The tax system in the US is complicated, you've got different state taxes as well as the federal, for example if your kids go to a different state for school than you live, add that your partner might work in another state, maybe they have different relief taxes for disasters through the year. It might very well be a feature but it is complicated, and the more activities you have, maybe investments, a small business, multiple jobs. It becomes overwhelming for non accountants.
Even the complex cases fit into an overarching tool. Most people in the UK don't submit tax returns because they don't have any income beyond their salary. Even if you do, you then use the tool which asks you a series of questions like "do you have a student loan?" and "did you receive any dividend income?", then you have to fill in some next level detail if those are true. I'm sure there are people with weird tax arrangements that need to work outside of the wizard, but I'd wager it was less than 1 in 1000, and those people tend to have the money to pay for fancy accountants to do it for them.
You also only need to fill in a tax return if you have income (or capital gains) above a threshold. SO having some interest paid on a savings account etc or a small side business or selling an asset at a small profit above what you paid for it does not mean you have to make a tax return.
I'm not sure how it is in the US, but in Canada a huge amount of low-income benefits are directly tied to filing your taxes. Most Canadians experienced this in our college years when we got GST (our VAT) refunds due to being low-income adults.
Canada recently announced that they're going to go for automated tax filing and it turns out the biggest cost may not be implementing it, but that they'd end up having to pay out a lot more in benefits to low income people that don't file.
Basically I only do mine in about 15 minutes, most spend on verifying what I actually paid for things. Because I go over of the basic deduction so I can deduct for workspace, internet and electronic equipment. But the workspace is going away so probably won't bother after this year.
Because it is (or was it the time this article was written) against the law. The company that owned the tax preparation software lobby to Congress to pass a law requiring that the IRS not provide a free and easy way for people to submit their taxes.
Sometimes I think the most exceptional thing about the USA is exceptionalism.
Solutions to problems that are solved elsewhere are pushed back against, because "The USA is fundamentally different".
Other countries have states too. The UK even has a country with an entirely different legal system (Scots Law), but we still make our collection of income tax system simple.
A "complicated tax system" (if that is the root cause) is not something that is impossible to change. It is within the gift of the government(s) to change that.
The lack of appetite for change is the result of decades of lobbying for the status quo to continue.
A 1040 form, while intimidating looking, is trivial to fill out. Once you've done it a couple times, it takes about 5 minutes.
The only arcane bit is the law. The tax prep software knows which forms to use for which financial detail.
If the law were written clearly, there would be no need at all for any special software, you could fill out a couple csv files and send an email...
Even without the law, you are right, the actual flow of the tax prep software, for most people, is something a 16 year old could probably cobble together in an afternoon or two... however the problem then becomes how to provide a public service at low cost (to cover hosting/bandwidth costs) while govt funds are explicitly forbade to be used.
To me the solution is obvious - a third party non govt player that receives specific allotment of funding, no questions asked. However, see the rampant issues with lobbyists mentioned in the article...
It's become worse since 2017 when they changed the 1040 to make it "shorter." All they did was move everything to different forms so now it's an insane process of shuffling numbers back and forth across many forms.
"tax prep" isn't something I've had to ever think about for the UK system. I don't have to buy software, I don't have to pay anyone. I get my wage, it has my taxes taken out. That's it. I don't need to keep receipts, I don't need to work out how much mortgage interest I've paid, etc.
My individual situation is calculated, by the tax authority and rolled into a "Tax code" which acts as the personal allowance. This then feeds into payroll which pay you net of tax.
If at the end of the year, the tax authority (not you, this is automatic without a form being filled in) spots an over or under payment, they adjust your tax code for the next year to recoup or refund the difference. No cheques in the post, no forms to fill in. Just automatically happening in the background.
Meanwhile for the US, I need to fill in 2555, 1040, and other forms. These aren't "5 minutes", they're slow, and more importantly error-prone, as they get you to add up different numbers rather than just asking for the information needed.
No human should ever have to answer the series of questions ( this is legit, from the current 1040 ) :
24 Add lines 22 and 23. This is your total tax
Where Line 22 is:
22 Subtract line 21 from line 18. If zero or less, enter -0-
Line 21 is of course:
21 Add lines 19 and 20
And 18 is:
18 Add lines 16 and 17
Where 17 is:
17 Amount from Schedule 2, line 3
Where that is an entirely different form.
The only purpose I can tell for this ridiculousness is to give scope for people to make mistakes.
A form should collect raw information, not put the burden of calculation shouldn't be on the form-filler in a world where computers exist.
The data is already on the form. What purpose can that solve except opening up a possibility for someone to accidentally commit tax fraud?
You're missing the point suggesting it should be "a couple of CSV files". No, it shouldn't be any filing at all.
Demand change, demand simplification of the tax system, and demand zero-filing solutions for regular employees.
> Meanwhile for the US, I need to fill in 2555, 1040, and other forms. These aren't "5 minutes", they're slow, and more importantly error-prone, as they get you to add up different numbers rather than just asking for the information needed.
For the many forms, yes of course it takes longer. However, from the W2 to the form, if you are familiar with both, it is many steps to be sure, but the process itself doesn't take long.
I don't mean to hold up the 1040 as some shining example of how to write a form.
Merely, the steps look involved, but usually boil down to several of the same number in multiple boxes, and a couple additions/subtractions. If you do it purely by hand, there is a high chance for clerical error, yes, with automation as simple as a calculator, it's much simpler.
You usually get the 1040 as part of the "preview" of the tax prep software. When you compare the actual steps involved in the 1040 vs the overly long, overcomplicated process in the tax software, it's obvious that there is a large amount of fluff involved.
Sure, there are some credits it might remember that you might not, but that's about the only reason I would think tax prep software is better here... however this could be accomplished by something as simple as a checklist provided by the govt...and if you are paranoid you could employ a lawyer to double check that every option has been explored (how do you know the tax prep software know every credit from this current year? You don't, so, what exactly are you paying for?)
We got pre-calculated returns as an alternative in the early 90's, by the time I got my first real job in the early 00's everyone used the pre-calculated one and just made changes as necessary. The first years I got my tax return in the mail and I think a few years I had to mail back a signed copy, but these days everything is digital and if you don't have to make any changes you don't have to do anything at all.
Back then you also had to physically deliver your tax deduction card to your employer so they could deduct tax correctly, but these days that is also digital and salary systems just fetches the current deduction card before running salary jobs every month.
I know French people who live near the Swiss border and who file their tax returns in a matter of minutes because all the information is pre-filled via their employer's income statement and their bank.
They are two different countries, and Switzerland is not a member of the EU.
When French bureaucracy is simpler and more efficient than your tax collection system, you have a problem.
If you want to understand the first, take McDonalds - you probably have one and don't think it's that bad? Imagine everything on the menu is either 10 times sweeter (sickening), or made with wilted products on the cusp of expiration, and that's "standard" food.
It's so bad, many Americans hate anything "healthy" because any time they are exposed to it, it's not much better than pigs swill. So there are many who will only eat meat, because that is harder to make taste poorly, despite being even more disease riddled (there are almost no standards for meat inspection).
So then, you are constantly sick, low energy.
And then education - suffice it to say there are many communities where it is seen as "reasonable" to believe in nonsense like "flat earth", and many struggle with basic things like addition. It's a wonder we aren't illiterate too... I suppose it's too useful to be able to read about products to buy them, so we can at least all read the adverts...(for now)
