How come the IRS doesn’t just mail you a bill if they know exactly how much you owe in taxes?
In: Economics
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1) Not everyone “owes” money.
2) Of those entitled to a refund, not all will claim everything they are entitled to.
3) Of those who owe, some may make an error, and think they owe MORE than they do.
Yes the IRS knows what your taxes should be based on your income. However the government over the years in order to promote various policies have decided that if you a spend money on certain things you won’t be taxed which means that the money the IRS thinks you made and your taxable income are different
American is the land of the free. Everyone interprets that differently, but one thing is certain. You have the freedom to file your own taxes.
Taxes are actually pretty easy. The IRS makes information readily available.
People would rather ignore the fact that taxes are certain. Especially when they are due around the same time every year, if not later. It’s easier to blame large business and lobbyists, then educate yourself on tax code.
You don’t need the private sector to file your taxes. If you feel like you do, that’s on you.
Forgive me for my ignorance but Americans have to file their own taxes? Lol
Because they don’t.
They know how much income you made that was reported to them and they know what your standard deduction is.
There’s a ton of other deductions out there, and they have no idea if you qualify for any of them. A lot of them are for rich people, but there’s also a lot for normal people too. (Most poor people get back everything they paid, and some even get back more than they paid because of things like child tax credits.)
They don’t know how much you paid in qualifying medical bills. They don’t know how much you paid in student loan interest (even if it was to the Dept. of Ed., they don’t talk to each other). They don’t know how much you spent on qualifying retirement contributions. They don’t know how much you spent on farm expenses. There’s so many deductions I’d be here all day trying to list them all.
That’s why you have to file your taxes. You know (or should know, a lot of people don’t) all the deductions you qualify for. So you include them in your tax filing. Personally I qualify for a massive deduction for student loan interest paid. My student loan interest paid every year actually exceeds the cap for the deduction. But the IRS has no way to know that because the financial institution doesn’t tell them.
it’s not that straight forward. They only really know if they pay close attention to your case and if they audit you.
People lie in their taxes all the time. I think they just accept that as an acceptable “loss” and try to limit the damage
Because they dont
The irs estimates how much you owe and take it ahead of time from your checks or if self employed they have no idea how much you would owe ahead if filing. Even then they over take from me and pay me back alot every year. With all the deductions and credits and other factors that go into calculations its unrealistic for the irs to be able to accurately know what everyone will pay ahead of time
The simple matter is: in the US, changes in the tax code are used to modify citizen behavior.
Want people to buy more houses? Put a tax credit on paid mortgage interest.
Want people to have more kids? Deduction per child dependent.
Want companies to pollute less? Create a tax credit for being clean.
And on and on and on and on… The tax code in the US is the -first- lever politicians pull to enact specific social change.
Because then it wouldnt so easy to ship your tax burdens overseas and fuck everyone over. Like it is now for every large company in America that’s milking us and not contributing to America beyond bribing politicians.
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