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Filing taxes in the US is needlessly complex
- Thread starter ngower
- Start date
Work at a cpa firm in the states, most of the 1040 returns are a complete joke and any college intern can do them. Those are the kinds of returns that should be completely automated and are the ones intuit and lobbyist fight to keep overly complicated. The joke that "all people are tax people" only works in a world where everyone's return is just 1-2 w2's and maybe a small about of interest in their savings account.
The same ones that have already been calculated by the government up to that point. The system is pure corruption to allow the tax software/service industry to exist. See video I posted on previous page. The only tax service industry that should persist is for complicated corporate taxes.
I like how much effort they put in trying to hid their free filing options.
How the hell does H&R Block and TurboTax have more say in Congress than normal people do?
Your employer will only be withholding what you tell them to via a worksheet. Many people don't have the correct information on file, or they intentionally make it inaccurate so that they get a refund.
When you combine all of your tax information at the end of the year, there may be discrepancies due to filing with a spouse or making the choice to not file with your spouse. Children and other dependents add more variables. Other things like mortgages, loans, investments all have an effect on your tax liability.
I mean, you don't go to jail unless you intentionally tried to not pay or underpay your taxes.
I've underpaid the IRS twice by accident/bad math and all they did was send me a notice showing me the error and saying, "Pay this much more." It's typically not a big deal.
I've underpaid the IRS twice by accident/bad math and all they did was send me a notice showing me the error and saying, "Pay this much more." It's typically not a big deal.
Lol are you unfamiliar with how the US works?
NO YOU WILL GO TO JAIL EVEN IF YOU OWE ONE DOLLAR AND THAT'S WHY YOU NEED TO PAY TURBTAX $200 TO MAKE SURE YOUR TAXES ARE CORRECT.
(/s obviously)
But yeah generally if you made a mistake, and not a really stupid "I didn't know I couldn't deduct all my groceries and personal bills as a business expense," it's NBD.
I'm venting frustrations. A job that could be done by the government is being left in the hands of a private company bent on milking as much profit as possible.
I mean, I agree with you, but this is true for literally everything in the US.
Lobbies are part of the reason, if not the main reason, behind why our tax system is the way it is, our healthcare system is the way it is, the amount of sugar/HFCS is unregulated in our food the way it is, etc.
People seem to get especially annoyed at the tax system, and I don't blame them, but sometimes it feels a bit misguided lol. Like with taxes, for most Americans, it's actually really simple to do it yourself and it comes around once a year.
Meanwhile, I have to waste hours every week studying fucking food labels and securitizing the nutritional values of things I buy because I can't trust what I put into my body every day.
Not that both shouldn't be fixed, but it is kinda weird to see people always so up in arms (and usually angry at the government???) about this once a year thing, whereas most people get super excited about things like new Mountain Dew flavors, new fast food stuff, etc.
Doing my taxes here in the Netherlands takes me about 15 minutes, and that's also accounting for the fact that I barely understand the Dutch language.
Add your spouse's job, student loan interest, mortgage interest, classroom supply expenditures, plus the gains from any stocks you've sold, dividend income... it gets complicated.
And you're still giving the government info it already has.
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Yeah it always bothered me how you can answer the questions on a W-4 honestly and end up owing money. When I got married my spouse (who worked at HR Block for years) was like "no you aren't supposed to answer the questions correctly, answer like this and you will always get money back" and I just stood there with a confused expression on my face.
Instead of questions about dependents, etc. why can't it be questions like "do you want more money now (that you will have to give back), do you want less money now (and we will give you more later), or do you want something in the middle" etc.
Instead of questions about dependents, etc. why can't it be questions like "do you want more money now (that you will have to give back), do you want less money now (and we will give you more later), or do you want something in the middle" etc.
A huge amount of the blame should be on tax companies, but some governments can make it annoying. Like for example, I get two W2s because for 3 months in 2020, I worked in a city that required a specific W2. Add in issues with my 2nd stimulus check and I feel like taxes are gonna be annoying as fuck this year.
The original W4 wasn't good for household with multiple streams of income. Doubt many people bothered filling out the extra worksheet either.
They have to ask about dependents though because that can make a huge impact on your tax liability.
What I mean is our W-4s have always said that we are single and have no dependents and that hasn't been true in over 15 years (and also conflicts with how we file annually). And there is nobody going around behind us making sure that those fields are accurate, they just factor into the amount that gets taken out of your paycheck. Since the questions don't have to have real answers, to me it seems silly/meaningless (or deceptive in a way) and I would rather the questions be asked a different way.
It's really easy in Japan. Our company gives us 3 forms to fill out and detailed instructions on how to fill them out. Takes 20 minutes, tops.
I live in Czech Republic, every month tax is taken from my paycheck. When tax season comes we get an email with a document we print and we sign it. If u have a kid, or got married or purchased a house that year you enter their details. Then about a week later a person comes into our office, they double check and sign the document with you. That's it, you never owe money, then the next paycheck you either get a refund if eligible, or u don't. That's it. It's been so easy compared to when I lived in USA.
I have to do them for the first time this year and its giving me crazy anxiety. I'm probably just going to pay someone to do them so i dont fuck it up. Hopefully i dont have to pay anything since i made very little last year.
Well... How was payroll supposed to know that your circumstances had changed? Even in a more competent country, that information needs to be relayed to your employer.
Why does payroll need to know if I'm married or not or how many kids I have?
My company knows for benefits/life insurance reasons, but that doesn't come from a W-4.
Second the recommendation for creditkarma filing. Got my W2's the other day and had my federal return filed in like, 10 minutes.
Please don't pay anyone to do your taxes if you made very little.
Go to VITA near you.
Free tax return preparation for qualifying taxpayers | Internal Revenue Service
The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs prepare tax returns for free for qualifying taxpayers.
In Canada we still have to file our taxes... But the CRA has something called EFile which is a standard that they certify tax software against. And they certify both free and paid tax software with there being a tonne of free tax preparing software, including a couple really fancy and easy to use Web Apps.
With EFile you can just login to your CRA account and it pulls down all the documents the CRA has on you. Then all you have to do is double check, apply any credits or income/expenses they missed and then click the fancy EFile button which will submit all of your Federal and Provincial taxes in one shot.
Can get your taxes done for the year in a couple minutes flat, and money deposited into your bank account by the end of the week.
Also as of recently. The CRA has just switched to just doing people's taxes for them if they have easy enough returns. In which case you have to do nothing.
In this hypothetical "W-4s make more sense to mute" universe payroll would know how much to take out of my check via some method other than how many kids/spouses I have OR if it has to be based on things like kids/spouses then they already know the answer because everyone already knows the answer and they don't need to ask me on that particular form. The questions being asked have right and wrong answers and what they are being used for do not. In over complicated jargon it explains this on the form, but to the average person I do not think it is clear, and could be clearer, along with everything else involving taxes.
I mean, even the previous form said "enter this number for your spouse" and "enter this number for each child". It's not that difficult to parse.
Singapore: You file on the internet, on the government revenue website. For a simple return, you don't file because the government has your pay information already. There is almost no market for individual returns at all; almost every accountant in the country is for businesses or expats. For a more complex return (for example, disabled dependants) you just click the appropriate checkbox or add the amount they help you calculate; it's all done on the revenue agency website and at no point do you ever see a tax form or line number.
(The 401K/RRSP equivalent is nationalized and also automatically included, if you are eligible.)
Honestly it just shines a light on how anti-individual the north american systems are.
Unfortunately in Canada the tax form is still incredibly complex and at times contradictory. I've worked with accountants who have literally called it a shell game if you work contracts, for example. I think every year I've ever filed has been reassessed, usually over pennies. The personal accountant industry continues to thrive.
It's particularly bad in Quebec where they have their own revenue agency! You get to file two returns with two different processes, and until the last few years RQ was heavily behind technology wise. My last return there had to be paper filed. It basically felt like when I was in the US and had seperate state/federal returns.
tl;dr (Canada) The process as a whole is better than the US, but I still think an accountant is almost necessary for any medium-difficulty return.
Right, how to fill out the form isn't difficult, but the dollar amount each child and spouse represents isn't clear. People may not understand "each kid I say I have = 30$ more per check (ex.)" and also "I have 3 kids, and if I claim them here I get more money now" and "I have 3 kids, but there are reasons I may want to say I have 2, or 1, or 0". The kids/spouses thing obfuscates the implications of the form. How you fill it out determines how much money you can potentially get now vs. later, when they could just as easily have a form that states more or less "do you want more money now or later?"
Did the declaration for my girlfriend in Spain, after logging in to the online system with her ID and password I didn't have to fill anything, she had all her income already there and tax calculated. I just wrote her bank account number and they took the money some weeks later.
It took literally seconds, which raised a big red flag for me but turns out it is just that...
That's dangerous though because all those people who choose "more money now" could easily come up short on tax day, not to mention the underpayment penalty. And where do you draw the lines for those thresholds?
The upper end of what you can have withheld can't be more than what you make, so that is easy. And the form can still have the write in box of how much extra you want withheld, since that makes sense.
How little you can have withheld is more complicated for sure, but I don't think it would be too difficult to estimate where the line would be where you would start owing, and I think it should be around there. There is a ton of data available to where (under normal circumstances) you should be able to get in that ballpark. Ideally, it shouldn't be possible to owe (but also, the whole system should be simpler). To me, that that is even a possibility in the current system is a problem to be fixed.
Pretty sure the problem here is that people should be given a mandatory class on basic taxes in high school.
I swear all this could be covered in two weeks. Probably less.
The tax code will never be unraveled, not so much because of TurboTax/H&R, but because Republicans and Democrats both need a certain degree of complexity to it so they can push various political agendas. Deciding how things do (or don't) get taxed is like 95% of the actual power politicians wield.
Not even trying to make a value judgment on that, it's just the way our government works. The decision to leave so much of the actual law, policing, and punishment at the local level made it so the federal government's primary levers for everything from strategic resource exploitation to social issues is handled through taxation. That's just how the United States do.
Not even trying to make a value judgment on that, it's just the way our government works. The decision to leave so much of the actual law, policing, and punishment at the local level made it so the federal government's primary levers for everything from strategic resource exploitation to social issues is handled through taxation. That's just how the United States do.
There's a difference between a complicated tax code and the process of actually filing simple tax returns. They already have a figure for you that you owe in taxes even if the code itself is complicated...they could just bill you instead of making you fill out the paperwork even today for the mast majority of tax payers.
No we don't.
File your taxes for free | Internal Revenue Service
Prepare and file your federal income tax return online for free. File at an IRS partner site with the IRS Free File Program or use Free File Fillable Forms. It's safe, easy and no cost to you.
There is a way to free file if you make under $72,000, but it's not advertised. That's why the private companies did to stop the IRS from making their own app.
As mentioned, a lot of the conservative rich here don't want filing to be easy or a prefilled form because they think people will be more likely to accept taxes that way.
There should definitely be some kind of mandatory education around this. I know the first time I interacted with it, I had none. But also it needing a couple weeks or a few days to explain probably shouldn't be something we aspire to either.
Well, if you are going to audit them, then you are doing your own taxes anyway, as you are just running the numbers second, rather than first. Also, my wife is 1099 and self-employed and she works from home. The IRS would not know all of the deductions she uses like a potion of the mortgage payment based on the square footage of the room she uses, internet bill, etc.
I would not trust the IRS to "do my taxes for me" and just send me a bill/form. I would rather take the time myself, make sure all legal write-offs are being applied and then submit it to them, putting the ball in their court to take the time and double check.
You can still do all that without making everybody else waste time when they DON'T have those sorts of deductions. I've never ONCE used anything but the standard deduction, so filing my taxes is nothing but a waste of time, but I understand that's not the case for everyone.
We should at least have to option of just receiving a bill/form and verifying it.
*shrug*
It's not so different from a basic financial / check balancing class imo. It should only take a couple minutes to explain. Again, tax is not difficult at all for the average American, really. (At least, for federal purposes).
Yeah there's literally no way a government agency is going to be able to do a self-employed person's taxes regularly lol.
I'm not sure how many Americans don't itemize Schedule A and only have W-2s.
Well sure, there's edge cases. But your wife is 1 / 100,000.
So, options! If you're just taking standard deductions they do it all for you. If you're line itemized, obviously you'll want to do that yourself.
You know how much HR Block, Turbo Tax, and all these other companies make?
They're not gonna let it happen, ever.
