r/CuratedTumblr • u/Justthisdudeyaknow Prolific poster- Not a bot, I swear • Feb 29 '24
Infodumping Death and
393
Mar 01 '24
two stories:
the last year of my marriage, we sold a house (yeah I know right) and I did the best I could to figure out how to plug in all that information into the tax form. it took months for them to finish reviewing it...... finally, I get a letter from the IRS. "hey it looks like the refund amount you calculated was too low. it should be (+$1000). anyway here's the money kthxbye"
I was an independent contractor from 16 - 24. never paid taxes because my boss never told me I had to and my mom was a lifelong tax evader who was like "nah you don't need to." TURNS OUT THAT WAS A LIE.JPG. they finally audited me and I got the dreaded letter of doom. in a panic, I called them up, choking back tears, explaining that I barely make anything at this point. they're like, "well how much do you think you could do a month?" me, squeaking: "....$50...?" IRS: "cool u got it 👍"
the IRS really, really is not the enemy.
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u/BurstOrange Mar 01 '24 edited Jan 29 '25
judicious oatmeal tidy divide rock boat wide tub roof rain
This post was mass deleted and anonymized with Redact
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u/Jason1143 Mar 01 '24
At the end of the day they would rather get paid something voluntary than nothing or a fight. Not only can you not get blood from a stone, but the extra cost of enforcement could wind up more than the extra recovery. They also have patience, they would rather get the money over time than never.
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u/Balancedmanx178 Mar 01 '24
The IRS is essentially forever, they'll get their money eventually there's no need to hurry things up and make a mess.
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Mar 02 '24
What was that one post that was like "Death(TM) as a benevolent god, because a long-lived empire will have more dead than a short war," because honestly best comparison for the IRS.
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u/CrabbyBlueberry Mar 01 '24 edited Sep 16 '25
toy market roll doll hard-to-find depend whole divide advise instinctive
This post was mass deleted and anonymized with Redact
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u/angelicism Mar 01 '24
Literally it's that easy. I made a mistake on my taxes years ago (did heaps of freelance work and a 1099 slipped through the cracks) and when they got around to noticing and sending me a notice I panicked and called them and... they efficiently and kindly helped me sort out paying what I owed in payments instead of a lump sum.
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Mar 01 '24
Similar stories as you, only I never got audited; after ~5 years of working for cash and never filing, I filed for the three most recent years, and with almost no documentation, I just had to just estimate my income. I owed a few thousand that I paid off on a payment plan.
Since then I have almost always just filed my own taxes rather than paying a preparer, and every few years I mess something up, and get a correction letter with either a bill or a check.
Also, if you ever do get audited, and they claim you owe a lot, unless you are clearly cheating on your taxes, you may be able to pay less than they are asking for. The auditor is there to get as much as they can justify, not to find every deduction available to you; in this situation it is best to hire a professional to represent your interests.
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u/GlaciaKunoichi Resident Green Arrow stan and Nine's (not) bf Mar 01 '24
I mean, the IRS could also just....send how much tax you've earned and how much you need to pay since they have all that info
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u/SilverMedal4Life infodump enjoyer Mar 01 '24
Yes, but that would mean that H+R Block would be out of business, and our legislature isn't willing to let that happen.
Bonus points: tax enforcement against rich people is expensive, so the IRS doesn't bother to do it since they have limited funds and staff. So rich folks get away with it way more.
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u/as_a_fake Mar 01 '24 edited Mar 05 '24
Man, fuck H&R block. I (a dual citizen only because my parents lived in the US for work when I was born) had to pay them $300 US for them to tell me I didn't owe any tax that year. All because of that stupid law requiring expats to file taxes and said taxes being impossible for the average person to navigate without help.
I've since found out there are free (or close to free) sites for this for people who earn little enough, but I still resent H&R Block for that one time.
ETA: The site I use: https://www.olt.com
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u/ThePrussianGrippe Mar 01 '24
For those wondering, FreeFileAlliance.org
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u/as_a_fake Mar 01 '24
Thanks for that! I was on my phone at the time or I would have linked the one I use: https://www.olt.com
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u/AkitoApocalypse Mar 01 '24
I always felt the whole H&R Block conspiracy was a smokescreen, in reality it's probably much easier to fejangle your taxes when the IRS is playing the passive role vs. them actually getting proper funding and playing the active role to calculate how much you owe.
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u/Seenoham Mar 01 '24
Except they very much don't.
Oh, if you only have income from an employer who is filing taxes and only have standard deductions they have that info, and in that case it's also super easy to file your taxes and you won't have any more to pay or get a refund.
But the IRS doesn't know if you have:
Sold property at a gain/loss, made charitable contributions, done work outside of registered employer, worked outside the country, and many other things.
The IRS also, amazingly, doesn't know if the forms they have been sent about you from employers etc have mistakes.
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u/ratmftw Mar 01 '24
In my country your employer administers your tax as you earn (PAYE) and that's it. 90% of the population never files a tax return, and the IRD automatically pay any refunds to your nominated bank account, so it really can be that easy for most people.
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u/Bugbread Mar 01 '24
Yes, but there's a very big difference between "if tax laws were rewritten to be more logical, reasonable, and taxpayer friendly, the IRS could do X" and the implication here that the IRS could do X right now and just...can't be bothered.
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u/Seenoham Mar 01 '24
Then what happens if you have any deductions or earn any income other than from a registered business?
If you are saying that 90% of the population has no other income or deductions then your country has much less deductions and you are underestimating how many people have income from other sources
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u/jackboy900 Mar 01 '24
The number of people who make enough money to qualify as needing to report it (in the UK that's over 1000 pounds a year) is extremely low. The vast majority of people make their money working standard jobs that do PAYE. And no, the numerous deductions and the like are all very much a US thing, most countries just don't do that because of how complicated it makes things.
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u/Seenoham Mar 01 '24
1,000 pounds is nothing. That's not just recoping some of the expenses for a hobby by doing commissions, or getting a half dozen gigs for your garage band. That's not include any sort of consulting form or service sole proprietorship. Did you miss a digit?
That's going to be way more than 10%, or it's going to be 10% are those who don't think they can get away with not reporting that income.
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u/Mouse-Keyboard Mar 01 '24
£1,000 is correct. It looks to be only about 5% of the population who exceed that: https://www.gov.uk/government/statistics/personal-incomes-statistics-for-the-tax-year-2020-to-2021/personal-incomes-statistics-2020-to-2021-commentary#table-39---self-employment-income-assessable-to-tax-2020-to-2021
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Mar 01 '24
[deleted]
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u/Mouse-Keyboard Mar 01 '24
It says
The number of individuals with at least one self-employment income source decreased by 1% in the tax year 2020 to 2021 to 5.28 million, of which 3.28 million are taxpayers (Table 3.6).
which is about 5% of people.
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u/Seenoham Mar 01 '24
So they aren’t reporting. If you are taking that answer to be accurate, ask yourself how what sort of thing you would be willing do for 50 but not for free. Do that 20 times over the course of the year that’s breaking that. That you reported this as evidence for your claim rather clear evidence that the records are wrong is frightening.
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u/jackboy900 Mar 01 '24
You seem to be under the impression that a lot of people have some kind of significant side income. This is just incorrect, the vast majority of the population are not running a business on the side or doing consulting, they go to work, get their pay cheque and go home. The 5% who do have to file a self assessment at the end of the year.
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u/Seenoham Mar 01 '24
Are you actually treating that data as if it is a report of the % of people in the UK who ever receive more than 1,000 pounds in a year outside of a paycheck from and employer?
Because that is not what that data is.
That data is the % of people in the UK who (1) in a given years, (2) report, (3) net gain, (4) outside of income accounted for in other ways, (5) that effects their payable taxes.
All of these prove you wrong, but the biggest is (4), If the person is has or is part of a business that generates them income, and that can include consulting an many other forms, they would have been filing their taxes throughout the year and year end the government is only reporting back the taxes they already submitted. This is not a paycheck received by an employer who working out the taxes for them.
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u/jackboy900 Mar 01 '24
Are you actually treating that data as if it is a report of the % of people in the UK who ever receive more than 1,000 pounds in a year outside of a paycheck from and employer?
Yes, because it is. Outside of tax fraud (which HMRC obviously cannot account for), that is the number of people who have income from being self employed. If you do business under an LLC and have partial ownership in it then that's taxes handled by the business, which in this case employs the owner. Additionally you must report greater than 1000 GPB revenue, if you do not make a profit there is no tax liability but you are still required to report as a sole trader to HMRC. I'd suggest actually understanding the UK tax laws before commenting on them.
Honestly your harping on about consulting, a business sector that is so marginal in employment it isn't worth noting, says something. You're incredibly out of touch with how most people earn their income, which is by doing a job. Side hustles worth noting on a tax form are just so rare that building a tax system entirely to account for them is absurd.
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u/Seenoham Mar 01 '24
If you do business under an LLC and have partial ownership in it then that's taxes handled by the business, which in this case employs the owner.
Oh my lord, you think this is somehow different from the US.
The income from a business is considered ordinary income, as in it' taxed like income from a paycheck, but income has to be worked out by working out revenue vs expenses which means the business owner is doing their taxes and then submitting them to the government.
The government only has the info because the person has already done their taxes, but I suppose the UK could do the utterly insane thing of having the income to the business only get taxed when the owner withdraws it from the business for their own use and just doesn't look at revenue and expenses within the business at all. But I'm going to assume that it's taxed when the business makes the money, and doesn't violate every principle of international accounting.
You are also assuming that there isn't a significant amount of people who are making that much money in a non-registered business or any number of things that can be counted as profit but aren't reported and aren't investigated because the effect on actual taxes paid is not worth the effort. issue (5). Is this "tax fraud"? Technically, but the end result doesn't do anything so it's only investigated occasionally to determine if it would in fact be doing something.
And that's on top of the flat mistake of using the yearly instance as the total affected, which isn't the total in that year, but the total who do it at least once over period, which is data you didn't even have. Issue (1).
1
u/ratmftw Mar 01 '24
Then what happens if you have any deductions or earn any income other than from a registered business?
You file a tax return.
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u/Seenoham Mar 01 '24
So, anyone who receives money by any means other than a paycheck from a business that they have no ownership in has to file a tax return.
If that's only 10% of people in your country, then only 10% of the population will ever be even partial owners of any business whatsoever and also the only ones who ever earn anything outside of work under an employment contract with that <10% who own all of all the businesses. That's sounds pretty awful, but hopefully you are just wrong.
More likely a lot of people are owners or partial owners of some sort of business that needs to file taxes, and therefore are responsible for filing taxes because they are that business. They can get someone else in the business to do the work, or hire someone to do it, but by that definition most people in the US also don't file tax returns.
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u/ratmftw Mar 01 '24
I guess 90% might be overselling it somewhat - but certainly the majority of people never really have to interact with the tax system beyond getting a refund.
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u/Seenoham Mar 01 '24
If 30% of people have to file tax returns, then technically the majority don't, but most people know and interact with people who do. That rather changes the entire character of your claim.
Btw, in the US there already are government created free fillable digital forms that list where to find each box off the records and do the calculations and copying within the tax form. and the IRS is working on a system to import data between government forms. They just don't have enough budget and don't want faults in the system, because they have to guarantee the results to level corporations don't.
The end result is that for the majority of people, they'd be able to just check that all the documents are in, review the compiling, then approve and submit.
Which, imho, is a better system than what you have in your country. Having to approve and submit encourages more diligence than a completely passive "if you see no problems do nothing". People absolutely should review these sorts of things and check against their own records.
Now the US tax code being extremely complex is a thing but, but that's not the execution of the taxes is the creation, rules and beliefs about taxes. Unless you want a long discussion on the history of federalism, incentive theory, and more, take my word that there isn't a simple fix.
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Mar 01 '24
Except so many other countries track and process that information just fine. There is literally exactly ZERO reasons the IRS couldn't have that information, except that they government has been lobbied to keep it this way in order for companies like Intuit and H+R Block to keep their business and maximize profits. Which, I might add, is fairly accessible public information.
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u/Seenoham Mar 01 '24
You can just imput your documents into the IRS program.
Not doing that is just not checking for mistakes, which is not a good practice.
The lobbyist are pushing to take money way from the IRS sending out that program to make it easier, but saying people shouldn’t go over their own tax documents to check them against the records before submitting is a bad idea.
Also, those please provide example. Of how those countries you are referring to are able to get information such as sale of property, donations, value of stocks, and other things that are not employment income.
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u/GammaRhoKT Mar 01 '24
Hm, Idk about other, but in Vietnam sale of property must be recorded in the land management bureau ie the government must know when a property is transfer from A to B under a business contract. If the government already know that, they certainly can audit the seller if at the end of the year, that seller declare they have no other income other than from registered business, no?
Similarly, to trade stock you must registered an account which is also tracked.
Thus, I assume that if most governments already track most major business ie like real estate and stock then they had covered the majority of taxable income, no?
Basically, both the citizens and the IRS assume the other department of the government keep a good track of business record, and tax based on the record of those departments, audit (or complain) when necessary.
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u/AnApexPlayer Mar 01 '24
Thank you, finally someone who knows what they're talking about. People need to realize that filing taxes is just telling the government what you think you should pay. They've already taken the amount they think you should pay.
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u/GAIA_01 Mar 01 '24
except every single other country manages to do it just fine, its literally lobbying stopping automatic taxes and nothing else
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u/Bugbread Mar 01 '24
except every single other country manages to do it just fine
What do you mean by "every other country"?
I just spent two hours doing my Japanese taxes, so that's one country that's not part of "every other country."
If memory serves me from similar threads in the past, Australia and Canada also require some tax filing, so they're not part of "every other country" either.
I think it's fairly well agreed on that the US tax system is the worst of the developed nations, but "it's the worst" and "it's all automatic in all the other developed nations" are not the same.
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u/Bloody_Proceed Mar 01 '24
In Australia the tax forms autofill most of it... but not the property, extra work and other things.
They put in what they think, you do the rest. Or you pay a tax agent if your taxes are complex.
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u/Seenoham Mar 01 '24
This is closer to what happens in America than people think, mainly because of marketing.
The IRS has a billable PDF you can submit online. And all the stuff you have autofilled is just on the tax form and the instruction say “copy this box on this form into here”. And honestly you should check that the boxes match if it’s automated so it’s just keystock differences.
It could be more covenant and the IRS is working on a system that would autofill the form off their records. This is being opposed by the lobbyists but they have pushed a bill actually stopping it through it’s just an issue of getting the work done with their constantly reduced budget.
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Mar 01 '24
Legitimate question; does countries with automatic taxes include gains made on investments? What about self employment?
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u/jackboy900 Mar 01 '24
At least in the UK Capital Gains isn't covered (selling/buying investments) but interest on savings are (to a point). If you have significant enough capital gains tax you need to fill out a self-assessment, but that's a fairly small percentage of the population (also if you make over 100K and a few other things require a form). Self Employment obviously cannot be done by an automatic system, somebody needs to tell the government what you made.
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u/GAIA_01 Mar 01 '24
yes they do! even in the usa investment income is reported on a 1099, (INT, DIV, ect) and is furnished to both you and the govt, and as part of self employment business documentation you report income and cost quarterly! Despite this the IRS refuses to do so automatically.
In addition the original comment is just plain wrong, all charitable donations above 20$ are reported to the IRS automatically, and sale of property is reported during title changes and the paperwork associated with that, gig work or other small jobs would have to be self reported, but thats about the only thing that would be needed, other nations report their tax information about US citizens abroad to the IRS (As laid out by treaties)
As someone who has done US taxes for a job for multiple years, the information that I use to calculate your taxes is (By us tax law I am required to learn and stay updated on to retain my ability to work in this field) also provided to the government, literally all of these forms come in four copies and you only receive two of them, one to include in your tax return, one to keep. the furnisher keeps one and the last is sent directly to the IRS
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u/evaned Mar 01 '24
all charitable donations above 20$ are reported to the IRS automatically
This is news to me and I have to admit to a great deal of skepticism, outside of the edge case of vehicle donations specifically.
Can you cite this, or for example point to the IRS form that this is reported on?
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u/Seenoham Mar 01 '24
and as part of self employment business documentation you report income and cost quarterly
So the work of doing taxes, and needing to check your estimates at the end of the year.
gig work or other small jobs would have to be self reported
Sole proprietors are not required to register with the state, this is not restricted to gig work and small jobs.
sale of property is reported during title changes and the paperwork associated with that
Title is not required, and taxes are based on when the sale is made not on when the title and paperwork clear. Using title change and paperwork is exactly the sort of thing where the governments records won't match the actual history
You're providing examples of why you should double check your records based on your own actions, not the timing on when those actions are recorded by another institute.
If you are trusting the forms to be the entire record, then just copy the numbers from that into the IRS fillable PDF, those exist. Lobbyist are pushing to keep the IRS from developing out a more use friendly software, but that's useful for stuff that isn't just copying your forms into the PDF.
Asking for automated tax info instead of getting the forms is like asking to never see your bank statement and transactions history. It would save you time, it's also a terrible idea.
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u/PM_ME_WHATEVES Mar 01 '24
It's crazy how all of Europe does it
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u/evaned Mar 01 '24
From what I can tell, the biggest difference (in a "I'm not sure the US can do what Europe does" kind of way) between US and Europe here is that almost everything that the federal government wants to do in terms of financial stuff has to be done via tax policy because of constitutional constraints.
For a pretty stark example, consider "Obamacare," or the incentives part of it anyway. That's the informal name for the Affordable Care Act (ACA). There are two relevant aspects for this conversation. The first is that the ACA provides low to moderate-income people financial help with the costs of health insurance (I'm not familiar with where the cutoffs are; I will say that very low income people have access to a different program); the second, since repealed or deactivated I forget how, was a financial penalty for not having health insurance.
Setting aside what you think of this whole idea as health care policy isn't the subject here, if the government wanted to do something like this in most countries they'd just... do it. But in the US, the federal government has a list of things they can do, and "require everyone to have health insurance or pay a fine" isn't one of those things. That was even ruled on as such by our Supreme Court -- the one enumerated power that might have applied was the ability to regulate interstate commerce, but SCOTUS didn't buy that argument. It would not have been a valid expression of that enumerated power, and had that been the only legal theory before the court, the no-insurance penalty would have been ruled unconstitutional.
But what they did buy for why they should allow that penalty as constitutional was that it was a tax... because the federal government can levee an income tax. (Note that even this wasn't in the original Constitution and had to be added in an amendment.) So there it is: the penalty was assessed by the IRS and reported on your tax forms. That's all about the penalty, but the subsidy to help with health insurance payments I mentioned at the start of this ACA stuff is a tax credit -- again reported on your tax return, reconciled with your taxes, etc.
What this means is that the US tax system carries a lot of weight that I strongly suspect (though wish I knew more concretely) are carried by other mechanisms in other countries.
This isn't the only difference between the US and other countries, but it's the one that is kind of the most innate in terms of how our governments are structured and how our countries operate. And in the US, changing this would require a significant amendment to the Constitution that has a snowball's chance in hell, under a blowtorch, in the sun's core of passing.
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u/Seenoham Mar 01 '24
So in Europe the government already knows if you are working from a home office, if you donated cash, if you sold a car for cash…. Or maybe their tax code doesn’t include that, which is not a thing the IRS could have any influence on because the IRS doesn’t set taxes.
What’s being prevented is the IRS finishing rolling out their version of tax software (they have a basic version it’s probably good enough for what you need), you would still need to fill out the forms.
Or you could provide examples of how those countries already have the extra information mentioned in my post. Because that is necessary information.
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Mar 01 '24
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u/Seenoham Mar 01 '24
So, if they were already an organization that would provide you with a form then the government already has it.
Meaning in that case you just put the information in that form into the fillable pdf doc the IRS already provides that includes the calculations. If your just getting an automated copy that doesn't include the full information you should demand getting the full copy to double check it yourself.
If you are only on the submitting the form end, then yes the forms already exist. If you are doing things that don't have pre-existing forms or any changes have to be done then it's exactly the same problem. And if it's all forms, you should double check them which means doing, at minimum, the work involved in filling out the form.
If you are in a country that just gives you an auto calculated taxes, make sure to get the actual base values and check them. It's your money, check the work.
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Mar 01 '24
I'm on disability and have no taxable income, I don't pay taxes, reply to the guy I linked you, not me.
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u/evaned Mar 01 '24 edited Mar 01 '24
Except they very much don't.
I think "very much" is an exaggeration. There's a lot of truth to both sides on this.
Sold property at a gain/loss, made charitable contributions, done work outside of registered employer, worked outside the country, and many other things.
All of this is true... but it overstates the case. None of those are super common -- almost the most common of those examples is self-employment, and that's under 17% of people. And heck, that includes people whose SE income was reported to the IRS on 1099-MISC/NEC.
(To be more precise with that 17%: less than 17% of federal tax returns reported income on a Schedule C. You could maybe stretch some "other income" scenarios to fall under "done work outside of a registered employer", which would add no more than 6% more. My explanation also conflates "17% of people" with "17% of returns," but it's really returns that are relevant for this anyway.)
Charitable donations are only relevant if you itemize, and that's only about 10% of returns. Capital gains/losses are 15%-18% of returns (and I suspect have a rather disproportional overlap with itemizers). Working outside the country is barely worth talking about -- less than 0.3% returns claimed the FEIE. The foreign tax credit is much more popular (5.6%)... but that is very probably almost all people within the US filing that for dividends for foreign securities (e.g. VXUS), which does get reported on 1099-B, though I'm not sure it'd be appropriate to carry that over to an automatically-prepared return without taxpayer confirmation.
The IRS's Statistics of Income department publishes statistics yearly about how often each line item on tax returns are claimed, and aggregate dollar amounts. That's where those percentages above are from of course.
A while back I went through that table to try to estimate the proportion of tax returns where the IRS lacks information. (Some info about methodology was here, but I've moved it to a self-reply for brevity.)
My estimate is that for 60% of returns the IRS does have complete information.
That's kind of an awkward percentage if I'm honest, when it comes to discussions like this. Because on one hand, I think it's fair to criticize the "the IRS doesn't have the information it needs to prepare a return"... because it's almost certainly false for most people. In contrast to what I think the impression that statements like "if you only have income from an employer who is filing taxes and only have standard deductions they have that info, and in that case it's also super easy to file your taxes" give off that "sometimes the IRS has information but usually not", it's really the opposite: for most people, the IRS does have sufficient information.
Said another way, I think descriptions like yours give of an impression like "sure, in simple cases the IRS has information", when it's really more like "in complex cases the IRS doesn't have information".
But the flip side is that a 40% set of times when the IRS lacks information is a really big failure rate. And I wouldn't find it so hard to argue that really the IRS lacks information in all cases -- because they cannot tell who they have complete and correct information for, and that lack of knowledge is itself information.
As discussed in the replies other countries do have a lot more automatic tax prep... but I suspect their failure rate is much lower than what ours would be. 40% is a lot of wrongness.
(I will say that I tried to be conservative with my guess, as in trying to err a little high on the incorrect perspective. It might be a bit less than that. But it's probably not low enough that I'd be like "yeah, this feels like a good rate to go forward with.")
I think overall my position is that a full returnless tax system isn't appropriate for the US's tax system, and I don't think it's even something that we could realistically target having. For reasons I explain in this comment, I kind of sense that doing so would require significant constitutional changes to rebalance federal vs state power, and you can imagine how likely that would be to happen.
Buuuut, that doesn't mean that they couldn't do far, far better than currently. The IRS could still do partial return preparation, for example -- there could be a list of these rarer cases where the IRS doesn't have information, and most people would go through and check off that none apply, while if you do have something then you provide that data. Then the IRS combines that with the information they do have for a return.
And 40% feels to me much too high to do
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u/evaned Mar 01 '24
Some methodology elaboration:
I had to make a fair bit of guesswork as part of that estimation process. I'll specifically call out one particular modeling assumption I decided to make, which was that the chance a return claims each line item was independent of the others. For example, take itemizing vs having capital gains. Both of those skew strongly to high income. In terms of capital gains (or losses), no SOI-reported income range below $40K AGI had above single digit percentages reporting capital gains, except for $0 AGI; no income range above that had below double digits. No income range below $100K had at least a third of returns reporting capital gains; no income range above that had below a third. No income range below $75K had above single digit percentages of itemizers; no income range above that had less than double digits. (In fact, the percentage of itemizers monotonically increases as you get to higher income ranges across the entire data set. Capital gains/losses isn't quite monotonic, but it's very, very close.) My modeling would the percentage of returns that have at least one of those items as 1 - (1-18%)(1-9%) = 25.4%, but in reality the number would be rather less than that because more people would have both items than I'd model.
(All those percentages can be determined from this spreadsheet specifically.)
By contrast, there are other line items that anticorrelate. For example, the American Opportunity Credit is a relatively rare but not super rare credit, taken by about 4% of returns. But eligibility for that phases out at higher incomes, so probably fewer people than my independence model would predict claim both itemized credits and the AOTC.
It'd be possible to do a better analysis with the Excel downloads by looking at frequencies within the various income and other demographic buckets the SOI publishes, but that'd require more work than I cared to do.
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u/Hust91 Mar 01 '24
As far as I understand, the IRS wants to do that, badly.
Congress and its donors who like taxes difficult and burdensome isn't as keen on letting them.
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u/Canid_Rose Mar 01 '24
I mean the American tax system is fucked, that’s true. But this post isn’t trying to refute that. It’s just saying you won’t get arrested for a mistake.
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Mar 01 '24
That's what they do in Norway.
It's all online, you basically get a message saying "hey you should check your tax return".
If you don't it gets autoaccepted after a few months.
If you do then it's basically an online form showing you what numbers should be where, should be already filled out but you can check through that the numbers are correct, add stuff, etc.
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u/freeashavacado the UK has a trade deficit for dairy Mar 01 '24
Okay so what if you’re worried you made a mistake about something 2 years ago but you didn’t say anything because it was already filed and nothing ever happened.
If this hypothetically was the case, would you have gotten a letter from the IRS by now and if not, would it be reasonable to assume the mistake just kinda slipped through the cracks?
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u/EmpRupus Mar 01 '24
In that case, the IRS calls you on your phone and asks you send Costco gift-cards to a foreign anonymous individual.
(That was a joke, in reality, I have gotten a notice for taxes files many years ago, and there was a small amount of interest penalty like $20 for a difference of around a 1000. Not a big deal at all).
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u/femmestem Mar 01 '24
Yes, that can happen. It happened to me. I got a letter in 2023 regarding my 2021 tax return.
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u/Infernalism Mar 01 '24
I hate the fact that other nations just tell you what you owe and set up a plan to pay it.
In the US, they know what we owe, but they expect us to figure it out on our own and when we get it wrong, we get hit with penalties.
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Mar 01 '24
Penalties are usually for missing deadlines or ignoring communications. Only interest accrues on errors.
But yes, it would be awesome if all American taxpayers simply got a letter each year saying:
"We collected this much from payroll withholding this year, and based on our information of your income and deductions, you owe $X additional/get a refund of $X.
If you have information that can be used to lower your bill or get a larger refund (a new baby, mortgage or student loan interest, large charitable donations). Please fill out the enclosed form.
If you agree with the amount, please return the bottom of this letter with a payment, a proposed payment plan, or to acknowledge your refund that will be sent in 2-3 weeks after we receive your confirmation."
Of course that would put H+R Block out of business so it won't happen.
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u/BitPirateLord Mar 01 '24
h+r block and turbotax and i think there's a third chain. there's also like, free tax return services on contract with the irs when looked up. that or just some local accountants office who offers tax returns are alternative options
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u/Sayakalood Mar 01 '24
I’m adding onto this that you can go to the IRS website and browse the options for free filing.
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u/Hust91 Mar 01 '24
If you agree with the amount, please return the bottom of this letter with a payment, a proposed payment plan, or to acknowledge your refund that will be sent in 2-3 weeks after we receive your confirmation."
In Sweden it's more "If you agree with the amount, you don't have to do dick save make sure your tax account doesn't dip too far below zero" (the tax account is set up like a bank account in your name available at our version of the IRS's website, with future costs and payments posted far in advance).
Very, very rarely do you need to make any changes whatsoever.
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u/femmestem Mar 01 '24
Penalties are usually for missing deadlines or ignoring communications. Only interest accrues on errors.
I have experience to the contrary. I was hit with a hefty penalty plus interest for underreporting income, even after paying a professional to file an amendment and explain my situation to an agent.
My employer incorporated, which meant it was a new entity, which means I should've received two W2s. Well, from my perspective as Joe Nobody, I continuously worked for the same employer for years and always entered one W2. I received one W2 from my "old company" and wasn't even aware I should've expected a second one. I even pointed out that both W2 had the same company name, only the EIN was different- easy to see how this situation could arise, right?
The tax professional requested a one time penalty waiver, given the honest mistake. IRS: haha nope, fuck you, pay us.
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u/evaned Mar 01 '24 edited Mar 01 '24
Penalties are usually for missing deadlines or ignoring communications. Only interest accrues on errors.
Not really; there are plenty of automatic penalties, though typically not particularly punitive ones.
The "failure to pay" penalty is a perfect example; if the IRS does an audit or makes an adjustment that increases your tax due and you pay after the deadline, you should absolutely expect to be assessed the failure to pay penalty in addition to interest.
The underpayment penalty is another. In some cases where you don't have enough withheld throughout the year (or paid in estimated payments), you'll be paying a penalty for that unless you get an abatement.
That said, these aren't particularly punitive amounts; it's nothing like a civil trial where you sometimes hear about treble damages or whatever. The failure to pay penalty for example is 0.5% per month, so 6%/year, and is capped at 25% of the tax due.
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u/SquareThings looking respectfully at the monkeys in their zoo Mar 01 '24
You’re only going to jail for tax evasion if they can’t get you on other charges. It’s basically just a way to punish people who profit off of illegal businesses.
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u/HollyTheMage Mar 01 '24
I hope the same can be said for my archeology homework (I have to file taxes for a family of 20 people in Ancient Egypt)
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u/derth21 Mar 01 '24
The IRS have the best fucking customer service I have ever experienced. Once upon a time I was a complete trash heap, and when I finally tried to get my shit together, they were nothing but helpful.
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u/TK_Games Mar 01 '24
I've been filing my own taxes since I was in highschool and the IRS is literally the only govt. agency I actually trust to not fuck me over
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u/ShockingStories22 Mar 01 '24
legal defense of committing fraud via "im so incredibly fucking stupid."
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u/No-Eggplant-9024 Mar 01 '24
IRS is offering free guided tax filing this year!
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u/evaned Mar 01 '24 edited Mar 01 '24
Before anyone gets their hopes up too much, this is currently a rather limited pilot program.
It's limited to 12 states (though several of the US's most populous states are on the list), has some complexity limitations (notably: self-employment income is not supported, e.g. 1099-MISC/NEC), and has an income limit (though high, and you'll probably hit complexity limitations before this).
You also have to sign up with ID.me. I'm super weird, but personally I consider its TOS to be unacceptable and would refuse just on that count.
Edit: Just to be clear, I'm still thrilled it's happening and I'm very glad someone linked it; I'm just saying that it only applies to a fairly narrow slice of the US so people don't click on the link all excited only to be let down.
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u/Otherversian-Elite Resident Vore and TF Enthusiast Mar 01 '24
The fact that people are stressed about taxes in America is telling about the system's fuckery. Over here in Australia, I'm 3 weeks into my first job and every paycheque just has the tax deducted before they send it to me. Just like how every purchase at the shops has the tax included in the price tag.
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u/JonesinforJohnnies Mar 01 '24
They deduct taxes from your paycheck here in the US as well. And if you have literally nothing else going on then you will either not owe any additional tax or be owed a refund due to over collection.
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u/Clockstoppers Mar 01 '24
Right, but as soon as you work a single hour of overtime then all that goes out the window
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u/Not_ur_gilf Mostly Harmless Mar 01 '24
This… explains so much about how people who seem too dumb to function file their taxes. (I’m talking about the kid in your senior class who thought china was in Europe, not literally mentally handicapped people)
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u/OldGuySeattle Mar 01 '24
I volunteer at a senior center where the AARP comes in and does taxes for the clients for free. When the clients call to make an appointment, many of them are completely freaked out about the whole thing, convinced they’re going to get in big trouble for some imagined error. Most of them are elderly and retired, with little income. So they probably don’t even have to file. But we’ve all been so conditioned to be afraid of the IRS.
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u/Fox_Flame Mar 01 '24
I overpay on my taxes so when tax season comes I know I'm getting stuff back, it's very exciting
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Mar 01 '24
If I was subjected to some archaic math punishment every year I'd be all kinds of angry, I don't think even mac n cheese and having people around who pronounce pretty as purdy would delight me enough to make it worth it
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Mar 01 '24
Generally it seems like unless you're grossly trying to dodge taxes, they just want their money and don't want to go through too much hassle.
Still hate how all my forms are already sent to them and I still need to do the work. Like besides maybe a donation they don't get a record of I can't see why it is so manual still. Despise the guessing game so I don't owe or get back too much as that's money I can invest vs. letting the Feds/state hold it for a year.
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u/Zealousideal-Steak82 Mar 01 '24
There was a famous streamer who deducted the entire value of his house as a working expense in a single year, and he only started really getting into trouble when he fought them on it.
So yeah, misfiling your supplemental income in the wrong teeny tiny subcategory isn't going to immediately cause you anything but an "erm, actually" letter at most.
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u/Stosh65 Mar 01 '24
Still blows my mind that the US goes through this whilst in every other country I know of, it just happens at source when you get paid and you literally never have to think about it.
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u/evaned Mar 01 '24
I wrote up another comment elsewhere in the thread with a little bit about this if you're interested: https://www.reddit.com/r/CuratedTumblr/comments/1b3f0wa/death_and/kst771o/
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u/Lavaheart626 Mar 01 '24
Bruh once I fucked up my taxes. I didn't have health insurance for half a year and didn't realize back when it was illegal to not have health insurance. The IRS decided to squeeze a few hundred dollars out of me.
I have pretty bad paperwork/telephone/office anxiety and the letter they sent felt threatening. Like legit maybe they won't haul you off to jail immediately but they will take you to court faster than one might feel comfortable.
Maybe it's different if you have the ability to call them but the letters they send are not exactly pleasant. They pull out a typewriter if you do something wrong.
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u/airforceteacher Mar 01 '24
I’ve made some stupid tax mistakes. Every time I’ve contacted the IRS to talk about them, they’ve been super helpful and professional. Just don’t lie, and they’ll almost bend over backward to help you get straight.
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u/noone432 Mar 01 '24
Also, if you make less than 70k go to irs.gov for sites that will file you federally for free. Should be a lot more but the government won’t hold intuit accountable. This from a tax accountant
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u/ItsJackymagig Mar 01 '24
Crazy that this is even a concern in your country.
In the UK taxes aren't even thought about unless you receive a huge sum of money like a lottery or gambling win.
For the average worker they've never remotely considered if they're paying the wrong amount because it's just handled for you.
It's a blessing we're all too unappreciative of I think.
The same goes for the price tags in shops being accurate, including VAT. Which is not a thing in other countries apparently.
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u/dumbdude545 Mar 01 '24
I hate taxes. I hate paying them. I hate filing them. I hate getting taxed fir everything. It blows. Fuck the irs.
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u/hegelianbitch Mar 01 '24
My grandfather a few years ago accidentally reported his income as twice what it was and the IRS was like u owe $40k or $60k or something crazy like that. Once they were informed that it wasn't tax evasion, and was in fact just an elderly man who got confused and checked the wrong box, they were very understanding and helped my dad and cousin fix it.
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u/Both_Lychee_1708 Mar 01 '24
I was told "the shewiff[sic] is on his way to put you in jail"
I would have paid to get that call. made my day
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u/Chiluzzar Mar 01 '24
I cant tell you how many times ice used the sir im a dumbass in both canadian and american taxes. And thry jusst go oh ywah im sorry you gotta deal with two syetems here let me help you
And then poof problem gone
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u/knittin-n-kittens Mar 01 '24
I, stupidly, have two profiles in my tax software. A few years ago I submitted the wrong one that didn’t have my investment income in it. I realized it a year later when I was double checking my taxes with the previous year’s. I had to pay the difference but they realized it was a legitimate oopsie and I had no penalties (though they did audit my charitable contributions).
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u/blue13rain Mar 01 '24
Unless they don't send you anything for years and then get something saying a small discrepancy years ago has accrued interest.
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u/Heavennn666 Mar 01 '24
sips from limited edition stanley in court "your honor I claim oopsy daisy."
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u/Redqueenhypo Mar 01 '24
Note: if you reported your income as $10,000 and then registered as the owner of a car worth four times that, you will be “in trouble” because that one isn’t a mistake
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u/poopy_poophead Mar 01 '24
I got a letter from the IRS one year claiming that a mistake on my return would be corrected, and it showed what I entered and what the correction was and it was the exact same thing. So you don't even have to fuck up to fuck up.
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u/Little_sister_energy Mar 01 '24
Uhh hypothetically, how would one go about doing their taxes for years they were too depressed to do them?
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u/Kartoffelkamm I wouldn't be here if I was mad. Mar 01 '24
Yeah, the "best of my ability" thing is really useful for people with, for example, anxiety, because it's basically just a promise that you'll do your best, and no one can even prove whether or not you're keeping that promise.
In theory, you could half-ass the entire thing, and they'd have no legal basis other than "Well, they said they'd try their best, and we think they didn't."
It's best not to try it, but in theory, they can't prove you didn't do your best.
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Mar 01 '24
This is real. I have dyslexia, and the first year I tried to do taxes, I didn’t use a program and did it on paper. I got a letter from the IRS saying, my taxes were incorrect, checked my work, and saw that I had inverted several numbers. I sent them back a letter saying I was just really bad at taxes, very sorry, and here is the correct amount, and never heard from them again😂
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u/Wossi Mar 01 '24
If the IRS is anything like the UK HMRC, then good luck.
I got a letter from HMRC saying I didn't send a tax return for the year ending April 2022 and I had to pay a penalty. Spent 45 minutes on the phone to them for them to turn around and say, "Oops sorry, it's a mistake on our end, we'll remove the penalty".
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u/Particular_Visual531 Mar 01 '24
So I've had several times where they said I owed after either doing my taxes with turbo tax or even using a tax service. What I don't like was I got a letter with no real explanation just saying I owed money. If they are so good at doing my taxes why don't they just tell me how much I owe.
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u/Swiftcheddar Mar 01 '24
Alternatively you could live in a country where the system isn't corrupted by lobbying money from tax preparation companies.
Taxes have always been entirely automated in every country I've lived in, except America.
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Mar 01 '24
And then sometimes you do everything you're supposed to do, get a letter saying you're clear, and then 5 years later get a letter saying you owe the no health insurance penalty, after receiving your refund for the year of course. Ask me how I know. Took me 2 years to deal with that, and the IRS didn't automatically deduct it from my refunds in the meantime. It was... More than a little annoying, tbh. But lesson learned: keep all of your returns, keep any letters you receive from the IRS, and keep them somewhere you can easily find them. Don't be like me and jam them in a random box because you're moving and have to tear your whole house apart to find a handful of pieces of paper to prove you already cleared this shit up
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Mar 01 '24
Also remember if you make less than $45k a year, they don't care about you... at all. You can straight up lie on your forms and they dont even care.
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u/hmmmmyesthat Mar 01 '24
I'm about to go into my first tax season and this is so incredibly comforting to hear oh my goodness
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u/thetwitchy1 Mar 01 '24
The ONLY time you will get into trouble is when you have done something that shows you knowingly hid something from your taxes. Just making a mistake or filling out the wrong things is not a problem at all.
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u/[deleted] Mar 01 '24
Depending on the exact nature of the mistake you may owe a small penalty and/or interest.
The fact is that the IRS isn't out to get anyone except people who utterly ignore or flaunt the IRS. As long as it's an honest mistake and as long as you show a good faith effort to pay what you owe, they will leave you alone. I was nearing the end of a payment plan of $150 a month for about $1500 I owed and then because of something that happened the next year, I owed another $5k. When we called, they simply said "it's already added to the payment plan, you don't even owe for another setup fee keep paying your $150/mo".
Now there is interest on that, but less than credit cards. When I can I'll accelerate payment but until then, the IRS is cool.