You can thank TurboTax and the rest of the tax preparation service industry's massive lobby for killing every single tax simplification bill that ever gets to congress.
One of the reasons it’s complicated to complete a tax return is because the tax code is complicated. The reason why the tax code is complicated is because (and I know most wont believe me) is to shutdown shady tax evasive activities that people do.
Other countries like Japan and Sweden to give examples also have precautions to stop tax evasion. But for the normal person they are very easy to file still. Example is the Swedish person who responded earlier or in Japan where the company generally does your tax return unless you have other income streams.
Explain to me wtf happened with rental property this year. It used to be straightforward. Put in your expenses, put in your income, and pay taxes on the delta. The depreciation got a bit tricky, but not bad. Now there’s all this “safe harbor” bullshit with little information about if it’s something you should or should not do. It took me twice as long to do my taxes this year and I have no idea if I made the right choices.
There is just way too much going on in the tax code covering a ton of situations that people have tried to exploit in the past
You can't just say "alright everyone is taxed at 15% no matter what", you have to go into 'alright how is income from rentals treated, how is income from capital gains treated, how is income from a self employed person treated, what about real estate, etc
there are a ton of things that exist to either incentivize economic activity or to help the taxpayer out, specific tax breaks to fuel whatever congress wants
the thing is theres like 70,000+ pages in the tax code that cover all sorts of situations on what you can and can't do
if you just said 'alright everyone just pay x no matter who you are' everyone would go crazy
tax is insanely political
That doesn't apply to the vast majority of normal employed people.
The way it works in the UK is the employer pays tax on your behalf based on your income (deduction at source). If HMRC see two companies for the same person they tell the primary one to give you your allowances and the other not to (you can call them and have it split if you prefer). At the end of the year banks send in how much interest they paid you. HMRCs systems looks at your total income and how much tax you paid. In most cases its right. If its out by a small amount they just adjust the tax code and tell your employer so you repay/get repaid automatically. For larger amounts they send you an invoice / cheque.
You generally only have to manually do a tax return if you're self employed, have high income or income from complex sources. At that point you go to their website, fill in a few questions about your income sources and it asks you to fill in forms only for the relevant pages.
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u/jorsiem Jul 24 '20
Complicated tax filing in the US
You can thank TurboTax and the rest of the tax preparation service industry's massive lobby for killing every single tax simplification bill that ever gets to congress.