Why Americans Still Have to File Taxes

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Every U.S. citizen files their income tax returns and payments. But if you think about it, the IRS already has your income tax data, so why not send a bill for you to pay? And, most importantly, why does tax day have to be a complicated process? 

Tax Preparation Is Huge

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According to IBS World, the market size of the tax preparation service industry in the U.S. is $13.6 billion.

Tax Service Providers Lobbies to Keep the Tax System Complicated

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Some people feel TurboTax and other tax service providers are to blame. According to Open Secrets, Intuit, the company that owns TurboTax, spent over $3.5 million on federal lobbying. 

They Don’t Always Know How Much You Owe

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“They know what your W-2 says and what any 1099s you received says,” explains a poster. But the government can’t tell if you made extra money on the side or any deductions you had. And “If you used the correct withholding information and only had a steady salary reported properly, then withholding should have taken enough money, and they probably owe you money.”

For these reasons, the IRS requires you to file your taxes. 

They Don’t Know What Deductions and Credits You Plan to Claim

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Since the government doesn’t track credits and deductions, “trusting their bill would result in overpayment of taxes, especially if you’re involved in any type of business, have more complex investments, or use any deductions such as spending on childcare.”

Politicians Are in the Pockets of Lobbyists

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Many people speculate that politicians receive money from lobbyists. 

A Ton of Factors That Determine How Much You Owe

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So many things determine how much you owe, and the IRS has no clue about all your finances. For example, they can’t tell if you bought a house or had a baby. So, they rely on you to disclose this information.  

To Prevent Tax Evasion

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Considering the IRS does not know how much you owe, they ask you to self-report to prevent tax evasion. 

Harder to Keep Track of People Who Don’t Have Regular Jobs

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If you work 9-5 and have no other source of income, it’s easy for the IRS to know how much you owe. But if you are self-employed and have multiple streams of income, then the tax agency won’t be able to tell how much you owe. 

Government Wants an Educated Population

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Some people believe they still file for taxes because the government wants them to be educated about the complicated tax system. 

Essential for either Getting Money Back or Paying What You Owe

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Another reason why Americans file taxes is write-offs. “If you track your spending on work-related things, there are tax write-offs to help you get your money back. Any interest on a mortgage, vehicle mileage for work, office supplies, work clothes, and moving for work are all examples of tax write-offs. If the IRS just sent you a bill, you wouldn’t get to include all your write-off,” shares a poster. 

People Will Accept What Is Sent Even When It Is Wrong

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If the IRS were to send people their bills, it’s possible that many people would just pay it without checking if the numbers are wrong. Chances are, some would be undercharged, while others would be overcharged. 

Hypothetical Government Advantage

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One user explains, “That is exactly what the government is there for. They want to control every aspect of your life.”

Source: Reddit
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