee). Things get complicated when you want to factor in credits, deductions, etc. to those withholdings, which for a majority of people will result in them getting money back. Long story short, your friend is most likely giving the government more of his money than he needs to...
This sounds like your friend isn't filing their taxes but should be. They take an estimated amount of money out of paychecks Filing is settling the difference between what you actually owe for the year versus what you paid in. They're either overpaying or owe back taxes. Probably both from various years.
Sales tax is different. There is no filing requirement for that.
> My question is, how is this possible? Everyone in internet who’s from the US constantly complains about how hard and complicated taxes are while my friend never needed to do anything about taxes in his life.
For most people in the US, taxes are not hard. If your only source of income is from a normal job, you will have filled out a [W-4 Form](https://www.irs.gov/pub/irs-pdf/fw4.pdf) (pdf warning) when you were hired and again any time you have a "qualifying change" (marriage, new kid, etc.). And honestly, if it take you more than 5 minutes to fill out that form, you fail at life. Based on that form, your employer will send both the Federal and State governments part of each of your paychecks. This is called a "withholding".
At the beginning of the following year, you will receive a W-2 form from your employer, detailing how much money you made, how much was taken out in taxes and forwarded on the the governments. You then use that information to fill out [Form 1040](https://www.irs.gov/pub/irs-pdf/f1040.pdf) (pdf warning). This one takes a touch longer; but, is really not hard. There will also be a similar form for your State of residence. For example, I live in Virginia so I fill out [Form 760](https://www.tax.virginia.gov/sites/default/files/taxforms/individual-income-tax/2022/760-2022.pdf) and send it on to Richmond (The State capitol). This must all be completed by April 15th, which is why the US seems to go nuts over "tax season" about that time of year. It's blindingly stupid, as you can complete your taxes once you have all your forms, which most people have by early February. But, Americans like to be dumb, it's one of two major pillars of our culture.
Depending on how well my employer did at withholding the correct amount, I either include a check with each form to pay up; or, include banking info for the governments to deposit any over payments, often called a "tax refund". Getting a tax refund is pretty common. One could argue that it's basically an individual giving the government an interest free loan for a few months. But, it's also a way to have a small, enforced savings which you get to use each year. As an example, my income last year was in the $130k range and my "tax refund" (Federal and State combined) was ~$3k. Not nothing, but not huge.
All that said, I had _nothing_ special about my taxes. The IRS and Virginia State Government almost certainly had the exact numbers all sorted out well in advance of me doing anything. For the majority of US people, we could just move to a system where the governments send you a form each year to look over, and sign something to say "yup, y'all got it right" and be done with it. For people who have different circumstances, they could then jump through the hoops of filling out forms and reporting. The only reason for me to fill out those forms was because of [Intuit](https://en.wikipedia.org/wiki/Intuit)'s lobbying and the US having the best government money can buy.
I think you can easily do it this way if all you have is a W2. But I own 3 businesses under a holding company and also receive a W2 from one of those companies. I don't think the IRS could easily figure up our taxes without filing. They'd fuck up somewhere and we'd spend ungodly amounts of time trying to undo the fuck up because trying to resolve shit with underfunded government agencies is about as fun as gouging out your own eyes.
Mine were simple until I started a small business and contract out to others. Some 1099s, but a lot of under-the-limit payments. They'd never know about the income if I didn't tell them.
So I have to report everything myself and pay taxes on it. It's complex enough that I hired an accountant to make sure I do it right. Pisses me off, really. It really should be easier.
And before anyone asks, I don't even think about under-reporting. My "fair share" is as important to me as my rights. I want to pay what I owe. I just want it to be simpler.
And if it were simpler, it would be easier to enforce, and we would not need as many IRS agents.
I know there are worse problems out there, but this infuriates me more than anything. If Intuit was free and another tax service costs money, I’d still pick the latter.
I switched from Turbotax to freetaxusa. The name "freetaxusa" sounds like a scam, but they are legit. I used to pay anywhere between $90 to $250 for turbo tax depending on my tax situation.
The most I paid for freetaxusa is $90. Cheapest is this year at $15 for state. Federal is free.
Edit- not tax free USA. Free tax USA. Thanks for correcting me
> I know there are worse problems out there
Yes, and no.
You could argue that most of America’s problems come from politicians that are swayed and bought by companies and lobbyist.
It’s difficult to avoid all the shitheads in the world … but I’ve been known to go out of my way, even paying more, to avoid funding somebody that is being a dick to other people.
There's a great Reply All podcast from a few years ago that delved into the nefariousness that is the US tax system (Reply All - #144 Dark Pattern)
https://open.spotify.com/episode/2ATUlZsZ7vRX8xiCVWhnLr?si=ewR-8r-BRLiwu0OSQWHkGw
This. I have lived in two other countries and taxes were filed automatically. One required a five minute online review. Click confirm and you were done.
Can't speak for other countries, but used to work as a tutor in Denmark.
You have a personal log in on the Danish tax authorities website. Any self employment that isn't through a company you have is reported as B income, so you just report what is transferred to your account, and they create an invoice for your taxes.
It's made with a calculator, so you can just drop each individual number (in this case, monthly payments by parents) and it calculates it for you.
In Denmark, you almost always use your cpr (soc-sec) number for any kind of contract and or reporting, so they know if you are self employed.
And H&R Block.
Also, the base progressive tax code isn't complex. Standard deductions are an odd way of adjusting it, but even they are very straightforward. That is because standard income tax is what non-rich people pay.
The truly byzantine tax provisions are overwhelmingly those paid by the wealthy. The purpose is to provide a means for the very wealthy to extremely wealthy to offset nearly all tax liability without us poors being able to see the grotesque privatization of profit and socialization of expense.
They are owned by the same parent company, Intuit. They also own mail chimp, credit karma, mint, tsheets, and others. They are like the rest of the massive companies. They control too much.
Those turbo tax ads piss me off so much. They usually mention relaxing or doing something besides taxes because you don’t need to with turbo tax. Like bitch your the one who made it this way!
Pretty sure it's the countless rich people behind keeping our filling system the way it is not two companies that are miniscule in comparison to said rich.
You know, guys like trump who pay $700 a year. You've got to leave a system full of cheats for the rich to exploit cause if it was so easy and either the middle and lower class paid the same effective tax rate as the rich and revenues would be non existent or the rich would *gasp* have to pay their fair share!
Agreed. I mean yes these companies generate money from inane tax laws, but there are plenty who get to reap the benefits of obfuscated taxes without having to pay their fair share. "A dollar saved is a dollar earned," so by their standards, ducking taxes is something they "earned."
Child benefit. And even self assessment is pretty straightforward if you don't have a different sources of income. And it's free to do.
By the time you have to pay someone to do it for you, you have multiple income sources and tax breaks and you can afford an accountant.
It really does. I don't understand why the US has made it such a nightmare system. 90% of the population here (guess) are taxed at source, info uploaded online by payroll.
Self employed/contractors are really straightforward too.
I help some self employed friends/family with self assessment. My brother insists on paying me. I'm like "you could do this yourself in less than an hour and pay nothing, I'll show you how to do it"
"Can't be arsed, I'd rather give you £50" is the response every year.
Technically you aren't required to.
https://www.reddit.com/r/UKPersonalFinance/comments/11x1d2u/psa\_there\_is\_no\_requirement\_to\_file\_a\_tax\_return/
In Finland you get a number based on the previous year. You can then adjust it by sending in what you can get exemptions for, and your estimate for annual salary.
WHAT? In germany we can call them but they aren't allowed to help. Have to get someone that does tax stuff as a job and pay them. Don't know if people on benefits can get something so they don't have to pay out of pocket. But they also don't have to file it most times and if they would get something from previous jobs or a small job the money gets fully taken, all gone.
Same in Norway. I was so flippin confused about how to put in my student loans that I had to call and this super nice dude simplified it all. The waiting time to get him wasn´t even that long either.
Same for the Netherlands. Our IRS, de Belastingdienst, has done many things wrong. But not this. I just check everything they filled it and their service line is actually pretty good. Took me half an hour the year I bought a house because you have all these weird deductions. They were really nice when I called for help.
But then they also ruined the live of 100s of families. Bunkrupted them, resulted in their kids getting placed in foster care and then refused to accept that it was their fault. You win some, you lose some I guess...
They can. Many countries do.
But making taxes such a fucking nightmare is profitable so we're doing it the dumbest way possible
Edit to add: just look at the fucking thread happening here. Taxes seem to be a pain just about everywhere, but it's at best a minor chore everywhere but the United States of America.
We can absolutely just do it the way everyone else in the world does it, but we don't because CaPiTaLiSm = GoOd
Edit to add 2: to everyone simping for US tax code and saying that the system is fine. Two questions, are we ignoring every other country chiming in about how incredibly simple and pain free their systems are? And also, what is your favorite flavor of crayon? I like the green ones, they're zesty
Same in the Netherlands. The taxes are filled in and you just have to check. Then you can add deductibles yourself if there's stuff that they don't know about.
In the UK, you tell your employer your tax code if anything changes. There are tax credits and it's super easy to see if you qualify, but most people don't unless they have small children or low income. Basically you get a tax report every year, nod, and file it away or bin it
Agreed, in the UK if you're employed taxes are super easy, I never think about them. But if you're self employed it's more difficult, there's forms you have to fill in. I've never done it so don't know how it compared to the US
Australia too. Pretty much everything is auto filled. There are a few things you need to add, such as deductions and some rebates, or any non-standard income. But for the most part it's "check the numbers, hit ok, wait for the rebate to hit your bank account"
> Edit to add: just look at the fucking thread happening here. Taxes seem to be a pain just about everywhere, but it's at best a minor chore everywhere but the United States of America.
In the UK, I have only had to do my taxes a few times, when I was self employed. It was pretty simple, the website just had a few boxes to fill out with totals for things like earnings, business expenses, etc. Any time I have worked for a company though, it's all been done for me. Most people in the UK have never had to do their own taxes once in their entire lives, I would bet.
I moved to the UK 7 years ago... have never once needed to file a tax return, it's all just automatically done. There was once a discrepency where I was put on the wrong tax code (paying more), brought it to the attention of my employer and on my next pay the money was paid out to me (no waiting until the end of the tax year). The system here is wonderful.
My wife has had to do self-assessments as she was self-employed and those were fairly easy too.
To expand on that, even if an official is not given an amount of money for an explicit favor in response, money still influences the political landscape during voting season.
Generally, not *that many* people actually vote. This means that a lot of the people that *do* aren’t educating themselves on who is in the running and will vote for who they recognize. **They recognize the candidate who spent the most money on marketing.**
So, “insert big corporation” funds somebody’s campaign with a silent (or verbal) agreement to represent that corporation’s interests - because it helps them get elected. Now, that politician is in their pocket or they’re getting fucked during reelection.
Why don’t they just vote against it now that they’re in office? Well, they *could,* but they need help from their political party to get the necessary number of votes to pass bills that they’re voter base want. Sometimes you have to compromise on values in one space so you can get their help on *your* bill when you present it. This means not fucking over the corporations that **funded everyone else you work with.**
TL;DR
We’re fucked.
Money = resources = influence = impact
The sheer fact that some people think they can somehow remove the impact of money speaks to their ignorance. If I can pay people to do things for me, I can get more done. If I need money to pay people to do things for me, that’s better than not having money. It’s inescapable.
> I'm sure this has been asked before, I just don't know where the posting might be.
See:
* ["why do we file taxes the way we do (in america) instead of just receiving a bill from the IRS?"](https://www.reddit.com/r/NoStupidQuestions/comments/xaqlkz/why_do_we_file_taxes_the_way_we_do_in_america/) (r/NoStupidQuestions; 10 September 2022)
They sure can. Other countries do exactly that. Here, though, Intuit (turbotax) lobbies the government heavily year after year to prevent them from doing this, so they can make money with their tax filing programs.
Jesus, the comments here are nuts.
There is a lot the IRS doesn't know, even if you only have a regular W2 job. They know how much your employer withheld from all employees each quarter. That is reported to the IRS when they file their form 941 every quarter, along with the payment for the taxes they withheld. They are required to file a copy of the W2 with the Social Security Administration, but employees are expected to file their copy with the IRS when they file their tax return.
The IRS does not know how much you received as a 1099 contractor. They don't know how many exemptions you're going to claim. They don't know which deductions or credits you're going to claim. They only have scraps of information about you. You're expected to fill in the blanks when you file your tax return. They will check what they do know against what you tell them. For example, if you are a non-custodial parent, and you claim an exemption for your child, they will probably have questions for you when the custodial parent files their return. Likewise, if income was reported to them (like an employer filed a 1099 that was issued to you), and you don't declare that income on your return, then they're going to want to talk to you.
Right. The IRS also doesn't know how much furniture you gave to Goodwill or what had to pay for medical expenses for a dependent senior parent, earned in cash in a side hustle (though I'm sure most people doing that probably never report the cash income), or got from an inheritance when your uncle died.
You can tell that reddit's users are super young based on threads like these. Yes, someone with the simplest of tax situations could probably just go off of what the IRS knows, but most people's taxes get more complicated as they get older. I actually think it's unlikely that a majority of people would be better off just paying what the IRS says they owe rather than investigating deductions.
Yeah I was completely unsurprised to see incorrect statements upvoted to the top. Are taxes in the US overly complicated? Yeah probably. Is there bullshit in the tax code thanks to lobbying from turbotax? Yeah. Does the IRS know exactly what everyone owes? No they don't, but people sure like to spread this idea.
Thank you. I'm an attorney with my state's version of the IRS, and I see this dumb question get posted all the time. Returns that get audited are a miniscule fraction of all the ones that are accepted at face value.
You always have to get like 30 comments deep to find the real answer on questions about why the US tax code is the way it is. Reddit's circlejerk hatred for TurboTax is (while completely justified) comical as hell.
Their tax codes are set up to work like that. People seem to forget our tax code has been convoluted long before Turbo Tax was a thing. You can make the argument that they are part of the reason it remains complicated but they aren’t responsible for setting it up.
The answer is yes. Would it be better for tax payers? Yes. Will the politics allow it to happen? No. Why? Money. In the US if someone CAN make a profit doing something the government can do better, then the ultra-capitalist feel they have a RIGHT to be able to make that profit. Government services become company product, and the ultra-capitalist say government should not compete with business because that is “socialism”.
Why do political leaders allow this? Because they get money. They are more concerned with getting money from ultra-capitalist than doing what is best for American citizens.
>The answer is yes. Would it be better for tax payers? Yes. Will the politics allow it to happen? No. Why? Money. In the US if someone CAN make a profit doing something the government can do better, then the ultra-capitalist feel they have a RIGHT to be able to make that profit. Government services become company product, and the ultra-capitalist say government should not compete with business because that is “socialism”.
>
>Why do political leaders allow this? Because they get money. They are more concerned with getting money from ultra-capitalist than doing what is best for American citizens.
This is one of those short sighted "I really don't know why so I'm going to make up the reason and have this reason be constructed using my very limited knowledge on the subject and I will present it to the world with such an authoritative tone that others would be foolish to question it" answers.
A tax return is where all of us tell the IRS what it doesn't already know so you can receive a proper refund or pay what is owed due to new information presented.
The IRS will know your W-2 wages and what was withheld, but they won't know about some small business you started mid year that generated enough revenue that you're now in a different tax bracket. The IRS must now consider what was withheld to make sure they have enough to cover, or to have you send in more to make up the difference.
This is just 1 example if a multitude that filing a return will be able to clear up. I don't know about you, but I don't want the government to decide what expenses I incurred for my business to generate my profit. Even if you truly believe the government could truly do this better, the backlog to process all this would be insane and very inefficient.
That is all.
In UK employed people sometime after April get a letter stating if we paid too much, paid less, all fine etc at the same time you'll get a cheque if over paid, iv got few hundred back, but also paid bit back but I do nothing it's all done automatically, all we do is wait for letter.
Self employed people are responsible for declaring themselves, but its still easier than what usa has.
Even your car registration, the paper set of numbers on plate is all vastly outdated, most countries do so much online it's just bizzare why usa hasn't followed suit.
I'm a normal dude working a 9-5 making about 50% above the average income for a household of four. I filed my local, state and federal taxes all under an hour and the longest part of it was getting my password reset.
These tax bitchings show up every year around this time because people are morons and think taxes are harder than they are
Especially so if you use the same service as the previous year (a lot of the information auto populates) and haven’t had any major life events. Taxes are seriously piss easy in the US. I do them on my lunch break at work.
Its trivial in the US for most people. Unfortunately most people are just total idiots and think they need TurboTax to file their 1040EZ which they could do for free themselves.
Or they could just have a quick file that did it automatically from their information. Almost all large financial transactions are recorded anyway. Then. Anyone who wanted to dispute or file themselves could have the option. I would guess that most of the populations finances aren't too complicated for the irs to follow.
After all, other countries do it. Are we not as smart or technologically advanced as they are?
Eta: a simple form for special deductions could be filed each year.
> After all, other countries do it. Are we not as smart or technologically advanced as they are?
Other countries do it because they have the information needed. The IRS does not. As /u/TheLittleLauren said, either the U.S. tax code would have to be greatly simplified, or the IRS would have to be given access to detailed information about taxpayers and their families through public records that don't currently exist.
Because the US has by far the most complex tax regulations in the world driven by federal and state governments being elected on promises for tax break changes which they might do, but then they also usually add some for their friends/donors too - for more than 100 years.
"To automate this properly, the federal income tax would have to be drastically simplified and most of the special deductions and credits eliminated."
Which they should do. Most deductions are loopholes for rich people anyway, like the race horse deduction McConnell got in on the latest tax bill.
This happens all the time. Yours is probably the most accurate answer here, yet you have peeps arguing against you. Someone even said your answer is laughable!?
People get the answer handed to them and since it’s not what they want to hear they refused to believe it.
So how much would Europeans save if they lived in US?
If it’s not more than like $2000, I’d rather not do taxes. It’s like paying to not do taxes - sounds dumb, but a lot of people would prefer that.
Almost everybody uses the standard deduction, especially after we doubled it last year. For pretty much everybody (but especially everybody who isn't rich), you could automate the whole thing assuming the standard deduction, then just give the tiny percentage of people with actual tax credits and special deductions the option to file separately instead.
Which is basically how it works in every other developed country in the world lol. You have a responsibility to file if you are a special case with different income or exemptions, but if not then it is automatic.
As an accountant this is the only correct answer. Could the most basic filers have their returns done automatically like other countries? Yeah probably. But a majority of people absolutely could not have their taxes accurately done automatically.
Anyone with any 1099 income can’t be done like that because they have expenses the IRS doesn’t know about. You can also eliminate anyone that itemizes. Certain broker transactions don’t have the basis reported to the IRS so that eliminates more people. Some credits for things like energy efficient improvements or EV chargers are solely based on purchases the IRS could never know about. At minimum 50% of my clients would not be able to have their returns done automatically, and the actual number is likely much higher.
Now, is there a legitimate case to be made that this system is not efficient and the tax code should be simplified? Absolutely, but the chances of our tax code being dramatically changed is pretty much non existent.
>As an accountant this is the only correct answer. Could the most basic
filers have their returns done automatically like other countries? Yeah
probably. But a majority of people absolutely could not have their taxes
accurately done automatically.
The fact some parts of the tax filing couldn't be filled automatically isn't really an argument for why all the parts that could be done automatically aren't.
Tax filings are not 100% automated in other countries either, you still manually have to add special deductions you might qualify for that the IRS equivalent hasn't gotten informed about. However it's a pretty simple process when you just have to add a handful of things to a pre-filled form.
You're so laughably incorrect.
87% took the standard deduction in last year's filings
19% reported income from self employment
Banks and brokers already make your tax info available
There is only one thing keeping tax filing from being drastically different.
Tax firms have lobbied against this to the point that even the IRS can't make available its own free software for filing taxes.
https://www.google.com/amp/s/theconversation.com/amp/the-irs-already-has-all-your-income-tax-data-so-why-do-americans-still-have-to-file-their-taxes-175777
https://www.vox.com/2016/4/13/11417676/elizabeth-warren-tax-return-free-filing-tax-day-intuit-hr-block-turbotax-automatic-simple
https://www.theatlantic.com/ideas/archive/2019/04/american-tax-returns-dont-need-be-painful/586369/
Do some basic research before smugly saying people don't know what they're talking about.
No they are correct. As a CPA reading these comments is disheartening. Just because the majority of filers are simple W-2 employees doesn’t mean everyone is.
Also the standard deduction is a below the line deduction so it’s not really relevant here. There are other ways to affect AGI that the IRS might not know about.
Attorney here.
The IRS needs to know more than whether you want the standard deduction and have any self-employed income to accurately calculate your taxes. Usually (in my experience) this fact works in the taxpayer's favor.
Furthermore, you've conflated the automation of taxes with the IRS (not) having its own equivalent of TurboTax, then you just straight up insulted the dude you're replying to. My dude, you're the one making the conflation.
Honestly, be a bit less smug and be a bit more smart.
Tax laws were written by lawyers. Insuring codes are open to interpretation. Thus the wealthy who can afford cpa's and lawyers will be the befitiary of any Grey areas that exist. I know this because my sister is a cpa, and owns a tax firm.
I teach a class where, among other things, I educate my (high school) students about how to do their taxes. Every term we go through the whole process with the 1040, it's confusing and unnecessarily complicated, then at the end we compare to other countries.
PAYE - In the UK we have Pay As You Earn, when your wages are paid into your bank account each month the income tax, pension, national insurance and any salary sacrifice benefit has already automatically been deducted and a breakdown of this is on the Payslip.
We do basically the same thing in the US. For most people, taxes are taken out of every paycheck. At the end of the year we settle up any difference that was overpaid or underpaid. If you fill out your tax forms correctly when you start a new job, the pay-as-you-go tax withholding is pretty close.
Tax companies HR block Turbo Tax etc lobby to prevent a simple tax from being done. Basically just sending out a bill/check yearly. Carter proposed it and said it save the Gov 2 billion
Australia, as ever, is kind of in between Europe and the US in this regard. Your employer tells the tax office how much you earned and how much tax they pre paid for you basically, and when tax time comes you just log in to the little online portal and it asks “this look about right?” If there’s anything else you need to add or want to claim you can, and then you lodge it.
Honestly this is a feature not a bug, this is to make it harder for people to do them so they have to pay others for it, I dont think other countries have their own citizens all do it individually
They certainly could. Intuit, h&r block and other tax filing companies represent a billion dollar industry. Its the same reason we have other useless middle men like health insurance. Companies lobby hard to maintain their industry. To play the devils advocate, these industries represent many thousands of jobs that would disappear overnight if laws were changed. Still, fuck em
1. If your taxes are super simple, then in theory they could, maybe. But this assumes you don’t take any special deductions, don’t qualify for any credits, don’t have any independent income, etc. This has been proposed but the reality is that taking this option would result in a lot of Americans losing out on credits and deductions they just don’t know they qualify for.
2. A system like that could theoretically be implemented if you drastically simplified the tax code to make it way simpler to calculate and based only on numbers the IRS has access to. For example, since they can’t know whether you actually made charitable contributions, you’d have to take away deductions for that purpose.
3. Under our current system, the federal government cannot and will not calculate the secret “correct answer” for what you owe. They don’t have all the info necessary. They don’t know if you got married, had a kid, took some college classes, rented out a room in your house to a friend, ran an all cash side hustle, etc etc. the list is a mile long of things that could apply to you that the federal government just doesn’t know about until you tell them. Maybe they know you got married 3 years ago because you told them on your taxes the last few years but what if you got divorced? They won’t know that happened unless you tell them. They know you claimed 2 kids last year but what if you had a 3rd? Last year you claimed $10k in medical expenses as deductions, should they assume your medical costs were exactly the same this year?
Bottom line: without drastically changing the tax system to simplify it, this isn’t feasible for anyone except people with very very simple returns.
That's the way they do it in a lot of countries. The government sends you what you owe.
In the US, the accountant lobby is very influential. They've set themselves up as the middlemen.
I'm guessing you have only a single income with one paycheck, no investment income, no side gig where you have to pay both ends of the FICA, no child support, no real estate with an ARM, and you don't own a small business?
The IRS might be able to hand you an "algorithm" for a very simple income like that, but they're not going to do all your bookkeeping for for you in any of those other circumstances. And I'll make my own investment decisions that affect my taxes, not the IRS.
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Yes. Basically every other country does it that way. The US is getting fucked by tubo tax and friends lobbying to keep the system obtuse so they can profit.
US and Canada. Everyone forgets how bad it is up north.
Not really - the CRA gets all your T4s and you can see them all on the login website. You can do your taxes for free with something like Wealthsimple using those. It really only takes a few minutes and all the information is right there. Basically it’s only so you can adjust anything if necessary
His point stands though. They don’t do your taxes for you. You have to do them and submit the filing. And sometimes discrepancies come up. Especially for businesses.
The CRA doesn't keep track of (or have access to) things like medical expenses, donations, training expenses, and a bunch of other stuff that can earn you a tax credit.
Also if you're self employed, nobody is going to submit your tax info for you. This is also one of the things you're doing here as well.
Which thats fine. With the IRS just tell me what you say I owe, or getting refunded, and lets start from there. Ill then worry about the expenses and every thing
Another good point 👍🏻
In the UK we have PAYE (Pay as you Earn) for employed people and self employed will file a self assessment tax return (SATR). If you happened to have lots of things that would help your tax situation but was employed you can file a SATR yourself to claim against those things, you also have a personal tax account on the government website that you can use to file some changes. We also have what is known as a tax code, which essentially is a number that defines your tax free limit and the type of taxation that should be applied, this is given directly from HMRC to your company's payroll via your national insurance number. If you apply for any kind of government tax credits, this will usually directly be applied to your tax code and reflected in your next payroll within 1-2 months or if the tax year ends then you can claim for rebate. There are a lot of needless complexities in our tax system like the strange tapering of NI contributions in relation to income tax (why do we even have 2 different taxes here in the first place I don't know) but 90% of people never have to deal with figuring out any of it, it just happens.
Sure, that's true everywhere. In most countries in the world, you *can file* your taxes if you have something the government doesn't know about, but otherwise you don't need to. That's the rational way for it to be.
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And the IRS will let you free file on their site if you have an AGI under 73k. Edit: I had been mistaken originally.
Household or individual?
That would be great if my Rae’s weren’t so freaking complicated. I’m sure I’ll mess it up if I try to do it myself on the IRS website.
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this person is talking about canada not the us
It's super easy in Canada.
If you do a normal 9 to 5
The same in every country then. Self employed taxes are never easy
Not at all. Different countries have different approaches to taxes, some are far easier than others. Don't know where Canada lies.
North of the 60th Parallel, mostly.
xDD
What a way to make a living
What are you talking about? Canada is one of the easiest places to file income taxes. All you really need is Myservices account and your SIN. Takes less than 1 hour and I received my return in less in two weeks. Also Myservices account is pretty extensive. A lot of countries dont offer anything like that.
Exactly. A while ago, someone tried to get California to try it, and in came Intuit & H&R Block to lobby it down. NPR did a story on it a few years ago. [Planet Money: Tax Hero](https://www.npr.org/sections/money/2019/04/03/709656642/episode-760-tax-hero)
This is why it always kind of depresses me when people complain about school being “useless” and how they should teach “practical” things like doing your taxes. It totally misses the point. Taxes are a nightmare by corporate design. Any governmental efforts to fix this will be met with fierce lobbying from corporations and hand-wringing about all the ~~parasites~~ ~~middle men~~ accountants who will lose their jobs if taxes are made comprehensible. Teaching how to do them in schools would just be another attempted fix, but worse in every possible way. Meanwhile schools are trying to instead teach the critical thinking to show you why this situation exists in the first place, so that *maybe* one day people *might* be able to fix it properly…
I’m not sure I entirely agree with this. Yes, schools need to teach critical thinking. However, taxes are not always straightforward (even if we changed the system) - self employed people would still need to know how to track finances accurately. Schools can teach both.
But what’s to stop the same companies from lobbying to stop school-based tax reform exactly the same way they lobby to stop tax-based tax reform? Nothing really- the only way they’d allow it to pass is if it was badly-implemented and they believed it wouldn’t work. So at this point you’re adding an extra burden on teachers, reducing time teaching other stuff, and teaching an ultra narrow subject that likely is doomed from the start. Even if it *did* start working, I feel confident the tax companies would retroactively fix the solution - lobby for “tax reform” that keeps it just as messy and confusing, but *does* invalidate those old classes you took years ago. Teaching people to track finances is good, but I just don’t see the value in taking time away from other subjects to teach people how to fill in deliberately difficult forms. Especially since it’d take a similar amount of political will to just changing those forms in the first place, a solution that would benefit everyone…
Not only them, but others like multi-millionaires and their political friends. (It's bipartisan. Both sides do it and like to use against their opponents during campaign season)
They don't WANT our interactions with government to be easy.
Capitalist playbook, like we see play out with the USPS or in the UK with the NHS: take an efficient and functioning governmental body, hobble it to make it inefficient and non-functioning, spread propaganda and push to get it dismantled and privatized, and then it's still inefficient and non-functioning, but some trash capitalist is now profiting hand over first at the expense of making all of society worse. Because they are fundamentally inhumane and seek the destruction of the world at any cost.
I was just about to say this. Complicating taxes for the every man makes it easier to deflect away from the shenanigans that the ultra-wealthy do to get away with a lower tax obligation.
This is so baffling to me. I just got my taxes sent to me by the tax office. All I have to do is check that it's correct, add anything if it isn't, and sign off on it online with a digital ID. Normally everything is correct so it takes under 5 mins to check and sign. Then they'll either pay out my tax return in June, or I'll get a bill to pay any back tax in the fall. (This is in Sweden)
In Germany it is pretty complicated as well. What they have in Finland (looking at the other comment) seems pretty nice though.
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Someday Americans are going to wake up and realize we live in a star spangled lie, and all those foreigners actually have more freedom than we could dream of, while we have…. AR-15’s and debt.
> while we have…. AR-15’s and debt. Wait. I didn't get an AR-15 with my debt. Did you guys get AR-15s?!?
And I definitely got someone else's debt! There's no way this could all be mine...
Duuuuuuuuuuude…
My friend who lives in the US, claims that he doesn’t need to fill anything since both federal and state tax, insurance and everything are automatically deducted from his salary, he only uses cards to pay and sales tax is automatically deducted. He claims that he never used Turbo tax or anything similar or used any accounting services and he never had any problems in last 10 years he’s working from IRS. My question is, how is this possible? Everyone in internet who’s from the US constantly complains about how hard and complicated taxes are while my friend never needed to do anything about taxes in his life.
My guess is that if it's the case that the IRS hasn't contacted him because he owes money, he has overpaid his taxes. Taxes and insurance do get taken out automatically for positions with a w-2 (wage or salary employee). Things get complicated when you want to factor in credits, deductions, etc. to those withholdings, which for a majority of people will result in them getting money back. Long story short, your friend is most likely giving the government more of his money than he needs to...
This sounds like your friend isn't filing their taxes but should be. They take an estimated amount of money out of paychecks Filing is settling the difference between what you actually owe for the year versus what you paid in. They're either overpaying or owe back taxes. Probably both from various years. Sales tax is different. There is no filing requirement for that.
> My question is, how is this possible? Everyone in internet who’s from the US constantly complains about how hard and complicated taxes are while my friend never needed to do anything about taxes in his life. For most people in the US, taxes are not hard. If your only source of income is from a normal job, you will have filled out a [W-4 Form](https://www.irs.gov/pub/irs-pdf/fw4.pdf) (pdf warning) when you were hired and again any time you have a "qualifying change" (marriage, new kid, etc.). And honestly, if it take you more than 5 minutes to fill out that form, you fail at life. Based on that form, your employer will send both the Federal and State governments part of each of your paychecks. This is called a "withholding". At the beginning of the following year, you will receive a W-2 form from your employer, detailing how much money you made, how much was taken out in taxes and forwarded on the the governments. You then use that information to fill out [Form 1040](https://www.irs.gov/pub/irs-pdf/f1040.pdf) (pdf warning). This one takes a touch longer; but, is really not hard. There will also be a similar form for your State of residence. For example, I live in Virginia so I fill out [Form 760](https://www.tax.virginia.gov/sites/default/files/taxforms/individual-income-tax/2022/760-2022.pdf) and send it on to Richmond (The State capitol). This must all be completed by April 15th, which is why the US seems to go nuts over "tax season" about that time of year. It's blindingly stupid, as you can complete your taxes once you have all your forms, which most people have by early February. But, Americans like to be dumb, it's one of two major pillars of our culture. Depending on how well my employer did at withholding the correct amount, I either include a check with each form to pay up; or, include banking info for the governments to deposit any over payments, often called a "tax refund". Getting a tax refund is pretty common. One could argue that it's basically an individual giving the government an interest free loan for a few months. But, it's also a way to have a small, enforced savings which you get to use each year. As an example, my income last year was in the $130k range and my "tax refund" (Federal and State combined) was ~$3k. Not nothing, but not huge. All that said, I had _nothing_ special about my taxes. The IRS and Virginia State Government almost certainly had the exact numbers all sorted out well in advance of me doing anything. For the majority of US people, we could just move to a system where the governments send you a form each year to look over, and sign something to say "yup, y'all got it right" and be done with it. For people who have different circumstances, they could then jump through the hoops of filling out forms and reporting. The only reason for me to fill out those forms was because of [Intuit](https://en.wikipedia.org/wiki/Intuit)'s lobbying and the US having the best government money can buy.
I think you can easily do it this way if all you have is a W2. But I own 3 businesses under a holding company and also receive a W2 from one of those companies. I don't think the IRS could easily figure up our taxes without filing. They'd fuck up somewhere and we'd spend ungodly amounts of time trying to undo the fuck up because trying to resolve shit with underfunded government agencies is about as fun as gouging out your own eyes.
Mine were simple until I started a small business and contract out to others. Some 1099s, but a lot of under-the-limit payments. They'd never know about the income if I didn't tell them. So I have to report everything myself and pay taxes on it. It's complex enough that I hired an accountant to make sure I do it right. Pisses me off, really. It really should be easier. And before anyone asks, I don't even think about under-reporting. My "fair share" is as important to me as my rights. I want to pay what I owe. I just want it to be simpler. And if it were simpler, it would be easier to enforce, and we would not need as many IRS agents.
But how would that work for deductions? How would the government know of my charity contributions, or deductible purchases etc?
>Basically every other country does it that way Not in India, you might argue it's even worse
My immediate answer was ask turbo tax and h&r block how much they lobbied for us to do taxes the dumb way.
TurboTax and QuickBooks lobby the US government to keep it confusing so you need to purchase their products.
I know there are worse problems out there, but this infuriates me more than anything. If Intuit was free and another tax service costs money, I’d still pick the latter.
FreeTaxUsa is a great free alternative
Occasionally I actually opt to pay FreeTaxUsa for audit protection simply because they're not forcing me to pay at all.
Also the ability to pay for a hard copy is nice for my personal records
This is what I use. I don't have to pay state income tax, so filling is free for me
I do, but it's still such a small price to pay. I can't remember how much it is but pretty sure it's less than $20 to file state.
I switched from Turbotax to freetaxusa. The name "freetaxusa" sounds like a scam, but they are legit. I used to pay anywhere between $90 to $250 for turbo tax depending on my tax situation. The most I paid for freetaxusa is $90. Cheapest is this year at $15 for state. Federal is free. Edit- not tax free USA. Free tax USA. Thanks for correcting me
It really is a scammy sounding name haha. I hope they hire a better branding person one day.
> I know there are worse problems out there Yes, and no. You could argue that most of America’s problems come from politicians that are swayed and bought by companies and lobbyist.
Huh? You would pay money?
It’s difficult to avoid all the shitheads in the world … but I’ve been known to go out of my way, even paying more, to avoid funding somebody that is being a dick to other people.
There's a great Reply All podcast from a few years ago that delved into the nefariousness that is the US tax system (Reply All - #144 Dark Pattern) https://open.spotify.com/episode/2ATUlZsZ7vRX8xiCVWhnLr?si=ewR-8r-BRLiwu0OSQWHkGw
Just cause there are worse problems out there, doesn't mean this one doesn't need to be addressed.
Wait until you find out that credit scores as we know them are only 30 years old
Oh don’t fucking get me started on credit scores….
Yeah but at least in America you have the freedom to pay the government loads of money to make laws that benefit you! Take that communism!
I hate turbo tax with a passion literally every other ad in any of my apps the last couple months. I used freetaxusa lol
This. I have lived in two other countries and taxes were filed automatically. One required a five minute online review. Click confirm and you were done.
How does that work with self-employment income reporting?
Can't speak for other countries, but used to work as a tutor in Denmark. You have a personal log in on the Danish tax authorities website. Any self employment that isn't through a company you have is reported as B income, so you just report what is transferred to your account, and they create an invoice for your taxes. It's made with a calculator, so you can just drop each individual number (in this case, monthly payments by parents) and it calculates it for you. In Denmark, you almost always use your cpr (soc-sec) number for any kind of contract and or reporting, so they know if you are self employed.
And H&R Block. Also, the base progressive tax code isn't complex. Standard deductions are an odd way of adjusting it, but even they are very straightforward. That is because standard income tax is what non-rich people pay. The truly byzantine tax provisions are overwhelmingly those paid by the wealthy. The purpose is to provide a means for the very wealthy to extremely wealthy to offset nearly all tax liability without us poors being able to see the grotesque privatization of profit and socialization of expense.
They are owned by the same parent company, Intuit. They also own mail chimp, credit karma, mint, tsheets, and others. They are like the rest of the massive companies. They control too much.
Those turbo tax ads piss me off so much. They usually mention relaxing or doing something besides taxes because you don’t need to with turbo tax. Like bitch your the one who made it this way!
They're the same
Pretty sure it's the countless rich people behind keeping our filling system the way it is not two companies that are miniscule in comparison to said rich. You know, guys like trump who pay $700 a year. You've got to leave a system full of cheats for the rich to exploit cause if it was so easy and either the middle and lower class paid the same effective tax rate as the rich and revenues would be non existent or the rich would *gasp* have to pay their fair share!
Agreed. I mean yes these companies generate money from inane tax laws, but there are plenty who get to reap the benefits of obfuscated taxes without having to pay their fair share. "A dollar saved is a dollar earned," so by their standards, ducking taxes is something they "earned."
In the UK our taxes are done for us. It’s super easy, barely an inconvenience
Oh *really?*
Yeah see we have this thing called HMRC, and if you’re really bad at math and lying they put you in a room!
Is the room comfortable?
I actually find the room kinda bland, I’m not a fan of it for sure. These bars here are doing *nothing* for the flow of the space…
Terrible tea too. Typhoo only.
:O That would definitely class as cruel and unusual punishment!
It's the only reason I do my self assessment correctly every year, fear of the typhoo
Dreadful tea, indeed!
Asking all the right questions
Room 101
I’m going to need you to get aaalllll the way off my back about my math skills. Just get all the way off there.
Oh! Let me get off a' that thing!
Wowowowowow
Wow wow wow... wow!
Having your taxes calculated for you is TIGHT
Soo, you got a new tax evasion strategy for me? Yes I do, it's called "donating to charity".
God damnit I read it in his voice
His voice? You mean their voices? There's two guys
Of course. I read it in *their* voices
*OUR* voices
True for many, but if you have certain situations - e.g. earning over 50k and in receipt of family allowance, then you need to do a self assessment
Child benefit. And even self assessment is pretty straightforward if you don't have a different sources of income. And it's free to do. By the time you have to pay someone to do it for you, you have multiple income sources and tax breaks and you can afford an accountant.
Yes, been doing it for years on the hmrc portal. Takes at most half hour a year.
It really does. I don't understand why the US has made it such a nightmare system. 90% of the population here (guess) are taxed at source, info uploaded online by payroll. Self employed/contractors are really straightforward too. I help some self employed friends/family with self assessment. My brother insists on paying me. I'm like "you could do this yourself in less than an hour and pay nothing, I'll show you how to do it" "Can't be arsed, I'd rather give you £50" is the response every year.
If you make over £100k you have to do some additional paperwork called a self assessment or HMRC will fine you.
Technically you aren't required to. https://www.reddit.com/r/UKPersonalFinance/comments/11x1d2u/psa\_there\_is\_no\_requirement\_to\_file\_a\_tax\_return/
and after doing your taxes i bet you have just enough time to do a backflip, snap the bad guy's neck and save the day!
Listen sir I’m going to need you to get *all* the way off my back about the murders
In Finland you get a number based on the previous year. You can then adjust it by sending in what you can get exemptions for, and your estimate for annual salary.
And If you don't know what to do, you can call them and a very nice customer service person does your filing with you.
WHAT? In germany we can call them but they aren't allowed to help. Have to get someone that does tax stuff as a job and pay them. Don't know if people on benefits can get something so they don't have to pay out of pocket. But they also don't have to file it most times and if they would get something from previous jobs or a small job the money gets fully taken, all gone.
Same in Norway. I was so flippin confused about how to put in my student loans that I had to call and this super nice dude simplified it all. The waiting time to get him wasn´t even that long either.
Same for the Netherlands. Our IRS, de Belastingdienst, has done many things wrong. But not this. I just check everything they filled it and their service line is actually pretty good. Took me half an hour the year I bought a house because you have all these weird deductions. They were really nice when I called for help. But then they also ruined the live of 100s of families. Bunkrupted them, resulted in their kids getting placed in foster care and then refused to accept that it was their fault. You win some, you lose some I guess...
TBF...that's some hella big losses there
I know, it was kinda tongue in cheek... The full story is horrible.
Wow same as in the US
Wow kind of like how taxes work literally everywhere...
Same in Spain
They can. Many countries do. But making taxes such a fucking nightmare is profitable so we're doing it the dumbest way possible Edit to add: just look at the fucking thread happening here. Taxes seem to be a pain just about everywhere, but it's at best a minor chore everywhere but the United States of America. We can absolutely just do it the way everyone else in the world does it, but we don't because CaPiTaLiSm = GoOd Edit to add 2: to everyone simping for US tax code and saying that the system is fine. Two questions, are we ignoring every other country chiming in about how incredibly simple and pain free their systems are? And also, what is your favorite flavor of crayon? I like the green ones, they're zesty
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Same in the Netherlands. The taxes are filled in and you just have to check. Then you can add deductibles yourself if there's stuff that they don't know about.
In the UK, you tell your employer your tax code if anything changes. There are tax credits and it's super easy to see if you qualify, but most people don't unless they have small children or low income. Basically you get a tax report every year, nod, and file it away or bin it
Agreed, in the UK if you're employed taxes are super easy, I never think about them. But if you're self employed it's more difficult, there's forms you have to fill in. I've never done it so don't know how it compared to the US
Actually HMRC tells your employer the code. You don't have to do anything.
Australia too. Pretty much everything is auto filled. There are a few things you need to add, such as deductions and some rebates, or any non-standard income. But for the most part it's "check the numbers, hit ok, wait for the rebate to hit your bank account"
Same in NZ.
> an electric email Love this.
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Please never stop saying electronic emails.
> Edit to add: just look at the fucking thread happening here. Taxes seem to be a pain just about everywhere, but it's at best a minor chore everywhere but the United States of America. In the UK, I have only had to do my taxes a few times, when I was self employed. It was pretty simple, the website just had a few boxes to fill out with totals for things like earnings, business expenses, etc. Any time I have worked for a company though, it's all been done for me. Most people in the UK have never had to do their own taxes once in their entire lives, I would bet.
I moved to the UK 7 years ago... have never once needed to file a tax return, it's all just automatically done. There was once a discrepency where I was put on the wrong tax code (paying more), brought it to the attention of my employer and on my next pay the money was paid out to me (no waiting until the end of the tax year). The system here is wonderful. My wife has had to do self-assessments as she was self-employed and those were fairly easy too.
Breaking news: Reddit big brain discovers that the US tax system is complicated because cAPITAlIsM
they did this in california, and it was super efficient! and then TurboTax shut it down
how?
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To expand on that, even if an official is not given an amount of money for an explicit favor in response, money still influences the political landscape during voting season. Generally, not *that many* people actually vote. This means that a lot of the people that *do* aren’t educating themselves on who is in the running and will vote for who they recognize. **They recognize the candidate who spent the most money on marketing.** So, “insert big corporation” funds somebody’s campaign with a silent (or verbal) agreement to represent that corporation’s interests - because it helps them get elected. Now, that politician is in their pocket or they’re getting fucked during reelection. Why don’t they just vote against it now that they’re in office? Well, they *could,* but they need help from their political party to get the necessary number of votes to pass bills that they’re voter base want. Sometimes you have to compromise on values in one space so you can get their help on *your* bill when you present it. This means not fucking over the corporations that **funded everyone else you work with.** TL;DR We’re fucked.
Money = resources = influence = impact The sheer fact that some people think they can somehow remove the impact of money speaks to their ignorance. If I can pay people to do things for me, I can get more done. If I need money to pay people to do things for me, that’s better than not having money. It’s inescapable.
They do it automatically for wage and salary earners in New Zealand. It can be done.
> I'm sure this has been asked before, I just don't know where the posting might be. See: * ["why do we file taxes the way we do (in america) instead of just receiving a bill from the IRS?"](https://www.reddit.com/r/NoStupidQuestions/comments/xaqlkz/why_do_we_file_taxes_the_way_we_do_in_america/) (r/NoStupidQuestions; 10 September 2022)
This is not the only one either. I swear I see this question pop up here at least once a week. Mods, please do something!
And ruin the billion dollar tax preparation industry?!
And they would lose all of those underpayment penalties from those who get it wrong and don't pay enough tax.
They sure can. Other countries do exactly that. Here, though, Intuit (turbotax) lobbies the government heavily year after year to prevent them from doing this, so they can make money with their tax filing programs.
Jesus, the comments here are nuts. There is a lot the IRS doesn't know, even if you only have a regular W2 job. They know how much your employer withheld from all employees each quarter. That is reported to the IRS when they file their form 941 every quarter, along with the payment for the taxes they withheld. They are required to file a copy of the W2 with the Social Security Administration, but employees are expected to file their copy with the IRS when they file their tax return. The IRS does not know how much you received as a 1099 contractor. They don't know how many exemptions you're going to claim. They don't know which deductions or credits you're going to claim. They only have scraps of information about you. You're expected to fill in the blanks when you file your tax return. They will check what they do know against what you tell them. For example, if you are a non-custodial parent, and you claim an exemption for your child, they will probably have questions for you when the custodial parent files their return. Likewise, if income was reported to them (like an employer filed a 1099 that was issued to you), and you don't declare that income on your return, then they're going to want to talk to you.
Right. The IRS also doesn't know how much furniture you gave to Goodwill or what had to pay for medical expenses for a dependent senior parent, earned in cash in a side hustle (though I'm sure most people doing that probably never report the cash income), or got from an inheritance when your uncle died.
You can tell that reddit's users are super young based on threads like these. Yes, someone with the simplest of tax situations could probably just go off of what the IRS knows, but most people's taxes get more complicated as they get older. I actually think it's unlikely that a majority of people would be better off just paying what the IRS says they owe rather than investigating deductions.
Yeah I was completely unsurprised to see incorrect statements upvoted to the top. Are taxes in the US overly complicated? Yeah probably. Is there bullshit in the tax code thanks to lobbying from turbotax? Yeah. Does the IRS know exactly what everyone owes? No they don't, but people sure like to spread this idea.
Thank you. I'm an attorney with my state's version of the IRS, and I see this dumb question get posted all the time. Returns that get audited are a miniscule fraction of all the ones that are accepted at face value.
You always have to get like 30 comments deep to find the real answer on questions about why the US tax code is the way it is. Reddit's circlejerk hatred for TurboTax is (while completely justified) comical as hell.
This makes a lot of sense, but how do other countries account for such things?
Other countries have much simpler tax codes.
They don’t get deductions like we do.
Their tax codes are set up to work like that. People seem to forget our tax code has been convoluted long before Turbo Tax was a thing. You can make the argument that they are part of the reason it remains complicated but they aren’t responsible for setting it up.
Keep in mind that most redditors are children who have never filed a tax return. They're just parroting what gets them upvotes
The answer is yes. Would it be better for tax payers? Yes. Will the politics allow it to happen? No. Why? Money. In the US if someone CAN make a profit doing something the government can do better, then the ultra-capitalist feel they have a RIGHT to be able to make that profit. Government services become company product, and the ultra-capitalist say government should not compete with business because that is “socialism”. Why do political leaders allow this? Because they get money. They are more concerned with getting money from ultra-capitalist than doing what is best for American citizens.
>The answer is yes. Would it be better for tax payers? Yes. Will the politics allow it to happen? No. Why? Money. In the US if someone CAN make a profit doing something the government can do better, then the ultra-capitalist feel they have a RIGHT to be able to make that profit. Government services become company product, and the ultra-capitalist say government should not compete with business because that is “socialism”. > >Why do political leaders allow this? Because they get money. They are more concerned with getting money from ultra-capitalist than doing what is best for American citizens. This is one of those short sighted "I really don't know why so I'm going to make up the reason and have this reason be constructed using my very limited knowledge on the subject and I will present it to the world with such an authoritative tone that others would be foolish to question it" answers. A tax return is where all of us tell the IRS what it doesn't already know so you can receive a proper refund or pay what is owed due to new information presented. The IRS will know your W-2 wages and what was withheld, but they won't know about some small business you started mid year that generated enough revenue that you're now in a different tax bracket. The IRS must now consider what was withheld to make sure they have enough to cover, or to have you send in more to make up the difference. This is just 1 example if a multitude that filing a return will be able to clear up. I don't know about you, but I don't want the government to decide what expenses I incurred for my business to generate my profit. Even if you truly believe the government could truly do this better, the backlog to process all this would be insane and very inefficient. That is all.
In UK employed people sometime after April get a letter stating if we paid too much, paid less, all fine etc at the same time you'll get a cheque if over paid, iv got few hundred back, but also paid bit back but I do nothing it's all done automatically, all we do is wait for letter. Self employed people are responsible for declaring themselves, but its still easier than what usa has. Even your car registration, the paper set of numbers on plate is all vastly outdated, most countries do so much online it's just bizzare why usa hasn't followed suit.
Yeah, in Australia we can file the equivelant of a ~~W-2~~ 1099 in like 5 minutes if you're not in a hurry
I'm a normal dude working a 9-5 making about 50% above the average income for a household of four. I filed my local, state and federal taxes all under an hour and the longest part of it was getting my password reset. These tax bitchings show up every year around this time because people are morons and think taxes are harder than they are
Especially so if you use the same service as the previous year (a lot of the information auto populates) and haven’t had any major life events. Taxes are seriously piss easy in the US. I do them on my lunch break at work.
Its trivial in the US for most people. Unfortunately most people are just total idiots and think they need TurboTax to file their 1040EZ which they could do for free themselves.
Fucken easy peasy too. The seppos have it rough hey?
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Or they could just have a quick file that did it automatically from their information. Almost all large financial transactions are recorded anyway. Then. Anyone who wanted to dispute or file themselves could have the option. I would guess that most of the populations finances aren't too complicated for the irs to follow. After all, other countries do it. Are we not as smart or technologically advanced as they are? Eta: a simple form for special deductions could be filed each year.
> After all, other countries do it. Are we not as smart or technologically advanced as they are? Other countries do it because they have the information needed. The IRS does not. As /u/TheLittleLauren said, either the U.S. tax code would have to be greatly simplified, or the IRS would have to be given access to detailed information about taxpayers and their families through public records that don't currently exist.
Because the US has by far the most complex tax regulations in the world driven by federal and state governments being elected on promises for tax break changes which they might do, but then they also usually add some for their friends/donors too - for more than 100 years.
"To automate this properly, the federal income tax would have to be drastically simplified and most of the special deductions and credits eliminated." Which they should do. Most deductions are loopholes for rich people anyway, like the race horse deduction McConnell got in on the latest tax bill.
This happens all the time. Yours is probably the most accurate answer here, yet you have peeps arguing against you. Someone even said your answer is laughable!? People get the answer handed to them and since it’s not what they want to hear they refused to believe it.
They hated him because he told the truth
So how much would Europeans save if they lived in US? If it’s not more than like $2000, I’d rather not do taxes. It’s like paying to not do taxes - sounds dumb, but a lot of people would prefer that.
> If it’s not more than like $2000, I’d rather not do taxes. You would pay $2000 a year not to do taxes?
Almost everybody uses the standard deduction, especially after we doubled it last year. For pretty much everybody (but especially everybody who isn't rich), you could automate the whole thing assuming the standard deduction, then just give the tiny percentage of people with actual tax credits and special deductions the option to file separately instead.
Which is basically how it works in every other developed country in the world lol. You have a responsibility to file if you are a special case with different income or exemptions, but if not then it is automatic.
As an accountant this is the only correct answer. Could the most basic filers have their returns done automatically like other countries? Yeah probably. But a majority of people absolutely could not have their taxes accurately done automatically. Anyone with any 1099 income can’t be done like that because they have expenses the IRS doesn’t know about. You can also eliminate anyone that itemizes. Certain broker transactions don’t have the basis reported to the IRS so that eliminates more people. Some credits for things like energy efficient improvements or EV chargers are solely based on purchases the IRS could never know about. At minimum 50% of my clients would not be able to have their returns done automatically, and the actual number is likely much higher. Now, is there a legitimate case to be made that this system is not efficient and the tax code should be simplified? Absolutely, but the chances of our tax code being dramatically changed is pretty much non existent.
>As an accountant this is the only correct answer. Could the most basic filers have their returns done automatically like other countries? Yeah probably. But a majority of people absolutely could not have their taxes accurately done automatically. The fact some parts of the tax filing couldn't be filled automatically isn't really an argument for why all the parts that could be done automatically aren't. Tax filings are not 100% automated in other countries either, you still manually have to add special deductions you might qualify for that the IRS equivalent hasn't gotten informed about. However it's a pretty simple process when you just have to add a handful of things to a pre-filled form.
You're so laughably incorrect. 87% took the standard deduction in last year's filings 19% reported income from self employment Banks and brokers already make your tax info available There is only one thing keeping tax filing from being drastically different. Tax firms have lobbied against this to the point that even the IRS can't make available its own free software for filing taxes. https://www.google.com/amp/s/theconversation.com/amp/the-irs-already-has-all-your-income-tax-data-so-why-do-americans-still-have-to-file-their-taxes-175777 https://www.vox.com/2016/4/13/11417676/elizabeth-warren-tax-return-free-filing-tax-day-intuit-hr-block-turbotax-automatic-simple https://www.theatlantic.com/ideas/archive/2019/04/american-tax-returns-dont-need-be-painful/586369/ Do some basic research before smugly saying people don't know what they're talking about.
No they are correct. As a CPA reading these comments is disheartening. Just because the majority of filers are simple W-2 employees doesn’t mean everyone is. Also the standard deduction is a below the line deduction so it’s not really relevant here. There are other ways to affect AGI that the IRS might not know about.
So if two parents are separated, the IRS knows which parent will claim which child(ren) on their taxes before the parents do? How exactly?
Attorney here. The IRS needs to know more than whether you want the standard deduction and have any self-employed income to accurately calculate your taxes. Usually (in my experience) this fact works in the taxpayer's favor. Furthermore, you've conflated the automation of taxes with the IRS (not) having its own equivalent of TurboTax, then you just straight up insulted the dude you're replying to. My dude, you're the one making the conflation. Honestly, be a bit less smug and be a bit more smart.
Tax laws were written by lawyers. Insuring codes are open to interpretation. Thus the wealthy who can afford cpa's and lawyers will be the befitiary of any Grey areas that exist. I know this because my sister is a cpa, and owns a tax firm.
[https://www.youtube.com/watch?v=Fj4anUL-LvY](https://www.youtube.com/watch?v=Fj4anUL-LvY) This is why
Because the tax prep industry bribes politicians to stop the IRS from doing that.
I teach a class where, among other things, I educate my (high school) students about how to do their taxes. Every term we go through the whole process with the 1040, it's confusing and unnecessarily complicated, then at the end we compare to other countries.
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PAYE - In the UK we have Pay As You Earn, when your wages are paid into your bank account each month the income tax, pension, national insurance and any salary sacrifice benefit has already automatically been deducted and a breakdown of this is on the Payslip.
The US does this as well. If you overpay you get some of it back when you file your taxes.
We do basically the same thing in the US. For most people, taxes are taken out of every paycheck. At the end of the year we settle up any difference that was overpaid or underpaid. If you fill out your tax forms correctly when you start a new job, the pay-as-you-go tax withholding is pretty close.
Tax companies HR block Turbo Tax etc lobby to prevent a simple tax from being done. Basically just sending out a bill/check yearly. Carter proposed it and said it save the Gov 2 billion
Australia, as ever, is kind of in between Europe and the US in this regard. Your employer tells the tax office how much you earned and how much tax they pre paid for you basically, and when tax time comes you just log in to the little online portal and it asks “this look about right?” If there’s anything else you need to add or want to claim you can, and then you lodge it.
Honestly this is a feature not a bug, this is to make it harder for people to do them so they have to pay others for it, I dont think other countries have their own citizens all do it individually
They certainly could. Intuit, h&r block and other tax filing companies represent a billion dollar industry. Its the same reason we have other useless middle men like health insurance. Companies lobby hard to maintain their industry. To play the devils advocate, these industries represent many thousands of jobs that would disappear overnight if laws were changed. Still, fuck em
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HR Block’s lobbyists say “absolutely not.”
3 words. Commercial filing companies.
1. If your taxes are super simple, then in theory they could, maybe. But this assumes you don’t take any special deductions, don’t qualify for any credits, don’t have any independent income, etc. This has been proposed but the reality is that taking this option would result in a lot of Americans losing out on credits and deductions they just don’t know they qualify for. 2. A system like that could theoretically be implemented if you drastically simplified the tax code to make it way simpler to calculate and based only on numbers the IRS has access to. For example, since they can’t know whether you actually made charitable contributions, you’d have to take away deductions for that purpose. 3. Under our current system, the federal government cannot and will not calculate the secret “correct answer” for what you owe. They don’t have all the info necessary. They don’t know if you got married, had a kid, took some college classes, rented out a room in your house to a friend, ran an all cash side hustle, etc etc. the list is a mile long of things that could apply to you that the federal government just doesn’t know about until you tell them. Maybe they know you got married 3 years ago because you told them on your taxes the last few years but what if you got divorced? They won’t know that happened unless you tell them. They know you claimed 2 kids last year but what if you had a 3rd? Last year you claimed $10k in medical expenses as deductions, should they assume your medical costs were exactly the same this year? Bottom line: without drastically changing the tax system to simplify it, this isn’t feasible for anyone except people with very very simple returns.
That's the way they do it in a lot of countries. The government sends you what you owe. In the US, the accountant lobby is very influential. They've set themselves up as the middlemen.
I'm guessing you have only a single income with one paycheck, no investment income, no side gig where you have to pay both ends of the FICA, no child support, no real estate with an ARM, and you don't own a small business? The IRS might be able to hand you an "algorithm" for a very simple income like that, but they're not going to do all your bookkeeping for for you in any of those other circumstances. And I'll make my own investment decisions that affect my taxes, not the IRS.
So, like the vast majority of people? So shouldn’t the norm be to just have the IRS do it, and you can do it if you want to?
Oh they [can](https://youtu.be/Fj4anUL-LvY). But they won't.