I wonder if they will be matching TurboTax’s brand new Lifetime Guarantee?
I think its a good idea. Why should John Q public have to pay someone to do his taxes. Filing should be easy. How about automatic?
Easy, I agree with. Automatic, not so much.
I can’t recall the last time all my income sources sent me 100% correct paperwork the first time. Plus, as a person with contract income, even when the revenue side is correctly reported, the expenses side is a collection of things like mileage logs, receipts, and records of minor cash costs that don’t get automatically reported anywhere…
I suspect that any ‘automatic’ filing would over-estimate tax burdens due to both the types of errors I usually get on my 1099s and the easier/more complete automated reporting of the revenue side vs. the expenses side…
I suspect that a significant portion of the population has little more than their W-2 to report. Once dependents are listed, their return should be trivial to automate.
Sure business people and those with multiple income sources have more to report and may well need assistance.
Well it depends on what you consider ‘significant’. Publication 1304 (Rev. 11-2022) (irs.gov) In 2020, there were 164.4MM returns were filed.
118.6MM (72.1%) had income tax withheld reported on a W-2
44.7MM (27.1%) had income tax withheld reported on a 1099
5.0MM (3.0%) had income tax withheld reported on other forms
9.8MM (6.0%) made estimated tax payments
Since the percent of returns that made payments adds up to 108.2% of the returns filed, there is obviously some cross-over between W-2 income withholding and other withholding, so maybe 65% of taxpayers had only W-2 withholding.
And that doesn’t even get into credits like education credits, earned income credit, child tax credit, premium tax credits, foreign tax credits, etc. or those who itemize their deductions. Edited to add: Not to mention - interest income, dividend income, IRA distributions, SS income, etc. which often don’t have any withholding, so wouldn’t be counted in the payments above.
Plus their filing status, and whether they share dependents with another taxpayer, like many divorced taxpayers do. So, no, it’s not really that simple.
It’s not, but it also doesn’t have to be perfect when you’re dealing with 164 million filers. Even if only 25% could be fully automated, that’s 41 million filers whose only interaction with the IRS will be a check or a bill once a year, and 41 million returns that are a priori error free.
If only you can figure out which 25% can be fully automated because they aren’t claiming any credits, itemizing deductions, etc. The problem is, it’s a lot tougher to fix something that’s submitted incorrectly than to go through and submit it correctly the first time.