Just tell me what I owe or what my refund is (or since I use a standard deduction, just take out the right amount to begin with) and allow me to contest it if I disagree.
Your post is almost exactly what I was going to write as well.
The government knows how much I make.
They know how much I've paid in taxes.
Why the fuck do I have to go through the bullshit of entering all that information that they already know about me? It's absolutely nonsense.
Fuck Intuit and their political lobbyists who are perpetuating this bullshit of needing to file every year. It should be a 5 minutes process.
It's tricky to take out the right amount even with just the standard deduction because of how tax brackets work, as they need to know all the income you have earned for the year up until that point along with any taxes paid in (all jobs, interest on a bank account, etc) and then they need to know how much money one will make in the current year (will they get a pay bump, put in some over time, take unpaid time off?). Or if you are going to have a kid or get married that year.
There are also credits that can be taken with the standard deduction like for tuition or say an EV purchase.
I think they could probably get pretty close with most people. And, I think those tax credits would get reported to the government anyway (otherwise how could they verify it). Regardless that part was more of a wish. Just sending me a bill would be a marked improvement.
I'd argue they get pretty close for most people right now if they have everything setup properly.
And even if credits get reported unless they are reported at the beginning of the year pay check with holding couldn't be changed.
But yes just sort of auto generating a return with either a refund or bill that someone could choose to dispute or accept would be much easier of a task and I think a reasonable ask.
For the majority of people out there, all their income is going to have digital records. A cash only store still deposits money in a bank, after all. For the people that don't... chances are their income without a digital footprint isn't being reported, and is small enough that no one is worried about that in the first place.
If the IRS is being told by a person's work how much they're paid, by their bank how much interest they got, by any Etsy-esque services how much they were paid... then the IRS has every bit of information it needs to get automatic withholding correct.
Right now withholding systems default to taking too much money out, because it's easier for the government to send you money than it is for them to request money from you. It also avoids the headache of most people being hit with surprise IRS bills. The IRS could keep that default, and then as the year goes on it could shift that withholding down until it's laser close. The negative there is that variability is bad for budgeting too, but with some work they could make it start close enough that it shouldn't be all that variable.
If the IRS is being told by a person's work how much they're paid, by their bank how much interest they got, by any Etsy-esque services how much they were paid... then the IRS has every bit of information it needs to get automatic withholding correct.
Unless you just want to just keep withholding on the marginal tax rate a person is currently in, thus starting your withholding super low in the start of the year and increasing it throughout the year so that come December they have way more withheld per paycheck than in January, it's not simple.
Future income is unknown, you could maybe design a system a system that assumes you will adjust your withholding amounts especially in the last quarter of the year to either catch up or slow down with holdings to try to best get you close to zero by the end of the year, but even then to be dead on still is a wild bar to clear as that requires that last source of income to know it's the last income for the year.
You're also making the implicit and incorrect assumption that this assumption of future income is not already the status quo. It is. The IRS already does this with your automatic withholding. It just does it at a higher level than necessary, due to what I mentioned above. Withholding basically assumes that a person will continue to earn whatever their paycheck was in every future payment period (weekly, semimonthly, whatever).
Your assumptions on how this would be dealt with are not realistic. The outlines of how to implement this not only already exist, they are already used and have been used for decades. All the IRS needs to do is glue together its knowledge of your income sources and lower the withholding amount based on being able to predict an individual's income far more accurately.
Data on seasonal income is known too, for the record. Consistent trends in income changes with parts of the year are not a surprise to the government agencies that care about it.
there is a few exceptions for this rule like self employed and individual contractors and sometimes if you work for a very small business however they are exceptions, for almost everyone else it should just be a bill that can be contested if there is issues.
Your post is almost exactly what I was going to write as well.
The government knows how much I make.
They know how much I've paid in taxes.
Why the fuck do I have to go through the bullshit of entering all that information that they already know about me? It's absolutely nonsense.
Fuck Intuit and their political lobbyists who are perpetuating this bullshit of needing to file every year. It should be a 5 minutes process.
This is the best summary I could come up with:
Today, the US Treasury Department announced that taxpayers will have the choice to go paperless for all Internal Revenue Service (IRS) correspondence in the upcoming 2024 filing season.
By accelerating paperless processing, the IRS expects to simplify how Americans access their taxpayer data and save millions historically spent on storing more than a billion documents.
Treasury Secretary Janet Yellen said that updating the IRS technology was crucial to reduce the tax gap and ensure that "high earners play by the same rules as working and middle-class families."
Ars reached out to several organizations representing tax professionals and accountants to see how the IRS going paperless would impact individuals and corporations during the next filing season and will update this report as more information becomes available.
Last month, Congress said that H&R Block, TaxAct, and TaxSlayer could be fined billions for "recklessly" sharing potentially hundreds of millions of taxpayers' sensitive personal and financial data with Google and Meta "for years" in apparent violation of laws.
I'm a bot and I'm open source!
For anyone wondering how this will "make high earners play by the same rules":
Seemingly not everyone will be stoked to see the IRS go totally paperless. The Treasury Department said that combining paperless processing with "an improved data platform" will make it easier for data scientists to extract and analyze data—potentially detecting tax evasion that the IRS has long overlooked due to a lack of resources.
"When combined with an improved data platform, digitization and data extraction will enable data scientists to implement advanced analytics and pattern recognition methods to pursue cases that can help address the tax gap, including wealthy individuals and large corporations using complex structures to evade taxes they owe," the Treasury Department said.
In April, the Treasury Department said that "improving enforcement among high-income and high-wealth individuals, complex partnerships, and large corporations that are not paying the taxes they owe" could end up flagging $160 billion owed but evaded annually.
"Due to a lack of resources and loss of top talent, audits of the wealthy and large corporations have plummeted over the last decade, and the amount of taxes evaded by the top 1 percent has exploded to $160 billion per year," the Treasury Department reported in April. "Audit rates for millionaires fell by 77 percent, audit rates for large corporations fell by 44 percent, and audit rates for partnerships fell by 80 percent between 2010 and 2017."
Treasury Secretary Janet Yellen said that updating the IRS technology was crucial to reduce the tax gap and ensure that "high earners play by the same rules as working and middle-class families."
Anyone taking bets on Congress shutting this down?
This is a direct result of congress intentionally giving greater funding to the IRS with the explicit goal of increasing revenue by decreasing tax evasion by the wealthy. https://en.wikipedia.org/wiki/Inflation_Reduction_Act
The chances of congress shutting it down comes down to if republicans gain control over government in next year's elections.
Crazy how they're able to do this but the taxpayers still need to 'prepare' their taxes themselves. What a fucking joke of a government we have.
Did hell just freeze over?
I'll believe it when I see it.
Fuck taxes!
This is a most excellent place for technology news and articles.
