But if we remove the annual pain of dealing with taxes, then Americans will get complacent and may stop being bothered by having to pay taxes.
- The serious ideology of a major American political party vis-a-vis taxes.
Similarly, there is a group in the US whose main goal is to change the law so that employers can't pay your taxes on your behalf. Instead, you would get your full salary, and then have to write a check to pay your taxes. The group believes this would raise tax awareness.
Doesn't seem like a particularly useful way to approach life, to me.
But forcing it just wastes everyones time, adds red tape, and additional bureaucracy they purport to rail against.
That's called Weight Watchers. The general principle was pretty effective for me. Most people don't keep a log of wear and tear on their car, but we definitely operate airplanes that way. That also seems pretty productive to me.
But yeah, it's not the only way to operate. I don't really like the idea of putting more responsibility on people in order to "raise awareness". I take that to really mean someone would like everyone to be more upset about taxes, and would like to make them less convenient to increase upsetness.
If a politician raises taxes, and all it does is change the value of a annual withdrawal on your account, I think that pain would be the same, regardless of difficulty of filing.
The pain is estimating and filing 4 times a year.
They simply do not understand the fact that, no, that check is not "free government money" but is instead money that the government took, held onto for free all year, interest free, and then let you have back after you filed the proper forms.
So the suggestions to have people cut checks to the government (quarterly, monthly, annually) is generally made from trying to overcome that viewpoint that too many folks view their tax return as some form of "gift" from the government, and instead get them to recognize just how much tax money is being consumed.
Which individuals? How do you know these people?
Also I don't agree with your perspective on tax withholding. If you don't want your employer to withhold taxes, I think they have to stop withholding taxes. It's a convenient default, in my opinion.
I appreciate transparency like that, but I hate other examples that add additional steps or paperwork to the process.
But it doesn't work for low-income people that are already living paycheck-to-paycheck.
In principle I like your suggestion but in actuality I think many Americans will not like their "yearly tax bill." Just think about people who are already living paycheck to paycheck; not saving much, or just overall spending every penny that comes into their bank account. They would be in trouble come April if they had to pay it at that point.
Perhaps they could do a monthly installment payment for last year's taxes... And the taxpayer would auto pay once or twice a month when they get paid... But then, we're back to where we started.
Tldr in an ideal world where every citizen is disciplined about not spending every penny they get, this suggestion would be great.
I know some people _have_ to spend every penny because they need to to survive, but there are also plenty of people who spend every penny because they just have no discipline and buy anything they want without regard to whether or not they could afford it. Ideally the people in the former category would get some sort of welfare. Not sure what, if anything, to do with the people in the latter.
https://www.npr.org/sections/money/2017/03/22/521132960/epis...
Also Reply All did an episode recently on the Propublica Intuit story.
It comes down to this and I do not blame Turbo Tax or any other company in this area. The Federal and State Tax codes are weaponized by politicians and until that stops the system will be too complex for many to do the the filing on their own and some of that is because there is always that "did I forget something" feeling.
At least the changes made recently helped the lower and middle classes out a lot, that doubling of the personal deduction was a god send in reducing the work needed as many will never need to itemize again
Yes they will. I don't know why you bother to make up a lie so easily disproved.
On September 9, 2019, I received a CP16 that stated
"We believe there are miscalculations on your 2018 Form 1040, which affect the following areas of your return:
- Tax Computation
We made changes to your return that correct these errors. As a result, your overpayment is $21,886.35.
Information was changed because of the following:
We changed the amount of tax reported on your tax return because the tax rates on Qualified Dividends and Capital Gains are generally lower than the standard rates. It appears your tax was not computed using these rates or the amount of tax was computed incorrectly. (211D)"
I have never actually done that; but my parents did well after I was using software, which sure is more convenient.
wait, does the Transmogrifier Deduction for Frobnubilors apply when you claim to be Single-and-Only Highlander? pauses and takes 1 hour to read up on the IRS rules for this and compares with the advice of $random_internet_guy
And after the personal satisfaction of having completed everything myself, I file and a few months later get a letter from the IRS to the effect of "Dear Mr Bonehead, you totally forgot this obvious item, so we're going to refund you a bit more. You're welcome."
Taxes are not hard if you know how all of the rules apply to your special situation. If you don't, like most people, you're in the dark and it becomes a very poor use of time, with lost money at stake—or worse if your intentions are deemed to be fraudulent.
The only time I didn't do my own taxes and paid a CPA, he messed up even though I told him that I withheld more than required (and gave him last year's return so he could see what last year's taxes were and that I had more than 110% withheld).
He still filled the form out wrong so that I would have had to pay a penalty. Then when I told him he filled it out wrong, he just took the penalty off, without properly updating the 1040. When I ended up getting the inevitable "you owe us a penalty letter", I just ended up dealing with it myself rather than use his boneheaded explanation basically "pretty please" as opposed to the actual "I made more money, and withheld enough more money, so penalties are waived."
For example, I've been considering installing solar panels on my house. There is a federal tax credit for installing solar, and it includes associated costs like repairing your roof to support the panels. But as a normal person the entirety of the guidance is this:
"No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed."
So if you get a new roof to support the panels will the tax credit cover the entire roof job, or only the part covered by the panels? I've heard from two accountants on this who had two diametrically opposed opinions on this. And if I guess wrong it's potentially Felony Tax Fraud, the kind that put Al Capone in jail for 11 years. Ignorance of the law is no excuse.
So I call the IRS help line to get the official guidance on this and the official IRS position is: "We can not give guidance on this subject." It's not like TurboTax is going to have any more official of an opinion on this either. The only way to safely handle this is to pass liability off to a third party, which makes filling out your own taxes not an option.
Many law makers don't want the Government to make this process easy on the assumption that the easier it is for the Government to tax, the more it will do so.
To be frank, the government has issues making things usable, and "usable" is a pretty small target when you're talking about the entire US workforce.
They brought in a bunch of dedicated experienced software pros who among other things rescued the federal health insurance exchange site.
I think they could do a fine job with tax software.
I've just filled in a new ESTA application on the US gov site too, simple (albeit stupid), and worked.
This morning however I tried using enterprise b2b to book a hire car, it took 6 attempts before it actually worked. Almost all corporate tools seem to be terrible.
Can the government please make something that's easy to use? Filing taxes isn't something that requires a separate company to help with, and I see no reason why these products have a right to exist (and especially not be canonized), especially with how exploitive they are or can be.