I don’t get the point behind the fight. There are many absolutely legal, potentially deductible items that are not reported to the IRS. For instance, I donate stuff to Goodwill on a regular basis. Not only do they not report a value to the IRS, they hand me a blank receipt. I’m expected to determine fair market value of the donation, record it on their receipt and be able to justify it to the IRS if audited. Other examples would be home office expenses, certain work expenses (like travel for a job interview), dependents, child care, medical expenses, etc. The IRS could send a form showing an estimated tax liability that reflects income and deduction sources reported to them with boxes for adjusting based on additional income and deductions. H&R Block and their ilk would still have a business preparing that part of the return. The parts the IRS knows about - income, interest on savings, etc. - is the easy part. It’s all that other crap that gets complicated.
In the U.S., in my experience, most charitable organizations routinely send you a letter sometime after Jan. 1, summarizing all donations you made to them in the previous year.
So for you you would do exactly what you do now but for everyone who does a 1040 EZ it would be much much easier.
In New Zealand, as a salary earner, if I didn’t make any charitable donations, I would spend no time doing tax returns. For some years now, wage and salary earners that have PAYE taxes taken by their employer do not have to submit tax returns. Banks and finance companies will also withhold taxes of interest payments at your declared PIR (prescribed investor rate).
You can log on to the IRD website and view your balance, but if you owe money, you are obliged to pay it. If you are owed money, you can claim it. If you do not check, then even if you owe, you do not have to pay! I’m not sure how much you have to owe before they let you know.
For charitable donations, there is a separate form to claim refunds. All you need is the receipt from the organisation you made the donation to. Refunds are calculated at 33 1/3 % of the amount donated. Send that form and receipts off, and you get a deposit in your bank account. You could also use it to credit someone else’s tax account such as the organisation you donate to. Every $100 you donate, they end up with $133.
About the same for me in Canada: self-employed, but with various investments. I collect all the paperwork; hand it off to my accountant; it takes me five minutes. My accountant gets everything done in about half an hour. I get coffee during that time, and when I get back to her office, she tells me what I owe, or what my refund (if any (Ha!)) is.
You get your deductions broken down and listed on your wage slips when they come through, and if you think you’ve over/under-paid you can take it up with Revenue and Customs.
Seeing as I’m just employed on a monthly salary, plus pension and union membership, my deductions are generally pretty stable month by month.
Yup, me too.
I did phone the Inland Revenue (= UK tax authorities) once three years ago to claim an allowance.
So that’s a total of 5 minutes over 39 years.
My employer’s payroll department does my income tax; my investment company worked out my tax relief for me.
If it’s the thing I’m thinking of, I think it’s where you can take a bunch of stuff that’s been depreciating for ages and pool it together for a useful amount and then write it off in in one go.
For example, let’s say you’ve got a computer and a printer/scanner and a desk phone that you’ve been claiming depreciation on for the past few years. Technically you might have another two or three years of depreciation left on the stuff, but it’s at the point where the computer is worth $100, the printer is worth $30, and the phone is now worth $5.
Instead of claiming the ever-shrinking sums of depreciation on the ever-decreasing value and doing that for years until the items are so obsolete they’ve become hipster collectible museum pieces and the depreciation payments are two buttons, a Mintie and some interesting pocket lint, you an claim the $135 in one go as part of the low-value pool, write the stuff off, and it’s off the tax books. Which means you can go and buy new stuff.
At least, that’s my understanding of how it works. I pay an accountant to handle my Tax Stuff because maths has never been my strong point so I figure it’s worth the (tax-deductible) fee they charge to make sure it’s all handled properly.
Norway: It used to be you got a text message that you could answer “yes” to if there was nothing to change. But they’ve simplified it now.
You can check in with the tax calculations and make any changes you feel you are entitled to, or not. If you chose not to, which I think 6-7 % of the population do, it takes 0 seconds. Just ignore the whole thing. Reading it and checking that its ok takes a minute or two.
If you want to make large changes, that may take more time, depending on how complicated your affairs are.
I get some of my income from investments in the UK, which is not reported to the government, so I need to add them manually. If I’ve kept my records in good shape through the year, that takes about 15 minutes. Admittedly, it took more time the first time I did it. And if my records were a mess, that would add time too I guess.
UK: I am afraid I can’t agree with PatrickLondon that UK taxes are simple. Of course, I am not having any automatic deduction in the UK, since I pay taxes to Norway. I find the UK tax forms quite complex.
I am particularly bitter about the deadline for filling a physical return being several months in advance of the internet one, and the way you requite registrations you can’t get if you have an address outside the UK to file an internet one. So you can start to do your taxes a month in advance and find that the deadline for the one form you can use passed a month ago.
But then a non-UK address is often a problem if you do business in the UK; so many of their things are coded by postcode.
It doesn’t even have to be a 1040EZ- I have to do a 1040 with itemized deductions and all.* And the only category that the feds don’'t know about before I file the return are charitable deductions and in some years, gambling losses. They already know about the W2 income , 1099 income interest income,state and local income taxes, real estate taxes, mortgage interest.
- The reason I do a 1040 is my state and local income taxes. If I lived in a state/city with lower taxes, I would be taking the standard deduction. It’s not that I have some complicated return with all different sorts of income and credits and deductions. It’s because our state and local income taxes alone exceed the standard deduction.
Exactly! 1040EZ and simple 1040 filers are not where tax companies make their money anyway. In fact, I’ve heard some of the national chains advertise that they would prepare a 1040EZ for free (I presume they may make some money by charging for electronic filling).
The real money for them is refund anticipation loans (RAL).
“Congratulations Mr./Ms. Low End Worker. Your taxes are done & ready to be e-filed. The IRS will mail you your refund check for $200 in about 8 weeks. Or I can give you $100 right now. Which do you prefer? The $100 right now you say? Sign here.”
The simple folks sign & take their $100 while the tax preparer makes a zero risk “loan” paying them 2600% APR since the IRS really takes more like 2 weeks, not 8, to pay them.
That should be totally illegal. But it’s not.
ZERO minutes !
since the wife and I are retired, her SS, my SS, her 2 small pensions…we are barely under the limit of having to file.
UK wages – nothing extraordinary in terms of income, as I have no other income here beyond my wages from the university, so I don’t have to file.
Big pain in the arse for me is that I have to file forms for the IRS every year, even though I have no US income or accounts. Extremely expensive (close to $600 this year) and time consuming (gathering up all of the paperwork as demanded by FATCA), and I end up using a CPA in the US who is familiar with doing ex-pat taxes.
I own a US business, rental properties in two countries, and several other investments. It takes me about 12-15 hours to put everything together and I have two accountants (one for the US and one for Czech Republic). It costs me about $3,000 each year to have my taxes prepared. That’s about 5% of my income. Today I will be filing my US Treasury FBAR report - that takes me 1-2 hours.
I work for HMRC, the UK’s tax authority, colloquially called “The Revenue”. We have zero interest in causing overpayments, as paying them back is a pain in the arse. They still happen sometimes: starting from about 20th April, I’ll be dealing with pretty much nothing but claims for repayment for at least a month or two.
Most people in the UK spend little to no time thinking about or “doing” their taxes. IIRC, of about 40 million taxpayers, around 2 million complete tax returns.
It can get even worse. In Canada, H&R Block and some other tax prep companies force customers to put their refunds on pre-paid cards.
This happens if the customer in question either isn’t going to get a refund, or gets one that is too small to make a refund anticipation loan worthwhile. (In Canada, that goes by the Orwellian name of “tax discounting”.) The customer is too poor to pay the tax prep company right away either.
However, the low-income person will get a few hundred dollars of GST credits and maybe a lot of child tax benefits. The GST is paid every three months, so you might have to wait that long before the tax prep bill is paid.
The refund (if any) and the following credits and benefits go onto the prepaid card, which the tax prep company won’t give to the taxpayer until there’s enough money on the card to pay off their bill. At which point they give the card to the taxpayer. The card sucks: you can’t transfer the money to a bank account, it’s hard to pay bills with the card, and there’s a fee for everything (relative to bank accounts).
(I’m pretty sure using someone’s child tax benefit to pay their tax prep bill is illegal. The tax prep companies might not take that money though.)
Zero, almost.
I’m a dependent worker. Your taxes are withheld automatically. I have two such jobs. The only time I spend is telling my main employer how much I made in the other job every month so that they (not the secondary employer) can withhold my taxes.
Them’s dangerous words… 
Seriously though, the part that irks me most about actually paying my taxes is that I have to pay once when I complete the return, and then pay some more later in the year (June / July). It’s a right pain.