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by Kalium 1932 days ago
The IRS already has most of your income information and much of your deduction information. They already use this to validate if your return makes sense.

In effect, the IRS already does most of a taxpayer's paperwork. Since they do this, it might be nice to provide it to taxpayers for review and correction, rather than making us all start from zero each time.

4 comments

Depends how intricate your taxes are. Perhaps 30 million people file Schedule C, which covers freelance income, gig income, etc.

The IRS will (mostly) know your gross income, but it won't know the exact details about claimable deductions such as business travel, business meals, supplies, etc.

The only way it could know that would be to peer inside your credit-card statements, bank statements, etc. and make judgments about what was work related and what wasn't.

I'd rather do the tallying myself -- which is a chore -- rather than have IRS software make guesses that are a) awfully nosy and b) bound to disadvantage me.

You're right. The IRS emphatically does not have everything. Please accept my deepest and humblest apologies for implying in any way, shape, or form that they do.

In addition to hundreds of millions of W-2s, the also IRS has 1099s and 1098s of various sorts. For the majority of Americans, the IRS already has the majority of their tax data. And the infrastructure already in place to provide this to them. Why not present it along with the opportunity to amend it? Or tally from zero yourself, if you prefer. This is what I intended to communicate earlier, and I can see I failed to be clear.

You're absolutely right. The IRS in no way has everything! Do you think it's maybe worth considering that it might be possible to make many people's lives easier for a very small marginal cost by letting people see what data the IRS already has about them? It might not work for every single person every single time, but it might work for a lot of people a lot of the time.

Thanks, Kalium, but the fault is all mine! I read your original comment too narrowly. It's my apology that is needed, and I hereby submit it.

Thanks for the very helpful clarification. Your argument for provisional disclosure is compelling.

> and much of your deduction information

No, no they don't. At most they have your mortgage interest deduction - side hustle expenses, charitable contributions, etc. are not reported to the IRS automatically.

The higher cost of administration is the part that makes me bug-eyed.

Auto-filing and simplification would be so much cheaper.

The IRS already has a web portal that lets you retrieve your data. This could be executed by adding more info to that. The higher cost of administration on that shouldn't make anyone bug-eyed, no matter how wonderful your idea of auto-filing and simplification is.
The IRS doesn’t have your deductions, but at the same time most people don’t have enough to itemize anyway, especially since Trump increased the standard deduction for individuals and families.

I think simplifying the tax code first requires trading in our deduction system for a flat tax or lower taxes across the board. Then you could get to a simple postcard bill every year. Too many special interests to let that happen though.