The IRS has all our tax data. Why doesn't its new website use it?
washingtonpost.com
washingtonpost.com
Online Tax Filing (preloaded with all the tax data, nothing to declare extra, just 5 clicks). In fact there are third party sites/apps (freetaxfiler) which automates the entire process.
When I do my tax returns I'm not complaining about the amount at all but about gathering the information. If anything, it distracts from how much I am paying. It's much easier to check how much money you've paid to the government by looking at your monthly salary slip than doing anything tax return related.
2. The IRS doesn't have everything, it has about 90% of what the average person needs to file taxes. Most people could answer about 5-10 simple questions and the IRS would have everything they need (this is basically how tax filing firms/software get it done after you give them all of the information that the IRS already has). A minority have more complex tax situations, but these people likely already have a personal accountant, or are running a business.
Well, not quite. The IRS knows 100% of what the average person is going to put in their tax return. So just automate that.
There is a small percentage of people with more complex tax situations. Yes, they will need to file a tax return. Percentage-wise, it is very few people.
Your tax office wouldn't automatically know about self employment, investment earnings, your private business expenses, collected rent, profit from reselling things, etc, and they'd expect you to declare them via some form of self-assessment.
The US takes one step further by allowing a plethora of non-earning items to be declared as deductions on your return (mortgage interest, healthcare expenses, kids, etc) which the IRS needs to be told about.
For nearly all people, they do.
They do know your investment earnings (brokerages report that) and your mortgage interest (loan companies report that) and your kids.
That covers, just about everyone.
Sure, a few people have personal businesses and rent incomes and all kinds of complex things. So the rational thing to do is build an automated system that covers the needs of 99+% of people, and for the few ones that it doesn't work, let them opt out and do a traditional tax return filing.
No reason to have middlemen in this space.
Then people would go like "but IRS told be to pay X, it shows that they don't know about my other source of income, so I better not tell them". In other countries with automatic payment (India, Ukraine) -- people would not disclose _any_ incomes for taxes, if given a chance. So government makes everyone to pay through a monitored taxed account. But people don't even think that if money come on another, non-business, account, they should disclose that as income. It's kinda assumed that if gov doesn't know, then they shouldn't pay.
At the inception of the federal tax, the federal government didn't have enough agents to enforce it. So they actually made the filings public so that people could police each other... You'd be able to see your neighbor claiming poverty when you knew they owned twenty acres and sic the fuzz on them.
Something to be said for not letting people do their finances in the dark...
As well as track and list the IP / location and time of when previous accesses occurred. Sign in and see someone not on the list? Have a link that sends to identity fraud at the FBI or whatever's the correct place.
They could also hide the exact details and just name the banks / holdings places and other things involved and you could confirm that there aren't any other details or make corrections.
https://www.login.gov/about-us/
""" Login.gov was a General Services Administration 18F innovation project in partnership with the United States Digital Services (USDS). This shared-service, made possible through a Trusted Identities Group (National Strategy for Trusted Identities in Cyberspace) grant, is a result of cross-agency collaboration that sought to develop secure, user-friendly ways for the public to access government websites. """
Though visiting a local police department or staffed USPS office might also be valid initial authentication methods.
Also they may have problems retrieving data in realtime. The IRS was a batch operation historically, and transitioning to realtime is challenging.
I mean what, are you going to do, put ip a wait cursor while joe bob mounts tape number 2,578,998,321?
Is this still true? After they raised the deduction and capped the sales/local tax deductions (and some others too I thought), I assumed a lot of people that used to hit the standard deduction now didn't.
That said, the vast majority of tax is paid by people who don't take the SD.
You might want a second opinion.
You can still get a second opinion with pre-filled taxes.
The meme about “oh I forgot to carry the one now I’m going to jail” is just Internet hyperbole.
This is not really accurate. If you're a typical employee, IRS has a pretty good idea of your income, which is just one of the many factors that goes into calculating your tax.
In particular, the IRS doesn't independently know most of the things that could cause you to get tax deductions, like whether you got married since last year, or you moved out of your parents' house and started living on your own, or you're taking care of a child, or you had self-employment expenses, or you bought textbooks for your college classes, or you donated to charity, or you paid expensive medical bills, etc.
The vast majority of taxpayers take the standard deduction and do not itemize, so in real practical terms this is an extremely irrelevant straw man.
(https://www.taxpolicycenter.org/briefing-book/what-standard-....)
(https://www.usatoday.com/story/money/taxes/2023/02/15/itemiz...)
I don't have any creative deductions. And I expect many others only have one or two "interesting" deductions to add. I haven't actually measured this but I honestly expect >95% of what I enter into my tax return is information they already have.
These are not "interesting", but nearly everyone has 'em, and the IRS cannot know, without bending space time, how much you'll owe because of those deductions (assuming an itemized deduction, though they're still in play either way because they can help tip the balance between taking a standard or itemized deductions).
Only 13% of all US federal tax filings each year itemize deductions. That means it would help the vast majority of filers and not harm the rest in any way whatsoever. Weird thing to be against if someone isn't misanthropic.
I wasn't disagreeing with the idea of pre-filling tax return data.
I was simply offering examples of "normal" deductions that can easily change what you owe, and how those deductions aren't as uncommon as the person I was commenting to would have you believe.
They internally compute what you owe, and if what you submit doesn't add up, they dig deeper.
They know a lower bound on how much income you should be reporting. They have no idea how many dependents you have, houses you sold, charity you donated, foreign income you made, etc etc etc. There are hundreds of other things they don't know which massively affect what you owe.
If they got a W-4 for you and you don't report it, yes you're f'd. But they in no way know how much you owe.
In a better world our taxes could be simpler, but for now let's do our taxes the way they do need to be done.
Generally speaking, the government does in fact know exactly what houses you sold and dependents you have. Those are both matters of public record and registered with the state. How do you think cities assess property taxes? And if you think that charitable donations and foreign income make any kind of dent for 99% of all taxpayers, you're living in a very weird bubble. 87% of all filings take the standard deduction in any given year for a reason.
The government is not a single entity. States do not funnel this information to the IRS.
> Those are both matters of public record
In my state (Missouri) house sale prices are not public record.
> 87% of all filings take the standard deduction in any given year for a reason
Yes I think everyone would be enthusiastic about submitting taxes that are 87% accurate.
That's a weird wrong thing you think. Visit https://www.stlouis-mo.gov/data/address-search/index.cfm and put in any address in St Louis MO and you'll see who owns it, when it sold, how much it sold for, how much property tax they owe, the bounds of their lot, and more.
Here's an example, randomly selected from google maps: https://www.stlouis-mo.gov/data/address-search/index.cfm?par...
This is standard.
> Yes I think everyone would be enthusiastic about submitting taxes that are 87% accurate.
I'm going to ignore this obvious bad faith trolling.
Here, I have a link of my own: https://www.attomdata.com/news/most-recent/do-you-know-what-...
That site may use voluntary reporting or MLS records, but nobody is under any obligation whatsoever to report the price for private sales.
AND, your bank and investment agencies definitely report everything you put into them. So now you must also be talking about non-disclosed property sales for _cash_, as in paper bills and coins under the mattress. Doing a lot of that, are you?
But tell me more about what percentage of all federal filings you believe would be affected by undisclosed property sales.
https://www.stlouis-mo.gov/data/address-search/index.cfm?par...
How much did the current owners buy it off the church for?
And sure, some agency might have some notification about some wire transfer that happened. It doesn't mean they know what it related to. It doesn't mean the IRS has any knowledge of it.
The IRS probably didn't know and wouldn't know about the kids I have until I told them about it. Sure the federal government would have theoretically known about it from telling the Social Security Administration (not necessarily a requirement!) and later applying for a passport, but the IRS wouldn't automatically know these things. If I told your cousin something do you instantly know it? Federal agencies suck at sharing information.
I do agree we can simplify filing income taxes for the vast majority of people. I agree most of the US doesn't have a kid every year, isn't in a non-reporting real estate state, don't do a ton of stock day trading, isn't donating half their income to charities, etc. But you shouldn't assume the IRS truly knows all your tax situation, and I'd recommend still looking over that simplified return if you've had an odd year if we ever get there.
The adult thing would be "Wow I guess I had no idea what I was talking about".
Scroll like 12.5 more pixels. The next section immediately below tax assessed value says "Sales Data" and includes a column for "Sale Price".
The fact remains through all of this that the IRS does actually have _all_ of the needed information for the vast majority of tax filings.
It's an extremely bad faith reach to be like "but maybe I sell my house for bags of paper cash (no banks) every year without telling anyone but want the IRS to know about it" and pretend like that's not an absolutely obnoxiously absurd argument against doing something that would help nearly everyone in the country.
Because, let us be absolutely clear, the vast vaaast majority of everyone in the country live in other states, do report sales even if they do live in those states this person is making the claim about, don't sell or buy houses all that often if at all, and especially don't do it without involving a reporting financial institution.
The federal government likely has zero clue what I spent to buy my house. They could probably find it if they bothered looking hard enough, but it wasn't directly reported anywhere with the government, especially federally.
I'm totally not against having a simple filing system though and agree for most people for most years it would be way simpler. Just pointing out a spot where you're incorrect on the federal government, especially the IRS, knowing everything. You're getting really angry at me about things I've never said. Probably time to calm down my dude.
This wouldn't change accuracy, if anything it might increase accuracy by simplifying it for the vast majority of filers. Nobody is saying you wouldn't be able to file just like you do today, but being able to just review a card of what the government already knows and OK'ing if right would make it massively simpler for 87% of tax filers. You could still have fun spending hours filling out several forms for your odd tax situation.
Remember, the IRS is already computing your taxes behind the scenes based on all the information they have.
If you report an answer different from what they computed, you get audited.