Those who have already finished their paperwork can read about why the process is unnecessarily complicated.
Imagine filing your income taxes in five minutes — and for free. You'd open up a pre-filled return, see what the government thinks you owe, make any needed changes and be done. The miserable annual IRS shuffle, gone.More details at Pro Publica.
It's already a reality in Denmark, Sweden and Spain. The government-prepared return would estimate your taxes using information your employer and bank already send it. Advocates say tens of millions of taxpayers could use such a system each year, saving them a collective $2 billion and 225 million hours in prep costs and time, according to one estimate...
Well, for one thing, it doesn't help that it's been opposed for years by the company behind the most popular consumer tax software — Intuit, maker of TurboTax. Conservative tax activist Grover Norquist and an influential computer industry group also have fought return-free filing.
Image from The Economist.
Also in The Netherlands. With free government supplied software that is available for Windows, OSX, and most flavors of Linux.
ReplyDeleteIt's just common sense really; it doesn't just save us citizens time, but the government as well. Much cheaper to process electronic filings than paperwork. Probably makes for more accurate filings as well.
Or, just ditch the IRS entirely. Embrace the Fairtax model (not a flat tax or a VAT tax). No more worries about filing taxes ever.
ReplyDeleteI'm 33 now and I've never done taxes any other way than looked at the prefilled form they send once a year for about 5 minutes. I've never had to correct anything on it. So the Finnish system has been like that for at least 15 years now.
ReplyDeleteI SMSed in my ok on the returns a few weeks ago. It took a little over a minute to find the verification number on the backside on one of the papers sent to me and check to see if it looked sane enough.
ReplyDeleteIRS seems completely insane to deal with.
/Sweden
I'm jealous. In comparison to you guys, my wife and I spent the better part of several days sorting and organizing receipts and then used that TurboTax software to print out 70 pages for three returns (federal and two states). I don't mind paying taxes. I do mind the paperwork and the wasting of my most precious and limited asset - time.
ReplyDeleteAustralian tax personal works pretty much the way you describe for most people. But I think you must have to give the IRS much more info than we have ever had to. Even when our system was paper-based I could fill out the form in less than ten minutes.
ReplyDeleteSimilar here, though I might have needed half an hour. Those old paper filings were fairly straightforward flowcharts. Tick a box here and there, fill in some numbers, add and subtract, double-check, done.
DeleteOf course, over here we don't have to file separate state and federal taxes, and many taxes are paid through the employer. Perhaps those help explain the difference in complexity compared to the US.
"you must have to give the IRS much more info than we have ever had to..."
DeleteIn the IRS system, in order for us to get partial compensation for many thousands of dollars of medical bills, we have to assemble all the receipts and then separate out the ones for prescription meds from the OTC meds and total those up separately from the physician bills, which are reported separately from the hospital bills. But the labs and dental and eyeglasses go into yet a different category. This despite having spent many additional thousands of dollars for medical insurance which didn't cover any of these items.
Crazy stupid data collection by an overblown bureaucracy.
Not to mention that the medical deduction is usually referred to as "the deduction you don't get." Unless you've got large surgery expenses (beyond what your insurer insurer is "willing" to pay), most people won't get above the 7.5% AGI threshold for a deduction.
DeleteYou're quite correct, Steve. My wife and I had medical expenses at 22% of our adjusted gross income, so it was worthwhile for us to do the paperwork. Ironically, the bulk of that expenditure was not for treatment of illnesses but for paying for the insurance, which didn't apply for our expenses...
DeleteI now live in Florida, so no state tax anymore. After selling a rental property some time ago, our taxes have been simplified. For several years I've used an online tax preparation site that is free and filing taxes has been very easy. We have income from different sources and the tax questions on the site lead you through the various possibilities and even ask about Social Security income if your age qualifies you. So far, so good for us. E-filing with no paperwork is so much easier than the old paper filing.
ReplyDeleteI now live in Florida, so no state tax anymore.
DeleteThat is an incomplete statement. Florida does not do income tax. But it does charge property taxes, sales tax, corporate taxes and a massive variety of tourist taxes.
Trust me, Florida gets its share of your money.