61–70 of 196 posts
Does 'direct file' mean you won't have to post (by registered mail) your physical tax form to the IRS? That would be the biggest win surely (although huge loss for USPS)
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Yes. We have to wait for forms to be mailed, or emailed, or avail. Download them or enter them in the tax website. Even though the fed already knows. Forms are things like: main employment, side jobs over 600, bank interest, car/house loan and tax payments, stocks, and other things. The forms are often not ready until late feb to mid march. Mid april is the filing deadline. Mind you - the gov already has copies of AL…
> Mind you - the gov already has copies of ALL the forms. They just want you to f it up. Not completely accurate - you’re required to pay tax on side jobs under $600 for instance, but neither you nor the IRS get a 1099 tax form for it. Reporting it is on the honor system. Cash tips are supposed to be taxed but rely on self reporting since the IRS has no idea who handed you money, etc. There are also many deductions a…
You have 3 kids registered in school? It’s in a db.
Buy an EV? It’s in a db.
But yeah- fair point. There are lots of “quiet” transactions for sure, but that’s likely no different in any other nation with better tax cycles.
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When you get a new job, you fill out some forms that tells the government how much money to withhold from your paycheck based on your expected earnings, deductions, etc. Later, at the end of the year, you file your return of what you actually made, what your actual deductions were, etc. And then the government will either pay you if you paid too much or they will ask you to pay if you did not pay enough.
Thanks. Presumably such a person wouldn't need tax-return software? The system here in the UK is similar, except that "regular workers" don't file a tax return. Work-related deductions/additions (e.g. private health plans) are reported by the employer and are automatically accounted for. Non-work stuff like capital gains on personal property sales are mostly dealt with as part of the transaction.
Correct. Part of the tax prep scam is convincing people that they will get the death penalty if they screw up their taxes, so they need an accountant or all these fancy software gizmos to do it right. If you can use a calculator, and aren't a SBO or have a massively complicated investment scheme, then you can do your own taxes in an hour or two. The IRS will send you a polite letter letting you know if you screwed up.
Non-USian here. How does federal income tax work for people with a normal, regular job? If someone just works full time in a shop or on a factory line, do they get yearly tax demand that they have to check and/or calculate themself?
The forms used to calculate this are quite complicated because they are designed to be very versatile. For instance, in years gone by you could reduce your taxable income by noting stuff like healthcare expenses, childcare expenses, home mortgage interest etc. This is all now covered (for most people) by a standard income exemption that everyone gets.
The forms have not been simplified to match.
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> What does the average American think about this? Like most problems, the average American has (for political purposes) ~zero mental engagement with this. Vs. those for-profit corporations (and a variety of other interest groups) are intensely engaged. And it's all-too-frequently reported that any politician who wants to be (re-)elected to America's Congress needs to be intensely engaged with wooing interest group s…
Here here! And, that is honestly the best. It’s why we have a republic and not a “pure democracy”. Nobody likes taxes, but other than having to interface with the system once a year… who cares ? I can pay H&R Block $X or pay $Y more in taxes. Whoopie!
Summed across the whole economy, the total $X being paid to America's "Tax-Industrial Complex" is vastly more than the total $Y that it'd cost to have an efficient government-run system.
In the 8 years since I lived in the United States my income taxes in other countries have been almost unbelievably easy. Typically I look at the calculated amount provided by a government website, compare it to what I think it should be if there is done discrepancy, upload some receipts or whatever for deductions, then click submit. It is beyond me why the experience should be any how different in the United States.…
JW, how do these countries handle non-employement or self-reported income (e.g. capital gains of real estate, equity, or even selling products online)?
I think it's understated how much of the tax mess in the US is also linked to "policy through tax credit and deductibles".
In the 8 years since I lived in the United States my income taxes in other countries have been almost unbelievably easy. Typically I look at the calculated amount provided by a government website, compare it to what I think it should be if there is done discrepancy, upload some receipts or whatever for deductions, then click submit. It is beyond me why the experience should be any how different in the United States.…
"And tax politics make strange bedfellows. Fighting alongside H&R Block and Intuit are anti-tax activist groups like Grover Norquist’s Americans for Tax Reform. H&R Block and Intuit love taxes—that’s how they make their money. Grover Norquist wants to cut taxes wherever possible. But on this issue, their interests are aligned. H&R Block and Intuit want to make it difficult for you to file on your own. The anti-tax ac…
For those who don't know, Grover Norquist is a highly influential, batshit crazy right-wing ideologue who believes the estate tax is morally equivalent to the holocaust. Almost every Republican lawmaker on the national level signs a pledge he has written, swearing they will not raise taxes.
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> Mind you - the gov already has copies of ALL the forms. They just want you to f it up. Not completely accurate - you’re required to pay tax on side jobs under $600 for instance, but neither you nor the IRS get a 1099 tax form for it. Reporting it is on the honor system. Cash tips are supposed to be taxed but rely on self reporting since the IRS has no idea who handed you money, etc. There are also many deductions a…
Deductions and credits: I posit, they could know based on how interlinked everything is. You have 3 kids registered in school? It’s in a db. Buy an EV? It’s in a db. But yeah- fair point. There are lots of “quiet” transactions for sure, but that’s likely no different in any other nation with better tax cycles.
I don't expect car purchases to be in a federal database (or the schools my children attend, for that matter).
The current system costs billions of dollars in taxpayer money, it’s just that today those dollars flow to Intuit. The IRS one should end up costing less overall, even at govt contracting rates.
In the 8 years since I lived in the United States my income taxes in other countries have been almost unbelievably easy. Typically I look at the calculated amount provided by a government website, compare it to what I think it should be if there is done discrepancy, upload some receipts or whatever for deductions, then click submit. It is beyond me why the experience should be any how different in the United States.…
JW, how do these countries handle non-employement or self-reported income (e.g. capital gains of real estate, equity, or even selling products online)?
This “contracts” are in xml format, require a private key to be signed, and are incredibly rich in catalogs and features.
They are massive: just last year, over 10^10 generated documents were reported.
Sure there is still a lot of informality, but in a matter of years not only will tax returns be automatically calculated for you to pay (this is already happening), but also p&l’s and balance sheets of small and big companies.
This all happens on almost real time, by the way.