Comment by godelski | Hacker News Reader

Comment by godelski | Hacker News Reader

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Aren't capital gains already reported from your bank? If not, it should be trivial to have them since they send the exact same information to me. The same goes for loans.

Honestly I wouldn't be surprised if the IRS could already have a 90+% success rate for 80+% of people. It seems like the real issues would be in the very rich who can take advantage of many loopholes or the average person when big life events happen (things like death, marriage, and birth, though most of this could be automatically reported as well but easier to fall through the gaps).

Maybe I misunderstand, but it doesn't seem like the IRS needs any additional information than I have presumed it already has. This information is at least all known by the fed, so it doesn't seem like a data leakage. And I'm someone that highly cares about privacy.

I suspect that the real pushback for return free filing is from 1) tax filers like Turbo Tax who would lose a lot of business and 2) the ultra wealthy as RTF would put pressure to simplify the tax code and reduce the number of loopholes.

Your bank will report interest via the 1099-INT, and they will do this if you make more than $10 per year. You will also get a form if you redeemed any government bonds. I'm not deeply familiar with AML/KYC, but transactions over $10,000 are reported to the government, but not necessarily to the IRS and definitely not as a taxable event.

Let's say you sold your car and deposited the money in your account. The IRS won't have details about the sale and neither will your bank. They will know the amount, but it is incumbent on you to report information if this sale represented a capital gain. In all likelihood it wasn't, but the government doesn't have a way of knowing this. If you get audited, someone will probably ask where the money came from and it would be up to you to furnish receipts in order to prove it.

Honestly, I don't see a problem with this. Like every other country, they send you a bill. You either correct the mistake they have or pay a fine. Still easier and cheaper than paying TurboTax.

> Aren't capital gains already reported from your bank?

Capital gains from real estate sales are not automatically reported.

Public securities (stocks, ETFs, crypto, etc) are a small fraction of overall capital gains by $.

> Capital gains from real estate

What percent of Americans buy and sell a property within a year? I bet it is pretty low.

> stocks

All the major players report this information.

> ETFs, crypto

The vast majority of people use exchanges like Coinbase and Binance. These already report.

So I'm not sure what your point really is. That there are edge cases? No shit. No one is even arguing against that. The argument for return free filing is that the vast majority of people will benefit from the system. Even if there are mistakes it is easier to look over something and correct it than do everything from scratch. The people that won't majorly benefit from this likely already have more than enough wealth to pay someone to do their taxes already and honestly I'm not concerned about them.

Don't let perfection get in the way of massive improvement.

You pay capital gains on any property sale where you earn income unless you reinvest the money in another property or use the one-time exemption. I don't know why you think the sale being within a year or not makes any difference. The major players know when you sell the stock and for how much, but they don't know the cost basis. The sale could be LIFO or FIFO and you might have transferred the stock into the brokerage without them ever knowing the purchase price. These are not edge cases.

Sorry, I looked at a bad source. But looks like so did you. Here's Investopedia:

> You can sell your primary residence and be exempt from capital gains taxes on the first $250,000 if you are single and $500,000 if married filing jointly. (once every 2 years)

> You can add your cost basis and costs of any improvements that you made to the home to the $250,000 if single or $500,000 if married filing jointly.

So I'll change my question:

What percentage of home owners are profiting >$250k (single)/ >$500k (married)? What percent of them do that more frequently than a 2 year period?

I'm willing to bet that these numbers are still very low. That's the entire point. I'm sure there's nuance I've missed as I'm not an expert. But my entire point isn't about specifics, it is that your argument against this system is about edge cases. If you can prove that these aren't edge cases, I'll actually side with you. If not, I still see return free filing as an extremely beneficiary policy to the vast majority of Americans, and especially to those with the least income. I already know that 90% of households take the standard deduction, so you're going to have to make some substantial claims.

https://www.investopedia.com/ask/answers/06/capitalgainhomes...

It's straightforward to calculate real estate capital gains from reported information. Remember, real estate transactions (including sales prices) are public records.

> The Tax Reform Act of 1986 required anyone responsible for closing a real estate transaction, which may include the escrow agent, title company, or attorney, to report a real estate sale or exchange to the IRS on Form 1099-S. In addition, they were required to furnish a statement to the seller of the gross proceeds of the sale. In 1998, with the passage of the Tax Payer Relief Act of 1997, an exception to this reporting requirement was allowed.

> If the sale price of your residence is $250,000 or less ($500,000 or less for married sellers) and you have lived in the property, as your principal residence, for the last two out of the last five years, your closing agent will not be required to file Form 1099-S with the IRS. The gross proceeds of the sale need not be reported to the IRS if these conditions are met.

> Be sure that your closing agent has your written confirmation that your sale is exempt from the IRS reporting rule. Most closing agents have a form, called a “Certification for No Information Reporting on the Sale or Exchange of a Principal Residence” which you will you be asked to sign at closing. The form will ask for your seller information, social security number, address, and certification that you have met the exemption requirements.

https://sandygadow.com/will-my-escrow-agent-have-to-report-m...

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