As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.
You type in like 14 numbers, each very clearly delineated.
But... if you are a business owner, it takes like 2-3 weekends. (I say weekends, because we work all day during the week)
Do you participate in SPP? Then the form you get will have an incorrect cost basis and you need to manually correct them. I guarantee it.
Do you trade individual stocks (e.g. RSUs)? A bit more work.
Got a K-1 form from an investment? Could be straightforward, or if it's real estate, a major pain to fill out those tax forms.
I’m guessing you would find it equally confusing if I told you we’d pay a premium to use a private DMV or private post office. Here in the US, that statement wouldn’t be controversial at all.
Interesting. I am currently renewing my and my spouse’s passports while also trying to get first time passports for my children and I couldn’t find the process more outdated and borderline kafkaesque. If you told me the website was built in 2003 and hasn’t been updated since then I would believe you. I can only renew my passport by snail mailing everything including my existing passport. I can only get my kids a passport by physically taking them to an approved location for processing. I could not get an appointment for about a month at any location near me. As a bureaucrat myself, I just find this level of hoop jumping to be ridiculous.
It was taken down after the pilot for them to adjust and fix the process but there are improvements in the works.
https://travel.state.gov/content/travel/en/passports/have-pa...
I did a digital renewal for my passport and it was fine also. It’s a once in many year event, so it doesn’t bother me that I need to go to a special place to submit documents.
Switzerland was the only one with better govt service. Everywhere else it was significantly worse than the US.
Surprisingly France and Germany were worse than India in terms of obscure things needed for getting anything done and no exceptions for anything. The US on the other hand, if you can go talk to someone in person they'll make it happen.
I sold a house in 2019, I walked away with only about $15k profit after paying everyone. Bought the house for $335, sold for $370ish. I think my principal was around $310k at the sale. I got a letter in 2022 that I owed the IRS something like $150k or so, some shocking amount of money. Freaked me the hell out. I had to dig out all of my paperwork from the sale and send it to them. All of it but, I forget, maybe $100-1k was dropped. I have no idea what their deal with that was. I had a mortgage, paid the mortgage to my mortgage broker, and when I sold it paid the mortgage off to that mortgage broker. Don't they handle that? I don't know, it was my first house sale.
I'm 40, I've never had the IRS annoy the hell out of me until the last 5 years and now I get a letter from them and my heart stops.. Like, what is it now, masters of my w2? Where I have erred today? It feels like they're practically targeting me at this point. I get letters from them and wonder if they're even legitimate so I call in to verify. When I go to the irs.gov site that tells you what you owe, it doesn't even match what any of my letters say. Right now it says I owe money from I think 2016 that was sent to collections and I've never received a letter for that. Collections! For my taxes? That you pull out of my paycheck?? I don't have ANYTHING about that on my credit report. I also have no way to pay it because it's "In collections."
Seeing all of the rich assholes skate by with tax evasion and all of the loop hole work they do, then knowing they're on my ass when I'm just a dude getting a salary just pisses me off so much.
Be more condescending though, that's helpful, wise one.
I didn't say I KNEW it was the issue, I said it was potentially that. The IRS doesn't say "Hey you messed up here, fix this, that's the problem." They just send you a bill, which sucks. I had NO information on my $150k house sale tax and had NO idea what information they needed to rectify it.
The IRS doesn't know about your income until the end of the year, when it gets reported to them by your employer.
I'd love to hear you disprove to some omnipotent government entity, with no information from their side, that you did NOT make $150k extra cash last year. Lets go, bud. Prove your lack of $150k. You didn't make an extra $150k last year? Prove it. Show your lack of paystubs against our information that we won't provide you with.
Some of you absolute mental giants think I'm crying about my anecdotes when they're literally just my examples of how the IRS gives you no information and just sends you a bill for $150k. That's the point of the post. I absolutely am not asking for your tax advice.
My issue was that my with-holdings and everything looked fine. But I was not having any federal taxes taken out on my paychecks for federal with-holdings. Turned out to be a software issue that the company who makes it was able to correct.
You have control, they don't.
Withholdings are calculated based on elections you make on an IRS form called a W4 (which could be electronic or paper). Neither your employer nor the IRS "control" that, but there are some common case defaults.
It's on each taxpayer to understand their actual tax liability situation and adjust withholdings accordingly.
Use your W-2 and this calculator from the IRS[1] - ensure that your W-2 includes the bonus you received (I would imagine it would since you got taxed on it). That should give you the values you need to have in your W-2 to avoid a massive tax bill at the end of the year.
You can also set a additional flat amount of withholding per paycheck. You get any overpayment back as a refund.
[1] https://www.irs.gov/individuals/tax-withholding-estimator
This is a common gripe I hear from US tax filers, and I fall into the same psychological trap myself. After all, it always feels bad to have to pay a 4 or 5 figure sum to anyone.
Instead, you should see this as a benefit -- you had the opportunity to extract gains from the stock market (or other investment) on money you rightfully owed to the government; they only came to collect it at the end of the year instead of with each paycheck. Conversely, a tax refund should be seen as a disadvantage, as the government withheld more money from you than it was entitled to.
Although I suspect this only matters to FANG where the changes to withholding from the Tax Cuts & Jobs Act meant you had to modify the supplemental withholding rates so you wouldn't get penalized.
https://pburgoscpa.com/managing-your-bonus-in-nyc-a-high-inc...
For your home sale, the person responsible for closing the transaction files Form 1099-S with the IRS, reporting the sale amount (which they're responsible for) but not how much you paid for it (because you're responsible for that). You should have gotten a copy of the 1099-S, which was your clue that you needed to report it on your return.