Several times they’ve sent me letters saying something to the effect of: “You’ve made a mistake. Go get form XYZ and try again, stupid!” They don’t really explain what the mistake it, though.
Then, four weeks later–before I’ve figured out the mistake–they send a refund–but they don’t tell me why! It’s just a check, with NO EXPLANATION. As far as I could tell, I owed them money! (And I sent it to them.) It’s like they’re saying: "Here’s a check. But do you really want to cash it? Maybe you deserve it. Maybe you don’t! Don’t be surprised if we take it back! Go figure it out on your own, then we’ll tell you if you’re right. "
They refuse to tell me what I did wrong in the first place. Like some kind of perverse math teacher who won’t tell me my mistake. If they know the solution to the problem, why don’t they just work it all out on the chalkboard for once and for all, and get on with it?
I’m sure a good part of it has to do with tax-deductible items that you can declare. They don’t know that I made a $1000 donation to the Children’s Home until I tell them.
I guess they have a general idea based on your W-2, but you have the chance to declare exeptions based on this or that. Also, they may just be correcting clerical errors if you’re submitting the paper form.
Well, I understand the sentiment here, but I think several factors make the current system better than one where the IRS does everyone’s return for them:
The IRS doesn’t necessarily have all of the information needed to determine your tax liability. For example, if you have a kid, the IRS isn’t going to know about until you claim another exemption.
Also, many times there are options and elections a person can make.
So, if the IRS were to do your return, you’d have to first tell them about any new/changed info and any elections you want to make (some of which you may only want to make depending on how much tax you owe), and by that point you may as well just fill out a return.
Finally, even though almost all types of income most people have are reported to the IRS by the payor or other type of person w/r/t the income, I don’t think the IRS has the capability to compile all of that data in an accurate manner for every taxpayer every year (so, they look at it on an as-needed basis).
I get these points. It’s more the caginess that annoys me. They know the right answer, but they won’t tell me. It’s like they think they have to teach me a lesson or something.
They are getting way better at data mining to be able to know some of these things. With requiring investment houses to start reporting cost basis next year, they’ll have a lot more on what they need. They can pull minor kids belonging to you off the social security rolls. And soon it should be possible for them to send you a letter that says “this is what we have for income, we think minor children Johnny and Sarah live with you and you are married and file jointly, here is your standard deduction. Sign and return this letter accepting this and you will get $x return (or pay $x). If this is not correct, if you have additional non-reported income, or you want to itemize to potentially lower your tax liability, you will need to fill out forms.”
But they don’t get reporting on a lot of the small stuff. And if they sent you that letter telling you only about the income they know about, how many people would report that unreported income? And I doubt they are going to see a lot of funding coming their way for system improvements. So they probably won’t.
I was drunk on the eve of the tax deadline one year, so I just signed the 1040EZ form with my W-2 and sent it blank. Got my refund check with no problem. Not that I’d recommend this method
It’s probably more due to the fact that they have hundreds of millions of returns to process, so the letter is being generated automatically and perhaps the program isn’t refined enough to be extremely specific about the error? Kind of like Windows errors that say “The program has encountered a problem and must close”. Covers all bases.
I’ve heard suggestions for a process like this. Most people would not need to make changes to their calculations. Of course, this would eliminate the need for H&R Block, Turbotax and the like, but it would be more efficient.
Frankly, the people who have taxes like this don’t need H&R Block. They are often the H&R Block users because taxes scare them and because H&R Block will give them an advance on their refund.
Its the folks who are down and dirty into itemizations and Schedule Ds that need either decent tax software or an accountant. And I don’t think that will change until you get a simplified tax code. And I don’t think the tax code will ever get that simple because its too good a tool for social engineering (plus the political paybacks).
This is the thing I hate most about paying taxes. It wouldn’t be so bad if they sent me a bill that says “pay this amount”, like all my other billers do. But the government has to make me get all sorts of paperwork together and figure out for myself how much I need to send them.
Back in the day, I remember there used to be a line on the tax form that said, “If you want the IRS to figure your tax for you, stop here.” It was after all the heavy lifting of deductions and credits, if I remember correctly … it basically saved you the trouble of looking up your tax amount from the tax tables. But they’ve stopped doing that, as far as I can tell. However, this thread reminds me of some handy (now outdated) advice from my high school economics teacher.
Obviously the best approach is to balance your withholding, so you don’t have a big refund or tax bill in April. However, he told us that if you’re going to get a refund, get your return filled out and sent in as early as possible, in order to get your money back from the feds as soon as you can. That’s still good advice.
If you were going to owe money, though, here was his gambit: Wait until April 15 to file. Fill out the form up to the point mentioned above (and let the IRS figure your tax). Then wait for the IRS to send you a bill for the amount you owe. Effectively, then, you wouldn’t have to actually pay your tax bill until June or so. And at the time, there wasn’t any penalty or interest or anything … you were following the IRS’s own rules.
Maybe that’s why they stopped doing it, I don’t know. But I clearly recall seeing that line on the forms back when I first starting filing taxes. I think I even used this gambit once.
