Re: And You Thought The "Do Not Call" List Was Popular

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My ex-boyfriend in France used to pay his taxes according to the government's calculations, and I have to admit that my libertarian soul protested at the thought.


Posted by: Jackmormon | Link to this comment | 02- 9-09 6:54 AM
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Doing your taxes builds character, Becks.


Posted by: apostropher | Link to this comment | 02- 9-09 6:54 AM
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There are some highly arbitrary limits on which piece of paper to file, even when you do paper. Just wage and interest income, everything else standard? Could be 1040EZ, 1040A, or 1040, just depending on the magnitude of the numbers, nothing else.


Posted by: Nathan Williams | Link to this comment | 02- 9-09 6:57 AM
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I'd be happy just to be able to file them online directly with the IRS instead of wading onto Bush's free market wonderland. Opinions differ on the proper role of government, but I'd think that collecting the damn taxes would clearly be allowed.


Posted by: Mo MacArbie | Link to this comment | 02- 9-09 7:25 AM
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But will they raise my taxes to cover the expense of doing everybody else's taxes?


Posted by: Di Kotimy | Link to this comment | 02- 9-09 7:36 AM
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If you are in the 95% that the govt. has the info to do your taxes, it shouldn't take you hours to do your own.


Posted by: MH | Link to this comment | 02- 9-09 7:46 AM
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I would love for this to happen. I'd probably still do my taxes myself (mine are not hugely complicated) but it would be really nice to see all the numbers come out the same. After a couple of years of agreeing returns I'd probably stop doing them myself and just sign off on whatever got sent to me. That would be really nice.

I think you're forgetting an additional category of opponents, though really they're more likely a subset of the anti-tax right: tax cheats and/or "creative" filers whose flunkies find ways to count a thousand chinchillas as dependents and whatnot. In a world where we all have to do our own taxes there's a lot more room for the rich and the dishonest to fudge the numbers.


Posted by: Robust McManlyPants | Link to this comment | 02- 9-09 7:46 AM
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It takes us hours to make sure we have everything in the right place and are not going to be audited or thrown in jail or whatever happens to people who calculate their taxes wrong (nobody knows), MH.


Posted by: Cryptic ned | Link to this comment | 02- 9-09 7:47 AM
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If you are in the 95% that the govt. has the info to do your taxes, it shouldn't take you hours to do your own.

If you're doing them by hand it certainly can. The gov't surely punches the numbers into a nice computer program. I, on the other hand, go to the worksheet on page 17 and if the number on line 9 of the worksheet is greater than the number on line 6, then I subtract line 6 from line 3, multiply that time .0147, compare that to the answer on line 98 of my 1040, and eventually learn that I may not take this credit and should enter 0 on line 46.

Roughly speaking.


Posted by: Di Kotimy | Link to this comment | 02- 9-09 7:52 AM
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whatever happens to people who calculate their taxes wrong (nobody knows)

Here's the big secret: Speaking from the experience of, uh, a guy I know, if you get it wrong adn don't pay enough, they send you a bill and you pay what you should have paid the first time plus 6% annualized interest. It's no big deal.

More shockingly, if you get it wrong and pay too much, at least if it's obvious, you get the extra back, and they pay you the 6% interest.

Sadly, though, the IRS reports the interest payment they make to you back to the IRS, so you get a strangely self-referential Form 1099. And if you forget to report that amount as income they will catch you and the cycle perpetuates itself. This also happened to a guy I know.


Posted by: unimaginative | Link to this comment | 02- 9-09 7:59 AM
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Wouldn't this have to be coupled with a significant simplification of the tax code? It seems to me that the government does not, in fact, have the information necessary to do your taxes for you. (And that's not, in fact, how an audit works: first they ask for all your records, then they do your taxes for you, then they compare the results. You left out that key first step.) They don't know how much I've given to charity (some donations are reported to the IRS; most aren't). They don't know whether I've paid cash wages to an unreported employee. They don't know if I had a new depenant this year, or separated from my spouse. They don't know what business expenes I've incurred (or job-related relocation expenses, or etc. etc. etc. etc.). They generally don't have anything except my very most basic wage and income information.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:01 AM
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if you get it wrong adn don't pay enough, they send you a bill and you pay what you should have paid the first time plus 6% annualized interest. It's no big deal.

Unless you "get it wrong" in a way that suggests to them you might have "gotten it wrong" on purpose, in which case they start taking a closer look, and things get more serious.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:04 AM
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10.last happened to me, I think.

What's semi-frustrating is that the vast majority of my income is self-reported (fees from clients), and so I could be making up whatever I want, but meanwhile the IRS is nickel-and-diming me on shit like a $52 refund from the City (which I'm 99% certain was BS, because it was Employment Tax that had been double-deducted, but I think I already paid taxes on it the first time around, before it was refunded. But, you know, what's the tax on $52?).


Posted by: JRoth | Link to this comment | 02- 9-09 8:06 AM
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11: Yes and no. You're right that most people who itemize have at least some details the IRS doesn't know (although of course they have all your mortgage info, which is the #1 item on most itemized returns), but anyone filling out a 1040EZ is using only info the IRS has in hand.

Probably part of the mechanism for making the changeover Becks suggests would be upping the standard deduction so that only people with really extraordinary deductions need to itemize.


Posted by: JRoth | Link to this comment | 02- 9-09 8:10 AM
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The city taxes in Pittsburgh are strange. Every year I sent in a PGH return claiming a refund of something less than $10 and every year they work up a letter denying it and sending me nothing. I'm not sure why. I think I may be on their shit list because the first year I was here they made me pay city tax on income that I already paid city tax on in Ohio. Since this wasn't a matter of $8, I fought them for quite a while before paying, though I never was able to talk to somebody who knew anything.


Posted by: MH | Link to this comment | 02- 9-09 8:12 AM
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11: my very most basic wage and income information.

But isn't that enough for most people who take the standard deduction, which is most people? Admittedly, this would only make a difference for people with pretty easy taxes, but there are a whole lot of them -- if it saves an hour for 100 million people, that seems worthwhile.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:13 AM
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JRoth pwned.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:16 AM
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14: they know whether my wife and I need to file jointly or separately? They know whether a college student's parents can claim her as a dependant? They know whether I put energy-efficient windows in my house?


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:16 AM
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16: everything in 18 matters, even to someone not itemizing.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:17 AM
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Brock, they know about your windows from driving the heat-vision van around to see who has a basement full of grow lamps.


Posted by: MH | Link to this comment | 02- 9-09 8:19 AM
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They also laugh at your drapes.


Posted by: MH | Link to this comment | 02- 9-09 8:20 AM
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Married filing separately is pretty low odds, right? If I recall correctly, you're almost never fiancially better off that way, the main purpose is to avoid having to take responsibility for a spouse's representations on their taxes.

And the other things you mention are also pretty low odds. What would be the problem with "Here's your precalculated taxes -- go ahead and correct them if anything on this list of stuff applies to you." It'd still save a lot of people some time and worry.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:21 AM
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if it saves an hour for 100 million people, that seems worthwhile

At a very rough guess, that seems to be about the level of savings we're talking about. I'm not sure it's not worthwhile, but that hardly seems self-evident.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:21 AM
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18 & 19: So they could have a website where you answer a half-dozen questions, like Turbo Tax. But then Turbo Tax wouldn't make money on the deal.


Posted by: Bave Dee | Link to this comment | 02- 9-09 8:21 AM
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Huh. 100 million hours of unnecessary work eliminated seems like a self-evident win to me.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:22 AM
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LB: in your view, would taxpayers be responsible for fixing errors against their interest, or would they be entitled to rely on the government's calculations? Because if they're not entitled to rely on them, it seems we're not really saving anything. And I genuinely don't think the government has enough information (under our current tax code) to calculate taxes that could be relied upon.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:26 AM
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25: at what cost?


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:26 AM
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Married filing separately is pretty low odds, right?

It's the right option for pretty much anyone who is married but separated.

I guess I should also clarify that I'd be more than happy to see most of these complications simplified away. I just think that's a necessary pre-requisite.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:30 AM
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26: For someone taking the standard deduction, is there any information the government wouldn't have that would increase, rather than decrease, their taxes? I can't think of anything offhand (which doesn't mean there isn't anything). If that's right, or mostly right, sure, I'd let the taxpayer rely on the government's calculations, and leave the risk of actual error on the IRS.

27: I could be wrong, but given that the IRS already has all the information on your various W-2s and such, I can't imagine that the cost of switching over to a system that calculates your taxes would approach 100 million hours of labor in the first year, and after the switchover I'd expect it to be pretty much cost neutral.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:31 AM
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In the UK, for ordinary people, in employment, you don't 'do' your taxes.

Only self-employed people, and businesses 'do' their taxes.


Posted by: nattarGcM ttaM | Link to this comment | 02- 9-09 8:34 AM
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28: But why would the existence of people who want to file separately be a problem? They tear up their pre-prepared form, and file separately. The point of it being low odds isn't to say that no one needs it, it's to say that even if people who want to file separately don't get the benefit of the pre-prepared form, that doesn't affect the total benefit all that much.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:34 AM
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For someone taking the standard deduction, is there any information the government wouldn't have that would increase, rather than decrease, their taxes? I can't think of anything offhand (which doesn't mean there isn't anything).

For several years most of my taxes were on fellowship or scholarship funds, which the government would have no way of knowing about.


Posted by: essear | Link to this comment | 02- 9-09 8:35 AM
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I wonder how much of that 100 million hours couldn't be saved by forbidding anybody with a JD or MBA from having anything do to with writing the forms/instructions for the 1040EZ.


Posted by: MH | Link to this comment | 02- 9-09 8:35 AM
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26.1: Tip income? Gambling winnings, or other cash income? Wages pages to an unreported employee (on which taxes are owed)? At the state level, out-of-state purchases (on which no sales tax was paid)? I'm just listing these off the top of my head; I'm sure there'd be plenty more if I sat down and worked through it.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:36 AM
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You fill out the Married filing jointly/separately thing on your W-2, right? So they just used that information.

Something else that is evil is having to pay TurboTax an extra fee to file your return electronically. Electronic returns save the government a ton of money - why are they discouraging it through a fee?


Posted by: Spike | Link to this comment | 02- 9-09 8:36 AM
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32: They don't give you a 1099 for scholarship funds? Seems like they should.


Posted by: Spike | Link to this comment | 02- 9-09 8:38 AM
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31: it woudln't be a "problem", except insofar as it's another (of the many we've identified, in 30 minutes of thinking through this proposal) class of people for whom this proposal wouldn't work.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:39 AM
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34: I think they know the tip income for most people. The establishment reports your sales and they withhold assuming that you are tipped a certain percentage of those sales. The percentage is well-below what even cheap people tip, but I very much doubt that anybody reports more in tips than the restuarant reported for them.

(Note: This may have changed, I haven't gotten a tip since 1995 -- unfortunately, I didn't quit waiting tables until 1999.)


Posted by: MH | Link to this comment | 02- 9-09 8:40 AM
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I always got a 1099 for scholarship funds, but I believe they were all state funds. I could imagine not all private scholarships being reported.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:41 AM
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34: Oh, I wasn't thinking. Sure, you'd have to have a form for 'Income not reported by an employer or whoever to the IRS', and your pre-prepared form would have to have "I swear I didn't earn anything not reflected on this form," above the signature box. But still, most people wouldn't have to fill out the extra form.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:41 AM
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36: No. The IRS instructions for reporting it involve writing "SCH $XXXXX" somewhere on the tax return.


Posted by: essear | Link to this comment | 02- 9-09 8:41 AM
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29.2: It probably depends a great deal on what format the gov't currently has this information in and what additional staffing/software would be necessary to convert the information into completely returns. If people are already automatically inputting all the information into a database for all taxpayers, then I agree that having a computer program spit the info back out as a completed return seems pretty straightforward.


Posted by: Di Kotimy | Link to this comment | 02- 9-09 8:41 AM
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having to pay TurboTax [...] save the government a ton of money

Different entities. Filing electronically doesn't save TurboTax a ton of money.


Posted by: apostropher | Link to this comment | 02- 9-09 8:42 AM
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37: But all the classes you're talking about are pretty small. There could be 50,000 separate reasons you wouldn't be able to use the pre-prepared form; if there are only 10,000,000 filers who fall into those classes, total, though, you're still left with a lot of people whose lives have been made easier by the pre-prepared form.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:44 AM
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43: TurboTax needs to have their asses disintermediated.


Posted by: Spike | Link to this comment | 02- 9-09 8:44 AM
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I always got a 1099 for scholarship funds, but I believe they were all state funds. I could imagine not all private scholarships being reported.

There's no 1099 for NSF fellowships. Strange, I know.


Posted by: essear | Link to this comment | 02- 9-09 8:45 AM
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For several years most of my taxes were on fellowship or scholarship funds, which the government would have no way of knowing about.

Wait, we have to pay taxes on that shit? Crap.


Posted by: Parenthetical | Link to this comment | 02- 9-09 8:47 AM
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A better solution is for the government to nationalize TurboTax.

Or more, seriously, just have a similar, free IRS-provided service. (Less satisfying than nationalization, but more politically feasible.) It would still take everyone a few hours to answer all the questions and file the thing, but you could skip all the stupid paper forms.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:48 AM
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47: No cabinet appointments for you!


Posted by: Spike | Link to this comment | 02- 9-09 8:48 AM
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Doesn't that one sound like the fix is to make fellowship and scholarship funds reportable to the IRS, either with a 1099 or some new form devised for the purpose? Keep the accounting on the organizations with paid accountants.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:49 AM
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Or more, seriously, just have a similar, free IRS-provided service.

This, exactly, is what's being stonewalled by H&R Block and TurboTax, if I understand correctly.


Posted by: heebie-geebie | Link to this comment | 02- 9-09 8:49 AM
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There's no 1099 for many graduate fellowships. This makes paying taxes a pain in the ass, for those of us who pay them.


Posted by: Cala | Link to this comment | 02- 9-09 8:50 AM
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(I think I'm mostly kidding. I'm sure I paid what I needed to at the time, right? Key word, think).


Posted by: Parenthetical | Link to this comment | 02- 9-09 8:50 AM
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I'm dreading doing my taxes this year. While in college, my dad was generous enough to take care of my taxes for me. For the first three years after that, my employment situation was pretty simple: except for temp work at a nearby school, my salary came from a small business in the town where I lived. Even then, I got my taxes in at the last minute or a few days later due to my habit of procrastination, but it didn't really matter because I made little enough that I qualified for a refund.

Today I work for a not-small business. I live in Virginia, the company I work for is based in Virginia too, the company I'm subcontracted out to has offices in Virginia but ultimately is based in Alaska, and I actually work in Washington, D.C. for a government agency. On top of that, I think some income from my previous job falls into this fiscal year as well, so I have to report that. So we're talking two employers spread out across DC and at least two states and maybe three (I'm not sure the Alaska connection matters). I doubt I'll be filling out the 1040EZ this time.

This probably doesn't sound that bad to all the lawyers and people with complicated family situations and stuff around here, but it sure seems daunting to me. Being a grownup sucks.


Posted by: | Link to this comment | 02- 9-09 8:50 AM
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48: Sure. If the IRS service pre-entered all the information they had already, rather than making you enter it, that'd be just about exactly the same thing.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:50 AM
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51: well, of course. So we nationalize them.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:51 AM
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Taxes aren't based on the "fiscal year", right? It's the actual year. Jan. 1 to Dec. 31.


Posted by: Cryptic ned | Link to this comment | 02- 9-09 8:51 AM
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It depends on the taxes.


Posted by: Cala | Link to this comment | 02- 9-09 8:52 AM
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57: Ned, for your own sake, please hire an accountant.


Posted by: MH | Link to this comment | 02- 9-09 8:52 AM
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54: if you've really got a complex situation, it's not *that* expensive just to hire someone to take care of it for you. ($100-150?) Weigh your anticipated headache against that amount, and figure out what's best for you.


Posted by: Brock Landers | Link to this comment | 02- 9-09 8:54 AM
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I don't need an accountant. I have a W2 form and a 1099-DIV form, and a form saying that the money the school "pays" to cover my "tuition" for the classes I need to be registered for but don't actually exist is not taxable. Just like last year and the year before.


Posted by: Cryptic ned | Link to this comment | 02- 9-09 8:54 AM
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I'm wondering what the effect on revenues would be. I'm thinking they would go up, because less people would push the envelope on "creative" tax reporting. This could be a good way to raise money without actually raising taxes. You could keep tax rates where they are, but collect them more efficiently.


Posted by: Spike | Link to this comment | 02- 9-09 8:55 AM
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61: In that case, your taxes are based on the calendar year if the last two digits of your SSN are less than the number of the MVP for the team that won the Super Bowl. Otherwise, its the fiscal year.


Posted by: MH | Link to this comment | 02- 9-09 8:58 AM
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62: On the other hand, there are a lot of fuckups out there who don't file even though they would have gotten refunds -- while I think that's a shame, correcting it would be a revenue loss.


Posted by: LizardBreath | Link to this comment | 02- 9-09 8:59 AM
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"classes" should be in scare quotes too.


Posted by: Cryptic ned | Link to this comment | 02- 9-09 9:00 AM
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55: well, no, it seems not to be the same thing at all to me. In one case, we were talking about the government just sending you a tax bill (with an opportunity to review/dispute). In the other, the taxpayer would still be responsible for the accuracy of the form. And therefore would have to go through the trouble of answering all the relevant questions, and doing his or her best to get the right result.

BUT, TO BE CLEAR: I'm all for making the process of answering the relevant questions and getting the right result much easier than it is now, and I do agree that it could be made substantially easier for most people. I'd love to have an IRS-sponsored Turbotax website, that had pre-entered all the information the IRS had on hand for you, and that guided you through a series of relevant questions to test the accuracy of the results. So, if that's more or less what you're saying as well (which sounsd to me very different from the post, but that's fine), then we're saying the same thing.


Posted by: Brock Landers | Link to this comment | 02- 9-09 9:02 AM
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Doesn't that one sound like the fix is to make fellowship and scholarship funds reportable to the IRS, either with a 1099 or some new form devised for the purpose? Keep the accounting on the organizations with paid accountants.

That's probably reasonable. I'm just wondering if there are lots of similar sources of unreported income out there that I don't know about. It seems like the most plausible way the government would lose a lot of money on this; if you're filing your own taxes, you'll probably report all such sources, but if the government sends you a much smaller bill, it would be a lot more tempting to pay it and not bother correcting it....


Posted by: essear | Link to this comment | 02- 9-09 9:11 AM
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64: I'm guessing those fuckups don't make a whole lot of money to begin with, so probably not much of a loss.


Posted by: Spike | Link to this comment | 02- 9-09 9:13 AM
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54 was me.

60: Thanks. I'll think about it. Maybe it won't be nearly as bad as I'm assuming, who knows.


Posted by: Cyrus | Link to this comment | 02- 9-09 9:22 AM
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30. Right. But I hope you claim a study allowance!


Posted by: jayann | Link to this comment | 02- 9-09 9:23 AM
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||

Kindle 2.0? Officially very tempting.

|>


Posted by: Brock Landers | Link to this comment | 02- 9-09 9:24 AM
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In that case, your taxes are based on the calendar year if the last two digits of your SSN are less than the number of the MVP for the team that won the Super Bowl. Otherwise, its the fiscal year.

Wait, the Super Bowl that occurs during the tax year in question, or the Super Bowl that follows the football season that occurs during the tax year in question? And what if the regular season extends beyond Jan 1?


Posted by: JRoth | Link to this comment | 02- 9-09 10:09 AM
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That depends. What sign were you born under?


Posted by: MH | Link to this comment | 02- 9-09 10:12 AM
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Whatever sign is one month to the day before the Immaculate Reception.

WOOOO!!!


Posted by: JRoth | Link to this comment | 02- 9-09 10:16 AM
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People, if your taxes are complicated, use an accountant. Brock is low-balling the price, I think, though maybe there's an accountant glut in the Northeast—we pay $200, and I'm given to understand that that's cheap. But even at that price, it will save you money in the end, I promise.


Posted by: Jesus McQueen | Link to this comment | 02- 9-09 10:16 AM
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75: that's the price range I was quoted for basic preparation service. This was about 12 years ago. I've never used an accountant personally, so maybe that quote was unusually low, or maybe rates have increased since then.


Posted by: Brock Landers | Link to this comment | 02- 9-09 10:32 AM
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In Sweden there's three categories, people who just approve the government's numbers (most people), people who add a few number, and the tiny minority who don't use the pre-prepared form. So maybe even without simplifications you could get a bit more than 100 million, if not 95%


Posted by: David Weman | Link to this comment | 02- 9-09 11:24 AM
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Re 1 -- if France is anything like the UK (see 30) in this respect, then it's very easy to contest the government's calculations if you feel there is a problem (or were able to anticipate one for some reason).

On two occasions I've had to ask for tax rebates due to the strange timing of my employment and the financial year. I suspect that having to fill in two forms in my entire adult life (downloadable in pdf from the official website) has left me with a great deal more genuine liberty than I would have had if I'd, say, had to waste my time filling in a full tax return every year for my relatively economically-inactive life.


Posted by: RobDP | Link to this comment | 02- 9-09 12:46 PM
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I'm given to understand that that's cheap

By your accountant?


Posted by: TJ | Link to this comment | 02- 9-09 12:48 PM
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80: By the people I know, mostly fellow freelancers, whose filings are similar to mine (married filing jointly, home office, lengthy itemization). As I understand it, the going rate is closer to $300-400.


Posted by: Jesus McQueen | Link to this comment | 02- 9-09 12:54 PM
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79


Posted by: Jesus McQueen | Link to this comment | 02- 9-09 12:55 PM
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This was about 12 years ago. I've never used an accountant personally, so maybe that quote was unusually low, or maybe rates have increased since then.

Nah, that can't be it. Snickers bars still cost 35 cents, so why wouldn't accountants cost the same as they did in 1996?

And yes, the IRS should send out pre-filled tax forms. Unreported income should still be a criminal offense in the same way it is now, but there should be a threshold on deductions where you can just take the IRS's word for it and still be mostly correct. This would be especially useful for some of the more complicated investment stuff, which is reported to the IRS so they know what's up, but individuals may absolutely not expect or know how to handle.

The particular example that I'm thinking of is the tax treatment of dividends paid out by many Master Limited Partnerships (a structure used by lots of public pipeline companies), which remains taxable even if the MLP holdings are in a 401k, IRA, or other tax-exempt vehicle. These are steady dividend payers that got very high yields in the market crash, so a lot of retiring folks (and we're just hitting the first retiring generation with sizable individually-managed tax-exempt accounts) picked them up without knowing these twists. I bet a lot of folks get screwed this year when they have no idea what a K-1 tax form is or how it affects their investment income reporting.


Posted by: Po-Mo Polymath | Link to this comment | 02- 9-09 1:51 PM
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This would be especially useful for some of the more complicated investment stuff, which is reported to the IRS so they know what's up, but individuals may absolutely not expect or know how to handle.

The IRS does not know if you bought IBM at 15 or at 30, they only know you sold at 25. You must tell them if you made a profit or loss.


Posted by: Tassled Loafered Leech | Link to this comment | 02- 9-09 1:59 PM
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83: Your broker does, and they report all 1099s directly to the IRS as well as to you. Switching brokers or inheriting shares makes the trail a little harder to follow, but it's still not too hard to put together since the old and new brokers will all report your account information.

So unless you have a seat on the NYSE that you use to buy all your shares without an intermediary, you go knock yourself out trying to turn capital gains into capital losses.

(Actually, it would not surprise me one bit if the IRS gets some data directly from the DTCC, which would give them a shot at foiling even those attempts to fudge the numbers.)


Posted by: Po-Mo Polymath | Link to this comment | 02- 9-09 2:05 PM
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But the 1099 reports the sale, not the net, IIRC.


Posted by: Tassled Loafered Leech | Link to this comment | 02- 9-09 2:08 PM
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85: It reports both, I'm quite sure. There's a section that lists new activity in the account (sales, etc.), while the summary sections list dividend income broken down by type, capital gains broken down by type, and foreign investment tax already paid by look-through investments such as mutual funds.

The category I'm not as sure about would be direct investments in hedge funds or unregistered separate accounts that aren't intermediated by a private bank or family office (which is probably a pretty small slice of their assets), but I bet even they have some sort of reporting arrangement with the IRS. Any fund over $100 million has to report equity holdings every quarter, so even these unregistered funds aren't flying entirely under the government's radar.


Posted by: Po-Mo Polymath | Link to this comment | 02- 9-09 2:25 PM
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87

It has been a long time since I was in the market, PoMo. Thanks for the update


Posted by: Tassled Loafered Leech | Link to this comment | 02- 9-09 2:31 PM
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88

I'm guessing that capital gains taxes are not going to be as big of an issue this year as in the past.


Posted by: MH | Link to this comment | 02- 9-09 2:32 PM
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89

87: Never a problem. I don't really know what the regulations and disclosures were in the past, and sometimes it surprises me how much they've changed. I only learned today that cash flow statements were not part of required US financial disclosures until 1987, which kind of blows my mind. It may well have been the case that only sale prices were given on 1099s and other investment reporting forms until fairly recently.


Posted by: Po-Mo Polymath | Link to this comment | 02- 9-09 2:37 PM
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89. This is one of the side benefits of the computer revolution. It is a lot easier to keep track of reams of data. It was indeed once the case that the client had to keep the records of purchase and sale. The broker had it somewhere, but one had to ask.


Posted by: Tassled Loafered Leech | Link to this comment | 02- 9-09 2:42 PM
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91

Um Becks, RTFA!


Posted by: M/tch M/lls | Link to this comment | 02- 9-09 3:43 PM
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92

91 - I thoughtud blogged about it before. I'm going to keep blogging this, angrier and angrier each year, until it's passed.


Posted by: Becks | Link to this comment | 02- 9-09 8:12 PM
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93

92: Does that work often?


Posted by: MH | Link to this comment | 02- 9-09 8:20 PM
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94

You need a count down. Or count up, as it may be. And put it in a widget to go into sidebars that says "n years [and counting] and still no tax prep reform" - but in catchier language than what I just wrote.


Posted by: eb | Link to this comment | 02- 9-09 8:22 PM
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Becks, you're going about this all wrong. Seriously, you need to argue against something that has yet to happen and then claim credit for stopping it. That's how you earn the big bucks. Just this year, I've succeeded in preventing environmentalists from ripping-up all of I-80 and stopped the oil companies from requiring that every hybrid vehicle continuously broadcast 'DJ Jazzy Jeff and the Fresh Prince' so that the blind have warning. 2/0 vs. 0/1.


Posted by: MH | Link to this comment | 02- 9-09 8:44 PM
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The IRS instructions for reporting it involve writing "SCH $XXXXX" somewhere on the tax return.

In particular "somewhere on the tax form" is not an actual box, but instead on top of one of the dotted lines next to an actual box. Seriously. And the NSF does not send the IRS or the fellowship holder any paper work indicating the total amount, you just have to remember/guess. I think the point of all this nuttiness is to stop the NSF from having to pay any payroll tax.


Posted by: Unfoggetarian: "Pause endlessly, then go in." (9) | Link to this comment | 02- 9-09 8:46 PM
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97

but instead on top of one of the dotted lines next to an actual box. Seriously.

That's how I remember it. Very weird.


Posted by: eb | Link to this comment | 02- 9-09 8:54 PM
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Also, that damned SCH crap forced me onto the non-EZ returns - not quite the full length every deduction possible forms, but still it meant a lot of answering "no" or putting down zero or leaving spaces blank as directed just to have a form that could handle the SCH line properly.


Posted by: eb | Link to this comment | 02- 9-09 8:58 PM
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From Becks' original post:

YOU DON'T NEED TO DO YOUR TAXES.

No, I haven't read the thread much.

But really, yes, I do need to do my taxes. I'm self-employed. The government does *not* have all my relevant paperwork. How do they know what proportion of my home I use for business? Or which of my expenses are business expenses?

If one is plugged into a company environment in which one's deductions are a matter of course, yeah sure fine, but I do not wish for all of us to be so plugged in.


Posted by: parsimon | Link to this comment | 02- 9-09 9:07 PM
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but instead on top of one of the dotted lines next to an actual box. Seriously.

Man, every time I filled out that SCH thing I felt like such a chump, knowing that quite a high percentage of my grad student colleagues weren't reporting a thing.


Posted by: Blume | Link to this comment | 02- 9-09 9:15 PM
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With my grad fellowship I also got a couple thousand a year for books, computer, etc.- you're supposed to report it unless it's required for all students in the same course of study as you. Because a PhD is pretty unique, I'd just go into my professor's office every year and say, "Are you making me buy an ipod with this money to complete my course of study?" and he's say sure.
(Graduated 2004- statute of limitations is passed!)


Posted by: SP | Link to this comment | 02- 9-09 9:35 PM
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10- They give 6% interest? Shit, I'm going to overpay by $100k, that's at least 2x the return you can get in deposit accounts right now. Hell, I'll take out a mortgage at 5% to overpay the IRS and get 6%.


Posted by: SP | Link to this comment | 02- 9-09 9:37 PM
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103

IPod statute of limitations is 25 years.


Posted by: John Emerson | Link to this comment | 02- 9-09 9:57 PM
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104

103: SP is busted!


Posted by: parsimon | Link to this comment | 02- 9-09 10:02 PM
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I am going to owe the government so much fucking money the year. I'm trying to look on the bright side--it's because I spent so much money last year! but, shit. oh well, I certainly deserve to pay a lot, and approve of higher tax rates on myself.


Posted by: alameida | Link to this comment | 02-10-09 5:59 AM
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106

Actually I used to rather like doing my taxes. However.


Posted by: Standpipe Bridgeplate | Link to this comment | 02-10-09 6:24 AM
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