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.
this post was submitted on 02 Aug 2023
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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.
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.
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.
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.
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?
Did hell just freeze over?