Tax time

The IRS is actually testing a new system where they just tell you how much you owe/get, and that's it unless there's unreported income and such that needs to be corrected.

Also, the IRS only escalates straight to jail if it's incredibly obvious you're intentionally committing tax fraud. If your forms are wrong they just send you a letter to fix it.
- I wish more people were aware of this. One year I made a rather significant number entry error and should have owed a couple thousand more than I paid. I got a fairly routine letter later in the year asking me to correct the error. I had a little mental panic, reran the numbers, and filed an amended return. There was no pressure, you always have payment options, and they send you back another letter confirming the acceptance of the amended file. I understand that many people would have significant problems paying extra unexpectedly but unless you are actively committing fraud you are not an immediate priority for the IRS.
Link? I will instantly use it. Mostly to stick it to Intuit.
- Turbotax has entered the chat. Turbotax has DMed your senator a couple hundred thousand to make sure you will never be able to use this
- They decide who is in the pilot at this point, not us.
- https://www.irs.gov/newsroom/irs-direct-file-update-free-secure-irs-run-electronic-filing-option-on-track-to-be-available-in-2024-as-a-limited-pilot
  If you don't qualify for the pilot, you can also find out what other tax filing companies do not lobby to keep taxes hard to figure out and file.
- Things you need to know first
  https://youtu.be/gT5_8nGWL0w?si=_Wc7SNtZXjvGOb8Y
Why that isn't the default to begin with is anyone's guess
- I mean it's not really. Lobbying. Lobbying is the reason.
- It's the default in places like the UK. Tax companies gotta get in there and stall progress for profit.
- Yeah. Where I live I get a message from our version of the IRS. They tell me how much taxes I've paid last year, and if I'm owed back taxes or if I owe more. If I don't change it, I accept it. Easy.
It's already like this with free tax returns. It just sucks you have to go through Intuit, because of their lobbying. The government is also counting on you to not properly doing your taxes. They want you to be lazy and pay more in taxes, for the convenience.
They don't want to come after people who aren't paying their taxes. They're making it inconvenient to file, so poor people who don't have time/ knowledge overpay.
- You apparently misunderstood what I was saying. The IRS is testing a program where they tell you how much you get/owe, and that's it unless you need to make changes like adding deductions or reporting unreported income.
That sounds like how it works in my country. Every year is just log in, take a quick look at the numbers, sign and send it away. Takes a minute or two and it just works.
Testing for 13 states for now.
https://youtu.be/gT5_8nGWL0w?si=_Wc7SNtZXjvGOb8Y
- Here is an alternative Piped link(s):
  https://piped.video/gT5_8nGWL0w?si=_Wc7SNtZXjvGOb8Y
  Piped is a privacy-respecting open-source alternative frontend to YouTube.
  I'm open-source; check me out at GitHub.

Okay, so I get the reason why NOWADAYS IRS can't tell you how much taxes you owe is lobbying. But how did it work BEFORE computers? Did you file your forms and IRS agents checked them one by one, and it was just most efficient to check taxes instead of calculating them? How did we get to the situation where the IRS checks the taxes instead of calculating them? I'm genuinely curious, because that's a recurring theme worldwide.

We have a "voluntary" tax system in the U.S. -- that's always been the situation. "Voluntary" doesn't mean that that you can choose to not volunteer to pay your taxes. It mostly just means that the way we run things, by default, it is each citizen's responsibility to calculate and pay their taxes each April.
American taxpayers filled out 1040 forms in the days before computers, a lot like they do now. The IRS selected certain fillings for audits, just like they do now -- sometimes because of an apparent discrepancy, and sometimes just at random.
It would be a lot more work, take a lot more resources, and be prone to a lot more error and lawsuits, if the IRS tried to calculate everyone's taxes for them. Even now that we are in the days of computers, it is much more efficient for the IRS to only audit a fraction of the filings submitted each year.
I'm also pretty sure our "voluntary" tax filling system has something to do with the Fourth Amendment and other privacy concerns. A lot of Americans very strongly believe that it is not the government's place to be all up in their private business.
-- EDIT to add:
There is a difference between whether it would be possible for the IRS to calculate individual citizens' taxes and whether we should abandon our voluntary tax system for one in which the IRS simply calculates the taxes owed by every citizen and send us each a bill. My original response was intended to address the latter, but now I'll say something about the former:
For someone whose single source of income is a job working for someone else, of course it is possible for the IRS to calculate your taxes. You've already volunteered all the information the IRS needs to do so. Your employer has already told the IRS exactly how much income you've earned and exactly how much of it you've had withheld for taxes. Remember when you signed that withholding paperwork with the HR department on your first day? That was the moment when you personally volunteered your income information and payments to the IRS. You've literally already been reporting your income and paying taxes on it ever since.
The way taxes work in practice for a single-income employee does not reveal the potential complexity of tax accounting for individuals who are self-employed, who have multiple sources of income, and anyone who doesn't want to make regular fillings and withholding payments throughout the year. The tax situation for single-income American employees is not the situation for all Americans. Not everyone has an employer who calculates their taxes and pays installments for them throughout the year.
It is common for Americans to have a single job with an employer who calculates and pays their taxes for them. This makes it very easy for the IRS to know exactly how much the taxpayer owes (or is owed) at the end of the year. If it ends up feeling to like this is the same thing as the IRS calculating your taxes for you, however, I'm guessing it's because you forgot that it's actually your employer who's been doing that accounting job for you all along, with each paycheck.
- Yet many other countries do in fact calculate taxes for their citizens. You just need to check it and sign.
- The IRS is confident it can do direct file for most american returns, which is why its running a pilot program this year to do just that.
- if the IRS tried to calculate everyone’s taxes for them
  The IRS does calculate everyone's taxes without an audit. If you mistype a bank statement you will get a bill or a check from the IRS (depending on whether the error was paying too much or too little).
  An audit is completely different than the typical, "you typed $1000 in bank interest but you only really received $100 so here's a check for the difference in taxes. This has happened to me many times over the years. It's why I no longer get stressed over taxes because I know the IRS will just send me a bill or a check in 6 months to fix any mistakes.
- We had the same in France until not so long ago. It is a democratic principle that you voluntarily and freely pay your taxes, rather than the state take your money without you hvving a say in it.
  It is both a principle of transparency and consent for taxes.
Not in the Netherlands, there it's all calculated for you and you just do the checking. If you have a more complicated situation like self employment or other stuff you may want to hire an accountant that will not only double check but also make sure you get the best outcome by doing some strange wizardry but for most people it's literally just go online, check the salary numbers etc, click okay and get some cash back to your account.
- Too bad the Belastingdienst (Dutch Taxservice) is a massive shitshow on pretty much anything else. Their hardware is so damn old new tax laws can't be passed, because it would break the systems. Of course this is more the fault of shitty upper management and poor political will to do anything about it.
Can't speak for the American IRS, but in my home country they audit some declarations at random, specially the parts they don't have in their system, like checking if professional deductions are valid or if there's anything that indicates some foreign income wasn't declared. Before computers the system was probably more or less trust based for most cases.

In reality -

Me: $600

IRS: are you a billionaire?

Me: what if I am?

IRS: $600 is too much

Damn y'all Americans really do taxes weird

It's because our country is a corporate oligarchy.
- Sounds cooler than it is
Canada does this too. Do other countries just tell you? That'd be nice.
- Yeah. Basically, we get a pre-filled form with most of what can automatically filled in, already filled in. Of course some stuff like donations (which are deductible) and other stuff that are not automatically linked to you have to be added by hand, but for a vast majority of people there is no such thing.
  So basically, open the pre-filled form, check that the incomes and your current situation is correct, send it back, then you basically get the amount (which can be either automatically collected through direct debit at a given date, split monthly, or paid manually).
  We usually argue about why and how much tax we pay, but I never had any heated discussion about the tax system itself.
- My country just tells you.

How it actually works is that the IRS doesn't known how much you need to pay. You provide your income and taxes already paid throughout the year then the IRS says "yeah, looks about right for what you made" or here's money back you paid to much or didn't pay enough. It only gets complicated when you have huge amounts of money.

That's still dumb AF, they could easily do like many other countries do and send you a breakdown of what you owe/getting back and why. You look it over and go "looks good to me" and have to do nothing or "This part is wrong" or "I qualify for Y tax break/incentive/credit" and then file some proof and you're done.
But the tax prep companies lobby really hard to keep things as difficult as they are
- and there is a tax form that is setup exactly like this available for years. the 1040x. but they don't use that to predo our taxes.
Your employer is required to submit the amount you were paid and the taxes that were withheld. The IRS knows how much you owe assuming that is your one source of income and you don't have deductions beyond the standard.
- Exactly. The IRS has TONS of information on every individual and business. There may be some unreported items, but that’s the exception to the rule.
  The IRS has a “transcript” with all of the many reported transactions associated with each person/entity. And you can request this transcript, which many people with complicated tax situations do so they can verify that everything is reported correctly and their records match the IRS data.
  https://www.irs.gov/individuals/get-transcript
- Many people have deductions beyond the standard
That's only true if you're getting paid cash under the table, make tips, or are self-employed. Your job reports your earnings to the IRS.
Pretty much how it works in India too.

I'm so tired of paying HR Block $300/year to do my taxes, which has no tax return because I do my deductions carefully. Why can't we have a straightforward system like the rest of the world??

Because Congress creates really, really complicated tax laws that reduce tax burdens for business losses and obviously favor a structure that if you're wealthy enough you can exploit it for things that aren't actually contributing to our economy. Regular person with a few deductions that might go over a standard deduction? You might want some help with that, even if you're "doing it yourself" with the help of software (just like almost all of tax preparers do) or if you're just doing a standard deduction, it is easy.
Why can't you just fill out a 1040EZ in a webform and file online through the IRS?
Companies like Intuit lobby Congress so that the IRS can't just make it easy for most people. For example, the IRS wanted to just have their own app on a website to help you do your taxes for free just like TurboTax but nope.
As an example, you can specifically blame Intuit as an example that has actively tried to limit the IRS making tax filing free and easy for most Americans.
The same thing has happened with weather in the US. NOAA/NWS pretty much provides all weather data and RADAR data to the public for free. They also provide a public API and all those weather apps either directly or indirectly get their data from there for the US.
Why don't they have an app like all these weather services do? Well companies lobbied so NWS isn't allowed to. The best they can do is provide a website that you can "use like an app." Paying extra for that up-to-date RADAR feed in your weather app? Guess what? You already did through taxes and now you get to pay a private company to simply display it in their interface.
You can specifically blame AccuWeather as an example of a company that actively has tried to limit the NWS and actually lock the public out of the data that they paid for through taxes.
Congress has the power to end this non-sense but does not. I'm sure this won't surprise anyone when I say this but US law is slanted towards empowering businesses and lowering accountability.
FreeTaxUSA provides free federal filing, including Schedule C (Self-Employeed) and Schedule E (Rental Income). I'm sure they have more scenarios.
You pay for state but it's usually a $12-15.
You can import your TurboTax/HR Block returns and it mostly does a good job bringing it in.
I started a thread on asklemmy to find out what are alternatives to scummy tax services that lobby against the better interests of tax payers. So far Tax Free USA seems like the one with the lowest cost (free Federal, $15 State) and while they are a member of a lobby group, the group has spent a fraction of what Intuit and H&R Block has to keep our tax returns complex.
Seems if I link the thread, my comment is hidden.
Have you looked into TaxAct or CreditKarma? Both seemed pretty good (compared to turbotax) when I tested them out.
- Wasn't CreditKarma bought out by Intuit? The same assholes who own Turbotax?
- Yeah I make too much per year to qualify for the cheap options, plus I need to file my stock and cryptocurrency options plus my retirement.

I've often thought it would be fun to just punch in some random numbers, send it off and say that I owe $10, pay the amount and let them figure it out ... they already do anyway.

But I know that if I do, they'd probably make me pay financially or legally anyway.

- there will be fines and fees with that though.
I somehow forgot to do my taxes in 2011 (was a student and travelling), it took them 10 years to come at me asking about it. Now I have no access to any of that info and even if I did they'd owe me money. Their systems are slow unless you owe a lot I think.

Just a PSA, the IRS recently instituted some kind of AI algorithm that is re-flagging a lot of things that have already been resolved... a friend got a bill for $1500 which they had earlier sent a letter of apology for. He doesn't actually owe anything, it's just the glitchy algorithm sending the old bill out again.
If you don't understand why you owe more, don't just give up and pay it. The IRS can make mistakes too.
Years ago they actually sent me a check because they thought I should have taken a deduction that I didn't. I didn't want to get on a gotcha list, so I sent back a letter explaining that the deduction was not proper for my situation, and they responded that if that was the case, I needed to file an amended return. That was way more energy than I wanted to spend on this issue, so I just ignored the check... until the next year, when they mailed me another one with a tartly-worded form letter about the importance of promptly depositing it, and again the year after. At that point I figured if Uncle Sam is that desperate for me to take the money I'd indulge him. At this point I'm well past the statute of repose for any potential issues that created, so I think I'm in the clear, but I guess we'll see.
- I mean, if they make that mistake, they can't demand more back than they sent you. Look at it as an interest-free loan, invest it into something that'll reliably earn more money over time, and if Uncle Sam ever wants it back, you've still made a profit

I actually haven't done my taxes in like 2 years due to extreme poverty (in the u.s you don't have to file if your income is under a certain threshold) I think I'm still under that, but I still should probably file this year right? Is there anything specific I should do? Maybe not the best place to ask, but I hate financial anything so I'd really appreciate some advice

in the u.s you don’t have to file if your income is under a certain threshold
You don't have to but also if you're under that threshold you would almost certainly be getting a refund of all of the taxes you paid that year. So I highly recommend filing even if you don't need to
- I'm pretty sure TurboTax told me otherwise, it would've cost me to file I hate this goddamn nonsense but ty
First thing would be to figure out if you're still under the limit. If you don't have to do them, don't do them.
If you are over the limit, there are plenty of free options out there to assist. I personally use free tax usa which works for me. It's great if your income just comes from normal sources like a job, it's not as great if you have investment income or things like that.
I think turbo tax has a free version as well if you meet some qualifications. It's a bit simpler to use imo, but Im not a fan of the company

If your itemized deductions are higher than your standardized deduction, you're likely in a fairly high income bracket and can have a professional do it for you.
- Yeah... My wife and I together make six figures a year (if only just barely), own a home with a mortgage, and have a kid, and I've never had the itemized deduction exceed the standardized deduction. I think you've either got to specifically structure your financial life around taking deductions, or make "'It's one banana, what could it cost" money to have itemized deductions make any sense, at which point, why are you complaining about the cost of tax prep anyway? A tax accountant doesn't cost that much.
Interesting. What deductions do you have the government doesn't know abut? Where I pay taxes they know how many kids do I have, they how much do I make and how much money do I save for retirement. What deductions do you have in US the government doesn't track?
- Work expenses and charitable donations

An account's take on this https://youtu.be/Vu3T4ZXzOyw?si=KnAP2TEvx9WSLzno

Is it a good take?
- Not really, says Australia has a good system and 45 countries at least partially do it already. The IRS will be testing a free online tool amongst a small group of filers in 2024 but none in the information will be pre populated due to limited scope of the project. He seems nice but talks really slow, rehashes content repeatedly and doesn’t even provide an answer or any kind of analysis. At the end he briefly wonders if TurboTax lobbying Congress impede progress…no shit.
  He never really addressed anything in the video, it’s honestly impressive.
Here is an alternative Piped link(s):
https://piped.video/Vu3T4ZXzOyw?si=KnAP2TEvx9WSLzno
Piped is a privacy-respecting open-source alternative frontend to YouTube.
I'm open-source; check me out at GitHub.

Blows my mind that you have to file tax returns and stuff in America.