Taxes!

or is the part where I suggested that a system where people have the option of doing things themselves, as the government often makes mistakes or does not advocate for them?

how do they determine eligibility? how do they prevent against fraud? does everyone get the same benefit? ... not being defensive here, just curious how things work elsewhere.

The key thing about the U.S. system, that I don't really see addressed in the stuff you're saying, caek, is how to determine income (and thus tax), if the government does not know how much income you made

Unless, the tax ID number of everyone is included in every single transaction, and all cash payments have to be reported as such?

in the case of kindegeld in germany, I believe that specific benefit is not means tested as it happens, because the goal of is to increase the birth rate not redistribute wealth, but let's say it was.

The government does know how much money you make. You have a taxpayer ID. Your employer reports your income. If you have a business or are self-employed, you report your income (like in the US, although the forms are much simpler for exactly the reasons we're talking about). It uses this knowledge to scale the benefit payment.

Means testing is controversial on the left in countries with a history of benefit payments, and it's wandering off topic, but as a practical matter it totally possible to means-test benefits without making people who are the non-US equivalent of single W2 filers file insanely complicated tax returns.

(and yes, a 1040-EZ is insanely complicated)

it's not really that "unfair," some benefits are just made more visible than others in a way that has no correlation to the magnitude of the benefit. i get way more out of my mortgage interest deduction than i would out of a child tax credit, if i had a child. if everyone got the same benefits maybe rich whiners wouldn't complain (wrongly) that poor people are getting "more" than them from the government. there are other ways. there are other countries that don't make people do cartwheels to show how much they deserve their paltry benefits. somehow their societies are more equal idk how that happens.

btw sarahell, if he's forced to grant some redistribution of wealth rather than a flat tax, guess what side paul ryan is on when it comes to means-tested benefits vs tax deductions.

and just to be clear...

I really get the sense that you don't really understand the US system and only the parts that apply to you, because there are several sizable benefits that poor people get through the tax system, and one of the main reasons many pay for tax preparation, as opposed to utilizing free resources, is because companies like H&R Block offer "fast refunds" so they can get their $4000 - $6000 in one to two days.

this is a sickness

also one of the nice things about a means test is you can apply it to wealth rather than income (which is another reason paul ryan is quite happy to handle the what redistribution there is as part of the income tax system, where taxing wealth is not possible)

i worked for one of those companies for two years, when I started doing taxes. I was told to try to sell the fast refunds, and earned commissions on how many I sold. But people bought them, and paid those fees. Does that make it "right"? I still think it's unethical, but if someone chooses it, and I am not in their situation, I feel kinda awkward saying "this should be illegal."

xp - I disagree with most of Paul Ryan advocates, to be clear, and while I might marginally benefit from the changes he has made to the tax system, I ethically disagree with most of them.

No totally. I’m saying it shouldn’t be necessary. People with simple incomes should not need to be financially sophisticated in order to avoid lending he government money by overpaying, and the government should pay it back without being asked.

People with simple incomes should not need to be financially sophisticated in order to avoid lending he government money by overpaying, and the government should pay it back without being asked.

one of the issues is that it isn't always clear who has a simple income and who doesn't - and there are people who have types of income that have financially sophisticated tax treatments, that might not be financially sophisticated themselves ... I get a handful of "my grandpa died, and i got this thing after he died, and they sent me this form, and I don't know what it is" clients every year.

in the other countries you've lived, does income you receive as a beneficiary of a relative's estate get taxed with your regular income, or does it get taxed at a different time, at different rates, etc.?

I'm getting the impression that the U.S. system combines a bunch of different types of income (and credits) all on one form, that other countries deal with separately, is that the case?

I don’t give a shit about giving a rebate for kids to rich people if we tax them more to begin with. I mean, great, a rich person gets $1k back and a poor person does too. It does a lot more for the poor person Hell, make it even larger.

I think that is what’s missed in thinking rich people shouldn’t get tax credits. They can game the system in a myriad of ways that make tax credits seem minuscule, so why would I care if they deduct things?

Switch to an incentive model or a basic income, then make income taxes progressive.

People with simple incomes should not need to be financially sophisticated in order to avoid lending he government money by overpaying

here's another thing I've learned from doing taxes for other people. Some people know they are lending the government money by overpaying, and are content to do that, because they like getting a big refund at tax time.

i think it's easy to see where sarahell is coming from since she's depended on the current system being the way it is for the past 15 years for her livelihood. it doesn't make it any less insane.

caek's system is obviously much more efficient but hard to argue for when our current government has been hijacked and any efficiencies would just go towards the pentagon and drilling for more oil.

in conclusion, we should all become sovereign citizens and start a noize colony.

and presumably you are paying more in taxes for the government to handle these things, rather than having a system where the individual has to do a modicum of work on their own behalf?

― sarahell, Tuesday, March 13, 2018 5:52 PM (four hours ago) Bookmark

this is insane crypto conservative self sufficiency small government rhetoric, btw. you just can't see it because this is how you make your living!

is it insane in the context of

when our current government has been hijacked and any efficiencies would just go towards the pentagon and drilling for more oil.

if being wary of the government being/becoming run by horrible people, as well as being generally corrupt, inefficient, with a lot of things being politicized in favor of those who the government owes favors makes me "crypto conservative," then I guess I am. Would you rather have feudalism or capitalism? Let's assume for the sake of judgment, this is America and there's no 3rd option.

in the other countries you've lived, does income you receive as a beneficiary of a relative's estate get taxed with your regular income, or does it get taxed at a different time, at different rates, etc.?

― sarahell, Tuesday, March 13, 2018 8:54 PM (one hour ago) Bookmark Flag Post Permalink

i get what you're saying that "The" tax return in the US serves a lot of purposes. that's not totally untrue, but even a very simple 1040EZ for a person with no dependents and one W2 is qualitatively more complex than the equivalent situation in those other countries.

on the specific issue of inheritance, no idea how it outside the US tbh. but in the US estates are taxed as entities if they're over something ridiculous like $5.5m, but the person who benefits from them is not taxed on that income and doesn't even need to report it. so none of it ends up on individual tax returns and that's not an example of a place in which individual tax returns get more complicated. or am i wrong/missing your point?

(i only know that because we just made an estate plan lol)

or am i wrong/missing your point?

For the most part you are right, but in some cases, beneficiaries will have some investment income and some expenses that are from the estate, before the estate closes, and that income is taxed to the beneficiaries. It also gets confusing, because sometimes it means they have to file a tax return for a state they don't live in.

I had a client, who inherited an investment portfolio that had royalties from oil production and real estate investment partnerships, and they eventually sold those investments, but until they did, they got a lot of confusing forms.

a very simple 1040EZ for a person with no dependents and one W2 is qualitatively more complex than the equivalent situation in those other countries.

I feel like in that case, some simpler option should be available. Like, there are plenty of people with very simple taxes, that the system should simplify. Whether it's a freefile system, or an "if you do not file a tax return, we will calculate things on your behalf and either send you a check or a bill" ... however, if you don't file, and the IRS thinks you owe, they will (eventually) send you a letter that looks like a bill, asking you to pay what they calculated or file a tax return, and it's confusing for financially unsophisticated people, and I think that's a problem.

like the "modicum of effort" quote that apparently marks me as a crypto-conservative ... here are some examples of things that were the context for that. I want to earn my crypto-conservative status ...

1. a grad student gets a fellowship that covers tuition and fees, and also includes money for teaching and research. Based on what is reported by the University to the IRS, the IRS will calculate that the amount in excess of tuition and fees (assuming the University properly reported that amount), is taxable income. However, the tax code says, that the amount in excess of tuition, fees, and expenses is considered taxable income. If the grad student has expenses related to their graduate studies that are paid out of pocket, that would reduce their taxable income. If they just go with what is reported, they end up paying more tax than they should.

2. a single person making $40,000 a year at a day job also makes jewelry and sells it on etsy and at craft fairs, so none of that income is reported to the government. The jewelry business operates at a loss, thus allowing the person a larger tax refund, than if the wages from the day job were considered.

3. a tech bro gets stock options as part of his compensation, and some of the value of those options are included in income on his w-2 and some are reported to the brokerage company, so that when he sells them, the cost/basis reported by the brokerage is inaccurate. He needs to report the amount that is included in income in addition to the amount reported to the brokerage company as the cost/basis of the stock.

Would you rather have feudalism or capitalism? Let's assume for the sake of judgment, this is America and there's no 3rd option.

― sarahell, Tuesday, March 13, 2018 10:35 PM (forty-four minutes ago) Bookmark

artificial distinction - in america, one and the same

1. just consider the whole thing taxable income and have the university gross up the amount is receiving. university bears the burden here.

2. don't allow people to deduct losses. silly

3. cost/basis rules are insane and this is a good example of why they should be done away with

sure if the inheritance is something that generates income like commercial real estate rather than a simple asset or cash then things get complicated for the recipient. i'm sure that's a nightmare in other countries too to be fair.

as an incremental change: there is absolutely no reason [*] why the federal government cannot mail out provisional tax returns in february that assume the only reportable income a person has is income that the payer has already reported to the IRS (W-2, 1099-INT/MISC, etc.) and they're going to take the standard deduction. the recipient then either signs it and they're done, or they file a new tax return that includes all their other income the government doesn't know about and non-standard deductions.

[*] there is of course a reason. it's intuit.

xp to myself for 3, just have the company report the basis directly to the irs. why introduce a self reporting element here? madness

right. unless an individual has business income, they should basically not be corresponding with the IRS. it's totally possible to design a redistributive/progressive tax system that incentivizes things deemed desirable (having kids, installing solar panels, whatever) that works like that. they manage it all over the world.

p.s. eliminate the mortgage interest deduction.

I need to go back and re-read all of this since it bookmarked in a weird place, but I hate how taxes in the US are so archaic that it written to assume one partner (the LADY person) in a marriage does not work.

And also, I can't imagine that the US is different in this regard (yes I can) but we need these convoluted tax codes and deductions and reporting requirements because Americans are assholes who think they know better and want to hide their income and still feel like they are patriots who aren't breaking the law.

p.s. eliminate the mortgage interest deduction.

― 𝔠𝔞𝔢𝔨 (caek), Tuesday, March 13, 2018 10:41 PM (yesterday) Bookmark Flag Post Permalink

this

I under pay the government, just enough to avoid penalty. I prefer to save money myself throughout the year. So I owe a lot this time of year, which I HATE paying. I mean, I love taxes, they are great, but still sending over that money hurts me in the feelings area.

see these comments for a window into the attitude toward users that exists at intuit:

https://news.ycombinator.com/item?id=16585473#16586234

here's two quotes from people who (claim to have) worked there

Second, the fact that Quickbooks is so awkward and inconsistent to use isn't a UI problem, it's a feature. This is an important lesson in designing software that people use for their jobs. When you make elegant, intuitive software that almost anyone can use in short order, it stops being an impressive item to put on a resume. And it stops being a barrier to entry for competing professionals. Software like Quickbooks that's hard to use correctly becomes a selling point for bookkeepers and almost accomplishes the same purpose (though to a lesser degree) than professional licensing organizations...it limits the competition and keeps the rates they can charge high.

and

There are psychological phenomena in play that make an existing, market dominant piece of software more successful and harder to displace when it's objectively harder to use when that software forms the basis for someone's job.

And it's important to realize this because this is counterintuitive to what those of us that create software for a living have been taught. We're taught to think like you. We're taught to make software that delights our users and is as easy as possible to use. But understanding a specific set of circumstances when that approach is destined to fail can be important.

I filed our returns today.

ME: maybe the "crumbs will keep coming" with the new tax bill, as ronna mcdaniel claims
TAXES: $3,000, up from a $15 refund or so

Milestones of imperial decline: the IRS’s computer system crashes on Tax Day.

— Doug Henwood (@DougHenwood) April 17, 2018

fucking hell, I went from owing >$250 last year to owing $3000 this year, with only an $800 increase in AGI this year. Christ.

Yeah. The mandatory reductions in withholding from the 2017 tax legislation forced our 2018 taxes owed above $1000, so we'll also owe a penalty of some kind. Unless I can place some kind of withholding on our Social Security we'll probably have to move to estimated quarterly taxes, because our one non-SS pension's W-2 already claims zero exemptions, which maxes out its withholding. Fuck that noise. Filing once a year is bad enough.

good god. I guess it's the witholding reductions plus the elimination of the personal exemption and the famous blue-state fuck you cap on SALT deductions that fucked me this year, and presumably for years to come.

aimless, i though you could ask for additional withholding on your w-4 even with 0 exemptions?

i was fortunate to calculate my taxes in december and realize i was going to owe, so i made an estimated payment before the deadline in january. it's so fucked up. i owed an extra $1000 or so and had to increase my withholding a lot this year. so i got a fake pay bump last january and now i'm poor, even though i am under the SALT cap so i still itemize.

and over the standard deduction, i mean

and my AGI went down this year because of retirement contributions. there's no way to win.

Unless I can place some kind of withholding on our Social Security

you mean above the standard amount they withhold if you say you want taxes withheld? (i think it's 10%?)

IRS giving a 3 month extension on paying taxes owed. They haven't official extended the filing deadline yet.

California has extended the filing deadline and payment deadline until June 15th

Stimulus payment checks: No information available yet
At this time, the IRS does not have any information available yet regarding stimulus or payment checks, which remain under consideration in Congress. Please do not call the IRS about this. When the IRS has more specific details available, we will make it available on this page.

The IRS is a great source of passive-aggressive content

Soooo how's it going for everyone.

Interesting thing I learned -- there's an IRS app that you can use to track refunds etc.; it also serves as a non-texting authenticator, which is a good idea:

https://www.irs.gov/newsroom/irs2goapp

And another tax season upon us here in the US -- and yesterday I learned about something important:

https://krebsonsecurity.com/2022/01/irs-will-soon-require-selfies-for-online-access/

The title is clickbaity but accurate -- here's how I summarized it elsewhere for some colleagues:

I wanted to alert everyone about an upcoming change -- which honestly should be getting more publicity that I've seen -- regarding access to one's IRS account and more besides. This article -- Krebs is very much a known name in the information security field, this isn't some rando! -- goes into thankfully patient detail, but in essence the IRS has entered into an agreement with the privacy/identity firm ID.me, which at some point this summer will be the sole way you can access your IRS account online. I'll add that setting up an ID.me account, as I did last night in response to all this, will also cover access to your Social Security account online as well as, as needed, your VA account if you have served in the military. I should note that my experience setting up my ID.me account and then linking everything to the IRS and Social Security was much smoother than the article author's experience, but as he notes, no matter what, the process does involve using a driver's license, state ID card or passport, as well as a biometric element, namely a face scan. This might not be for everyone and Krebs himself is clear about what issues he has with it, so I encourage a careful reading of the article.

But as he concludes: "Over the years, I’ve tried to stress the importance of creating accounts online tied to your various identity, financial and communications services before identity thieves do it for you. But all of those places where you should “Plant Your Flag” conduct identity verification in an automated fashion, using entirely static data points about consumers that have been breached many times over (SSNs, DoBs, etc). Love it or hate it, ID.me is likely to become one of those places where Americans need to plant their flag and mark their territory, if for no other reason than it will probably be needed at some point to manage your relationship with the federal government and/or your state. And given the potential time investment needed to successfully create an ID.me account, it might be a good idea to do that before you’re forced to do so at the last minute (such as waiting until the eleventh hour to pay your quarterly or annual estimated taxes)."

the IRS actually currently uses KBA (the thing where you get a handful of multiple choice questions where one is the name of a street you lived on 25 years ago, so a bit different from the SSN DoB basics), and requires specific info from a prior year tax return ... you don't have to have an IRS account to make estimated tax payments ... in fact, you can mail a check postmarked as of the deadline and they will count it as paid on that date with no penalty. ... sorry, i should totally avoid this thread.

Filed last night.