If the government were aware of your proper taxes for the amount of money you make each week, the taxes deducted from your check would always be appropriate. In real life, it never is. At many employers, you can request an increase or decrease in the withholding, but it’s rare for it to come out right.
If you efile you don’t attach anything, just the number of your W2 and the issuer of your 1099.
However I don’t think the filing requirement is totally lack of trust. Even if the IRS has a 99.99% accuracy in processing all the necessary inputs there will be tons of people where something is botched, and who get a ginormous tax bill by mistake. Much better to match the records they get with the stuff you send and double check for errors.
The IRS doesn’t give a rat’s ass if, through a mistake, someone gets overbilled, and they aren’t particularly interested in collecting data that would prevent that. Providing them with the necessary information to protect yourself is your problem, not theirs; and likewise fixing such a mistake once it happens. Ask me how I know that.
OTOH, they definitely want to know any facts that would enable them to bill you at least the right amount and nothing less.
You sure about that?
W-2s are due to the employee by 1/31. They’re not due to the SSA until 2/28 (if filed by paper) or 3/31 (if e-filed). If e-filed, a 30-day extension of time to file is available, which means the IRS may not receive a timely filed W-2 until 4/30. Yes, that’s right - until after your taxes are due. This is why you staple a copy of the W-2 to a mailed tax return, and why the e-filing specification transmits your W-2 information along with the return.
Most 1099 and 1098 forms have similar filing deadlines - 1/31 to the taxpayer, 2/28 if by mail, 3/31 if e-filed, with a 30-day extension for e-filing to 4/30.
Now… what about your IRA contributions? Form 5498 doesn’t even have to be provided to taxpayer until 5/15! I’m not sure when it’s due to the IRS.
Or how about K-1s? A calendar year partnership or S Corporation has until 9/15 to send the K-1 to the IRS and to the taxpayer. (Before you scoff at business owners as being an exception, remember that PTPs are traded on public stock exchanges.)
Oh, and the IRS doesn’t get copies of birth certificates, death certificates, divorce settlements or marriage licenses. So they don’t even know whether you’re still alive, let alone whether you’re married or whether you have kids. If we’re limiting the IRS’s auto-filings to “unmarried people with no kids eligible to file a 1040EZ” I think you’ll find that this is a tiny fraction of the population. Conveniently, it’s also the fraction of the population who can file for free.
Technically, what you don’t spend on meals and incidentals is income (most businesses and the government have gone to the “lodging plus M&I” system to cut down on fraud). Nobody ever claims the difference and as you said, there is no itemization to audit.
If you are an employee, then you aren’t actually paying your taxes … your employer is tasked with withholding your tax money and sending it to the IRS themselves. So here I agree that filing useless in the Electronic Age.
Business owners have to pay their taxes themselves. Now, the 1099 reporting rules have recently changed. However, before this change, only transactions $10,000 and over had to be reported. I’m making $8,000 per job, 12 jobs, that’s $100,000 income that the IRS doesn’t know about. I file claiming $14,000 income so I can get that EIC. Not only did I rip off the IRS for tens of thousands of dollars, I got a $5,000 refund !!!
Yeah, the 1099 rules have been changed … son-a-bitch, I had to sell one of my airplanes.
So, I’ve taken the plunge and opened an “off-shore” corporation for the primary purpose of trading with Cuba. My USA business now sub-contracts it’s work from this corporation. I can jerry the books so that the USA business’ income is exactly off set by expenses, leaving zero taxable profit, avoiding both the 17% income tax and 15% self-employment tax, for a total of 32% tax rate. I’m the only share-holder of the “off shore” corporation, so I receive a dividend check for all the profits, which is taxed at a flat 20%. I’m saving 12% off my taxes, or $12,000 per year.
All perfectly legal … there’s a few other hoops to jump through, but if you’re careful when picking your off shore location, it quite literally becomes a tax deductible vacation every year.
Mitt Romney leased a custom 747 to fly his wife’s horse to England in 2012 … for the Olympics … and he wrote it off his taxes as a charitable contribution … sweet.
Just think of it as a bureaucracy the gets bigger, less efficient, and more contrived as time progresses–like the IRS.
Among other things, the IRS doesn’t receive info about the property taxes I paid. That makes a big difference in the amount of taxes I owe. It probably affects many filers as well, if they are homeowners.