How come the IRS doesn’t just mail you a bill if they know exactly how much you owe in taxes?
In: Economics
Because a small number of companies who have made their business from assisting people with filing tax returns, have paid huge amounts lobbying politicians and making ‘campaign donations’ (i.e. legal bribes) to prevent it.
The IRS doesn’t know every single detail that could affect how much you owe, so a bill wouldn’t always be exactly accurate for every single filer
They are not allowed to. This is how it works in most other countires. They send you a prefilled tax return based on what they know. You then make any changes to this as there may be a few things the IRS does not know until you tell them. Based on this they will calculate your taxes and send a bill for the remainder unpaid taxes or repay you any overpaid taxes. But in the US there are laws against having the IRS help people fill inn their tax returns in any way. There are IRS employees who have been fired for violating these laws. And even if they were allowed to help you they do not have the funds to do this for everyone, they bearly have enough money to collect and process the data for a few tax returns so they have to trust the information returned in most of them.
Because the government doesn’t keep track of how many children you have, charitable donations you’ve made, or what sort of unclaimed income you may have, all of which affect how much taxes you pay. It also doesn’t keep track of how much money you make in general, so the taxes that are withheld from your paycheck are just an estimate. At the end of the year you may be owed money back. You may owe more.
They do have access to your banking stats so if you try to cheat they have passive systems to scan for that, but even then they won’t know how much you owe. They’ll just send out an accountant to dig through all your finances and it won’t be pleasant.
Because I need to pay a meager fee to my non affiliated tax preparer so I can get back as much as I possibly can of the money the government was graciously holding for me without interest.
How else am I going to claim all my work expenses, small business use of my house and the 9 real dolls I claim as dependents. Not to mention their depreciation.
1. Some companies make money from assisting people with their taxes and are lobbying against IRS helping people.
2. The American politicans who are against taxes want them to be viewed as problematic by American people as possible. This is why items in the store don’t have taxes already calculated in their price. Taxes are supposed to be rubbed in the faces of the American people as a chore.
This is exactly how it is in my country.
Except you can even sign up to get notified via E-Mail and then download your tax statement and how much you get back.
Where there is a will, there is a way, but the will to simplify seems to be lacking in the US.
Edit: didn’t realize I’m in ELI5, thought this was r/personalfinance. Seems like there are a few good answers already though, so hope the mods don’t mind me chiming in
I’m not too familiar with the US tax system. However I heard that here in Germany we have some of the most complicated tax laws in the world.
The income tax is automatically deducted from your paycheck. Every year you *can* do your taxes and inform the german equivalent of the IRS of anything they don’t know, like some expenses you had (cost of transportation to the workplace, anything mandatory that basically lowers your de-facto income). Some people are obligated to do their taxes (i.e. self employed).
You then get a letter from the “IRS” that informs you whether you get money back or didn’t pay enough. For most emloyees you usually get money back.
Turbo tax, H&R Block and other companies like them throw tens of millions of dollars at lobbying congresspersons and senators to keep it this way.
No other reason.
Because tax preparers lobby politicians to stop them from making IRS do just that.
This isn’t a joke.
TurboTax and it’s cohorts spend millions each year to make the tax law stay complicated so regular people have to hire them or buy their software to file taxes. Also, TurboTax promises irs to have a free filing system, but they [intentionally hide their free filing service from searches. ](https://www.propublica.org/article/turbotax-deliberately-hides-its-free-file-page-from-search-engines)
Lots of countries in the world does exactly what you suggest. When I was working overseas, the government would send me a tax Bill I can just pay online, and I only need to mail something back if I dispute the amount.
The US system is fucked up.
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