There was an interesting episode of Fresh Air on NPR on Monday. An interview with some guy who wrote a book about the ridiculous tax situation in the US. One claim that was made was that virtually no other industrialized country had a tax code so complex that individuals had to hire accountants to do their taxes.
So, just wondering. If you don’t live in the US, how much time do you typically spend “doing your taxes” (as we say in the US) each year? I think the claim was that in most countries, it’s 15 minutes or less.
As an American, I spend about 2 hours each year putting my stuff together so that my tax guy can do my taxes. It probably doesn’t take him too long, but then he’s a pro.
Feel free to chime in if your an American. We wouldn’t want to discriminate!!
I’m Australian, and it takes me around 15min to submit my tax return online.
I’m a ‘simple’ taxpayer (only get taxed by the federal government on my earnings) so for me it’s just getting a statement from my employer (called a group certificate) that notes the gross wages paid and the amount of tax withheld.
Then I add up my deductions, things like charitable donations, outgoings that I paid to be able to hold the job, and then subtract that amount from my gross income to get to the amount of tax that I SHOULD have paid and how much I owe in the Medicare Levy. The difference of course then comes back to me as a tax refund.
Mine is the most basic of tax returns. Others who have investments, live remotely, have business etc will face more complexities in submitting their returns and often get an accountant to do their dirty work.
Yet it still amazes me how many ordinary people who have tax situations just like mine are intimidated by the process and pay sometimes hundreds of dollars to get an accountant to do theirs. Yes, they can claim the accountant’s fee as a tax deduction, but it’s bog simple, it really is!
Probably 2-3 hours actually filing the return once I have all the paperwork. There’s little things throughout the year like tracking expenses that are deductible or that someday might be deductible. Maybe another couple of hours for that.
Canadian taxes are just as bad. I spend hours doing four returns (two for me, two for my wife) on tax software. A lot of it is to figure out the medical and charitable expenses, although the software does the tax credits for them.
Then I get to do my US return. Except for changing the currency most of the figures are already there and my would-be taxes are swallowed by the foreign tax credit. But the US has devised a special form of torture for foreign nationals called FATCA and that takes hours to fill out online. Even though there are only minor changes year to year, you cannot use all that work and I have not figured out any way to automate it.
It might be a bit hard to swallow for you 'murricans, but at least 75% of people here around do not <do> taxes as “social state” do it for you. State tax bureau collects all the data from the source. Since 75% of people are pensioners, on state welfare, have state jobs, are students, employed at general enterprises (who are obliged to send payment data to state bureau) etc. You only fill taxes when you inherit something, won the lottery, sell the property over certain value, claim the act of god, are self employed, angelic mafioso etc.
Other just get bland message from the bureau every April: " We owe you 17.67 EUR. Want to leave it to us? Yes - No.
So yes. Yes. Your taxing policy is ridiculous. You (the Doper) can do the taxes (so can I being self-employed), but can your mom?
What you described is the actual situation in the US. The vast majority of taxpayers are facing 15 minutes of toil on one side of one sheet of paper. Many such people are so innumerate / paperwork-shy they hire somebody to handle it for them, paying $50 to $200.
A small percentage of people have much more complicated tax lives. I’m a pretty typical middle-upper range white collar guy in a two-income household with a mortgage and a decent stock/bond portfolio. Using software my taxes took about 4 hours total work and came to 20-ish pages filed.
It truly gets byzantine if you own significant businesses or large asset holdings that aren’t simple stocks and bonds. But that’s not a big percentage of the populace.
Most of the time I spend “doing my taxes” is just trying to remember my CRA account login so that I can check when I’ll get my refund after I’ve filed. Well, perhaps that’s a slight exaggeration.
Download and install this year’s version of the tax software.
Import last year’s return into it - this grabs all the personal info at the top of the form so you don’t have to enter your address and Social Insurance Number etc.
2a) Check the box that shares your address info with Elections Canada to keep your voter registration info updated.
Discover that there’s a new-this-year option for the software to ping CRA’s own servers to see what tax documents they already have on file for you, so you don’t even have to enter the figures on your T-4 (basic income statement from your employer, can’t remember the W- equivalent).
Add in charitable donation figures.
Add in registered retirement investment figures.
Click ‘Send’.
Receive tax refund in a week or so.
15 minutes would be about right if I’d just been trying to get it done, but I poked around a bit - a few years back I used an option to utilize registered retirement savings as a house downpayment, said savings having to be repaid into the retirement account at minimum rate. I’m repaying at a higher rate, but spend at least an extra 2 minutes see how various rates would impact my refund. Some people, of course, have much more complicated tax situations than I do.
In Spain that’s true for someone whose pre-prepared tax doesn’t need any tweaking. The government preps most people’s yearly income tax: if you agree with what they say, just sign and return it.
If you disagree, then in order to count “15 minutes or less” you have to be counting only the time spent actually typing (or having your banker or the person at Treasury typing) the information. Collecting it may require multiple calls to organizations which are lousy at providing records of donations, for example.
Depending on where you live, you deal with different Treasuries. My own’s yearly form is only two pages (one piece of paper, both sides); since I fill quarterly withdrawals, my process for the yearly consists of downloading the quarterlies, adding up the “incomings” and “outgoings”, separatedly adding two concepts which are not part of the quarterlies, going to the Treasury office on my appointed date (I prefer to go in person, as that way when they don’t like my expenses I can explain what they are; so far they’ve always accepted them, but explaining is a lot less of a pain than an inspection), accepting the data they’ve gotten from my bank, verifying that the data they’ve gotten from the quarterlies is correct, saying “both” when they ask if I want the government to give 0.7% of what I pay to RCC-linked NGOs, non-RCC-linked of both, and saying “see you next year”.
The national form is about six times as big. And because national quarterlies do not separate expenses the same way the yearly form does, if I was reporting to the national Treasury I’d have to re-account everything at the end of the year and make sure the sum of the partials I’d need to report on the yearly matched the collated expenses and earnings of the quarterlies… aaargh! I swear, it’s worth it to keep my residency in Navarre just to avoid that shit!
From downloading a free/personal-use yearly CRA approved software to electronically auto-submiting to the government, this Canadian spends ~15mins. 30mins, tops, if we include time spent hunting down my pay/tax slips and approving software submissions.
How about people that have 3 rental properties, own their own business, and have an investment in a limited partnership? Those are the kinds of people that I see coming to the firm I work at and paying us a few hundred dollars to sort through. There are plenty who probably don’t need to use our services, but what are we going to tell them, “No, we don’t want your money, it’s simple enough to do yourself”? That most Americans go to professionals says more about their laziness and lack of aptitude for finance than it does about the tax code.
I’m an Australian, on the more complicated end of the tax spectrum. Married, children, own a company, own shares, and both tenant and landlord. I generally set aside a couple of evenings to do both of ours.
It’s long-winded but fairly straightforward, and I’m used to doing it, but I expect most people in our situation would be heading off to H&R block.
On the other hand, there are a LOT of even more complicated options that I skip because either not relevant right now or I figure if I don’t understand it I don’t fit the category … but someone must fit the category. Every so often I muse “I wonder what a ‘low value project pool’ actually is and what it’s useful for?” then forget about it for another year.
Take same a couple of hours and that is mostly because I triple check everything. Democrats in Congress tried to pass a law that would make it easier. Basically the IRS would do your taxes for you (they already have all the same info you do) and you can either confirm or deny their result but H&R Block and Turbo tax lobbied to kill it.
So basically we have confusing taxes to keep tax preparers in business.
Pakistan. I have a hideously complicated Tax return. Unmarried and childless, but in business for myself (law practice) and also have stocks, bonds, real estate investments… just tell my assistant hand it to my Father’s accountant. So 3 minutes? The direction, affirming the return, online payment for what is owed and cutting the Accountant’s cheque.
I’m in the UK, and it’s very simple for most people. Employers and others who pay you a regular income deduct tax at source, based on a coding the Revenue gives them; that coding reflects the basic tax-free allowance everyone gets. If you want to claim an extra allowance for anything else the rules allow*, or if you have additional taxable income to report, you have to make a return, and the Revenue will adjust the coding. So most people don’t need to make a return from one year’s end to the next, but if they do, the Revenue would like it done online - and then it all depends on how complicated your documentation is. For most of us, it’s probably only about 15 minutes or so.
You can opt for self-assessment, but that puts the onus on you to collect and fill in the necessary documentation, get accountants’ advice and so on.
*In my experience, they will take what you claim at face value - they’ve never queried my claim on how much I give to charity each year, and I’d imagine there’s some rule of thumb as to what sounds like reasonable work expenses, for example. There’s not a lot else you can claim extra reliefs on, unless you have enough income to engage in complicated tax avoidance schemes and funny money finagling through off-shoring and the like.
I could spend zero. Almost everything is filled in already. My employer reports to the tax authority. My bank reports to the tax authority. The charities I donate to I have allowed to report to the tax authority. The tax authority has access to property registers and the vehicle registry.
I don’t have any of the, relatively few, deductions that are available and that aren’t filled in automatically.
And if you don’t have additions or corrections you can accept the status quo by doing nothing.
Only reason I spend some time on it is to give it a quick browse and see if they’re missing anything. This time I saw that they don’t actually list a value for my car, so I’ll fill that in rather than cross my fingers and assume there isn’t some outrageous default value.
I probably should access my pay slips online and see that they’ve been reported correctly, but the odds are that’s a waste of time, so unless I see something way off, or am surprised by a ton of back taxes, I’m not gonna.
Another Aussie. It takes me about 5 minutes online. I think I answer a few yes/no questions and type in two numbers and submit it. Everything else is already filled in.
Only reason it takes me a few minutes longer than don’t ask is that I work from HOME and can claim a whole shitload of deductions for working from a home office.
Some people, of course, have much more complicated tax situations than I do.