The vast majority of people take the standard deduction, so offering a "here's what we think you owe, but if you disagree feel free to do the full return" form would be a huge efficiency gain.
Your comment seems like a prime case of perfect being the enemy of good.
> The vast majority of people take the standard deduction
Unless they are a homeowner, probably.
Part of the issue is that the US tax code is a lot more complex than most countries. (And the homeowner-targetted deductions are kind of insane and bad policy too).
Still, I don't disagree with the basic premise. They probably know enough to know if itemizing your homeowner-related things would be better for you, and do it that way. You can ask for adjustments, or you could always ignore what they calculate for you and do it all yourself from scratch if you wanted to, a thing I believe you _can_ do in European countries that generally calculate your income taxes for you?
Unless you are a homeowner at an expensive metro. It used to be basically every homeowner, but the changes in 2018 led to a massive reduction of people itemizing. The standard deduction went up a whole lot, and along with it, the deduction for state and local taxes was capped to a relatively low number. So if you owe, say, $200K in your mortgage, chances are that you are going to need non-trivial bonus itemization to get to the cap, when in 2016, that was definitely enough to itemize.
In practice, about half as many people itemize today than they did back in 2016.
"Here is what we think you owe/don't owe. If this isn't what you expect, then click this button to add or subtract deductions. Oh and BTW, we know you owned a home last year so we included that too!" Or, "Hey we noticed you took the standard deduction last year so we assumed based on what info we have that this year might be the same so here is the standard answer!"
Since Trump's tax changes very few people itemize - it is very difficult to get about the standard deduction. The average person doesn't even have enough income (the standard deduction is about a third the average income, the odds that someone at that wage level is spending enough on deductible things is small, there are too many non-deductable things they also need to buy).
Of course it depends on where you live - in San Francisco if you can afford a house at all you have enough interest to deduct it (especially at today's rates), but other areas have more sane housing prices and lower incomes.
> Your comment seems like a prime case of perfect being the enemy of good.
Which makes sense in a lot of spheres where's there's obligations on both sides. Unfortunately, if myself and the IRS come a disagreement about my filings, I can end up in jail or at the very least deal with an expensive criminal prosecution. If the IRS is wrong, then there's effectively no penalty for them.
The government wants it both ways. People understandably have some apprehension about this.
> Unfortunately, if myself and the IRS come a disagreement about my filings, I can end up in jail or at the very least deal with an expensive criminal prosecution.
I think there's a huge gap between facing an audit in most circumstances and those two outcomes...
I wasn't arguing for or against any system. Just wondering how it could work when the government doesn't know about a significant amount of my deductions and I ended up itemizing last year.
> The vast majority of people take the standard deduction, so offering a "here's what we think you owe, but if you disagree feel free to do the full return" form would be a huge efficiency gain.
> Your comment seems like a prime case of perfect being the enemy of good.
And the comments advocating for automatic tax filing seem to be ignoring Chesterton's fence. They seem to be viewing it solely through the lens of revenue collection. However, IIRC, for better or worse, one of the big levers the US government uses to influence individual behavior is incentives implemented via tax policy. It stands to reason that mechanism would stop working if individuals could avoid interacting with the tax rules.
People care about what they're paying in taxes whether they're manually punching in the numbers or not. For most people, you just put the numbers in the right places when filing taxes, and don't consider the policy implications or causes at that moment, because it makes no difference at that point. You consider those effects when voting.
Removing manual filing won't stop people from voting on tax policy.
I know I'm likely better off with the standard deduction, but I still have to check both ways to know for sure that's the case for me. So standard deduction never actually saves me time even though post Trump tax reform I generally take it.
But surely, you're on the cusp of itemizing. Or have dramatically changing circumstances year to year. Otherwise, you're just wasting time.
FWIW, we are in the "on the cusp" boat. Another year or two and our mortgage interest vs principle equation will put us in the standard deduction range. And short of massive changes to either tax law or our income, we'll remain there.
jrochkind1|2 years ago
Unless they are a homeowner, probably.
Part of the issue is that the US tax code is a lot more complex than most countries. (And the homeowner-targetted deductions are kind of insane and bad policy too).
Still, I don't disagree with the basic premise. They probably know enough to know if itemizing your homeowner-related things would be better for you, and do it that way. You can ask for adjustments, or you could always ignore what they calculate for you and do it all yourself from scratch if you wanted to, a thing I believe you _can_ do in European countries that generally calculate your income taxes for you?
Also, I wish our tax code werent' so insane.
hibikir|2 years ago
In practice, about half as many people itemize today than they did back in 2016.
firesteelrain|2 years ago
"Here is what we think you owe/don't owe. If this isn't what you expect, then click this button to add or subtract deductions. Oh and BTW, we know you owned a home last year so we included that too!" Or, "Hey we noticed you took the standard deduction last year so we assumed based on what info we have that this year might be the same so here is the standard answer!"
lotsofpulp|2 years ago
bluGill|2 years ago
Of course it depends on where you live - in San Francisco if you can afford a house at all you have enough interest to deduct it (especially at today's rates), but other areas have more sane housing prices and lower incomes.
akira2501|2 years ago
Which makes sense in a lot of spheres where's there's obligations on both sides. Unfortunately, if myself and the IRS come a disagreement about my filings, I can end up in jail or at the very least deal with an expensive criminal prosecution. If the IRS is wrong, then there's effectively no penalty for them.
The government wants it both ways. People understandably have some apprehension about this.
jjnoakes|2 years ago
I think there's a huge gap between facing an audit in most circumstances and those two outcomes...
RandallBrown|2 years ago
tivert|2 years ago
> Your comment seems like a prime case of perfect being the enemy of good.
And the comments advocating for automatic tax filing seem to be ignoring Chesterton's fence. They seem to be viewing it solely through the lens of revenue collection. However, IIRC, for better or worse, one of the big levers the US government uses to influence individual behavior is incentives implemented via tax policy. It stands to reason that mechanism would stop working if individuals could avoid interacting with the tax rules.
Taywee|2 years ago
Removing manual filing won't stop people from voting on tax policy.
elicash|2 years ago
alistairSH|2 years ago
FWIW, we are in the "on the cusp" boat. Another year or two and our mortgage interest vs principle equation will put us in the standard deduction range. And short of massive changes to either tax law or our income, we'll remain there.