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IRS Free File: Do Your Taxes for Free

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Re: IRS Free File: Do Your Taxes for Free

#171

Post by rwmj »

nly wrote: post #163

It's crazy to me that all Americans have to do their taxes every year and are charged for this. Many people in the UK go their entire lives without ever interacting with HMRC (our equivalent of the IRS) Self Assessment (doing taxes every year) takes about 20-30 minutes and that's when I'm claiming tax reliefs

Self Assessment is definitely not "20-30 minutes".

Anyway what's crazy is that we have to do this at all. In normal countries the government calculates the tax you owe based on information filed by your employer, bank etc, and then sends you the bill. If you agree with it, you pay that. You are required to do no work at all unless you want to dispute the bill.

Re: IRS Free File: Do Your Taxes for Free

#172

Post by joxel »

IgorPartola wrote: post #53
coderintherye wrote: post #9

Earlier quoted context omitted.

I'm not going to claim they are easy, but they are accurate (they have a Do The Math calculation button). Even if you mess up, the IRS will typically send you a response noting where their calculations diverged from yours and offer to automatically adjust. (Which denotes the absurdity of this exercise for most taxpayers because the IRS already has all the information it needs to complete your taxes).

Yup. I suppose they can use the cell phone tracking to figure how many miles you’ve put on your personal vehicle and use AI to figure out how many were business use miles. /s In reality only if you take standard deductions and only get paid with a W-2 can they actually figure it out. But I agree that overall the process is messed up.

So the reality is that they could automatically calculate taxes for >>50% of households?

Re: IRS Free File: Do Your Taxes for Free

#173

Post by sofixa »

andsoitis wrote: post #168
sofixa wrote: post #154

Earlier quoted context omitted.

> Is this just the typical “European = better” stance so prevalent online? Yes and is often the case, fully justified. When it's the time to file taxes, you go to a government website that tells you all it knows about you - inheritances, donations, salaries, etc etc. You can add stuff if you want (e.g. special deductions), but for most people it's a matter of next next OK Finished. On a government website everyone kn…

While tax filing in the US might be more Byzantine, I’m happy with the trade off of paying lower taxes, relative to most countries with such streamlined taxes. Put differently, if I’m paying very high tax rates, of course I’ll be doubly pissed off if it is also arduous to file.

The tax rates are comparable between the US and many EU countries, all things included. Yes, your sales tax is much lower than the usual 20% (for some things, often lower for essentials) VAT; your income tax might be lower in some cases, but when most people in the EU talk about "taxes" and "tax rates", healthcare plan costs are included in that, as well as pensions. When Americans talk about "taxes" and "tax rates", your premiums, deductibles and etc. aren't, and it's up to each individual to save money for retirement. According to some online sources the median tax rate is comparable between the the US and the OECD median for Europe.

And you also have non-insignificant property taxes.

Re: IRS Free File: Do Your Taxes for Free

#174

Post by blue_cookeh »

ashconnor wrote: post #80
madsbuch wrote: post #38

Earlier quoted context omitted.

This is how it works in most countries across the pond...

Only works in the UK this way if you earn less than £100k. Canada forces most people to file a return too. Though it’s simpler than a US return.

> Only works in the UK this way if you earn less than £100k.

I mean that puts you in the top 1% here...

Re: IRS Free File: Do Your Taxes for Free

#176

Post by 70rd »

londgine wrote: post #167

Every year I ask, and every year I'm disappointed, but does any good solution exist for expats? I know I shouldn't be paying taxes, since I earn under the exception limit. But I don't know all the forms I should fill out, and all of the websites dedicated to expats are expensive, almost $500.

What exception? If you are a citizen and intend on returning to the US (or even intend to renounce) you should be in good standing with the IRS (FBARs and annual filings). You owe the difference between locally paid taxes and federal taxes, and can claim overpayment as tax credits.

Most low-earners don't bother with this and use the Foreign Earned Income Exclusion Act [1]. Don't forget about FBARs if you have more than 10k across foreign banks accounts.

[1] https://www.irs.gov/individuals/international-taxpayers/fore...

Re: IRS Free File: Do Your Taxes for Free

#177

Post by Liquix »

nly wrote: post #163

It's crazy to me that all Americans have to do their taxes every year and are charged for this. Many people in the UK go their entire lives without ever interacting with HMRC (our equivalent of the IRS) Self Assessment (doing taxes every year) takes about 20-30 minutes and that's when I'm claiming tax reliefs

The craziest part is that the IRS verifies this information against their records and will investigate you if things don't match up. If there's a source of truth each citizen's submission must align with, why not just use that to begin with and investigate people whose assets/deposits exceed their expected income?

Re: IRS Free File: Do Your Taxes for Free

#178

Post by twoodfin »

Liquix wrote: post #177
nly wrote: post #163

It's crazy to me that all Americans have to do their taxes every year and are charged for this. Many people in the UK go their entire lives without ever interacting with HMRC (our equivalent of the IRS) Self Assessment (doing taxes every year) takes about 20-30 minutes and that's when I'm claiming tax reliefs

The craziest part is that the IRS verifies this information against their records and will investigate you if things don't match up. If there's a source of truth each citizen's submission must align with, why not just use that to begin with and investigate people whose assets/deposits exceed their expected income?

To cover the breadth of US tax law, including provisions that impact large swaths of ordinary Americans, the IRS would have to collect a lot more data than they do today.

More than likely this would be politically infeasible: Look at the uproar over their (now deferred) attempt to collect information on relatively low-dollar Venmo accounts.

Re: IRS Free File: Do Your Taxes for Free

#179

Post by maxerickson »

twoodfin wrote: post #178
Liquix wrote: post #177

Earlier quoted context omitted.

The craziest part is that the IRS verifies this information against their records and will investigate you if things don't match up. If there's a source of truth each citizen's submission must align with, why not just use that to begin with and investigate people whose assets/deposits exceed their expected income?

To cover the breadth of US tax law, including provisions that impact large swaths of ordinary Americans, the IRS would have to collect a lot more data than they do today. More than likely this would be politically infeasible: Look at the uproar over their (now deferred) attempt to collect information on relatively low-dollar Venmo accounts.

The number of people that it would work for would easily justify the cost of the IRS sending out prepared taxes.

That some small sliver of people have complicated taxes or want to itemize their expenses is not a good reason to complicate the activity for the majority that have straightforward taxes.

And then if you want to simplify, just eliminate deductions altogether (and shift brackets to compensate). Eliminating top bracket income for the mortgage interest on a huge house is pretty regressive, for example.

Re: IRS Free File: Do Your Taxes for Free

#180

Post by twoodfin »

maxerickson wrote: post #179
twoodfin wrote: post #178

Earlier quoted context omitted.

To cover the breadth of US tax law, including provisions that impact large swaths of ordinary Americans, the IRS would have to collect a lot more data than they do today. More than likely this would be politically infeasible: Look at the uproar over their (now deferred) attempt to collect information on relatively low-dollar Venmo accounts.

The number of people that it would work for would easily justify the cost of the IRS sending out prepared taxes. That some small sliver of people have complicated taxes or want to itemize their expenses is not a good reason to complicate the activity for the majority that have straightforward taxes. And then if you want to simplify, just eliminate deductions altogether (and shift brackets to compensate). Eliminating…

That’s my point: Americans spend a ton of time doing their taxes because taxes are complicated, not because the IRS doesn’t pre-transcribe their W-2. If all you need is the 1040-EZ, you can do that in 20 minutes.
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