Americans spend hours and hours preparing their taxes. We shouldn’t have to.

[38Chevy454]

Actually filling out the 1040 and associated schedules, incl Sch C, isn't what takes much time for me. It's getting all the 1099s, and other information gathered, summarized, and ready to actually input into TT that takes all the time. The Sch C business information is what takes most of the time and it's an ongoing process all year.

I completely agree that basic W-2 and/or 1099 income is less than 1 hour process. Also very easy to fill out and file.

 

[Dreamer]

To me, the point is, no matter if it only takes you 30-60 minutes to file, we still should not have to do this when the IRS already has the information for many of us. It is simply because of the special interest groups lobbying efforts that we still do it this way. It also costs the American taxpayers money. I realize that many people could do it for free, but some people do not have computers and unfortunately there are many people who are below average intelligence.

My hat is off to the people on this site who help people file their taxes.

 

[rk911]

Another improvement we can’t have because of special interests $ - nothing partisan about it.
https://www.washingtonpost.com/opin...hours-preparing-their-taxes-we-shouldnt-have/


https://www.theatlantic.com/business/archive/2016/03/the-10-second-tax-return/475899/

under that system it seems like the taxpayer would have two choices. assume the govt is right and accept the refund or balance due. or...spend X-hours checking the govt figures. i would take door #2...trust but verify. why not a flat tax where everybody...everybody...pays something.

 

[SecondCor521]

But the plots been lost anyway…

It's like herding cats around here.

 

[armor99]

I can easily do my taxes if I choose to. However, I always elect to pay someone to do my taxes for me. I view it as insurance. If I am ever audited the person who filed it has to explain.

 

[kgtest]

I really wonder about this estimate. I worked on a couple hundred returns this year, and only one of was even close to this time. It had several W-2s, two Sched Cs, a home sale and some brokerage docs. The couple was completely disorganized and had to visit us three times because they were missing info about their home's basis, their business expenses, and one of the 1099s. Possibly if you add up all the time they both spent looking for info at home and then working with us on their return you might hit 11 hrs, but this is definitely not typical.

The average return we do takes about 90 minutes including filling out our intake sheet and having a second person do a quality review. A return for a single person with just a job or pension and SS is under an hour for the entire process. I keep reading about how the typical American has very little savings and can't afford to buy a house, so the idea that it takes this person 11 hours to do their taxes just doesn't make sense to me.

That said, I do agree that the IRS should be able to do the income part of most returns automatically. They can't do returns with rental, farm, fishing or cash business income, but the majority of taxpayers don't have any of that. Making it possible for the IRS to do the entire return means we have to rewrite the tax code to eliminate most credits and deductions, which would make us more like all the countries that do have automatic tax levies.

I might be the exception to the rule...but I do spend a lot of time preparing for tax time. Maybe its more accounting and data prep/mining to obtain all the information and to make sure it is accurate. I like to think I am organized but even then I spend well over 11 hours on taxes, a lot of the time researching what is allowable etc.

I file for 2 businesses, S-corps that need 1120s, then my DW info for her W2 job. Then, I need to login to EFTPS and my stata system to pay the quarterly tax, and also file a paper 941 for the 2 S-Corps.

Takes me a while to get it all in order. Then I do what-if scenarios on what this year's taxes and quarterly taxes might be to get an idea of my tax obligations. Its a lot of work and I don't love it, but I feel like I do a good job, and not sure if an accountant or tax preparer would do a better job.

 

[aaronc879]

..... Making it possible for the IRS to do the entire return means we have to rewrite the tax code to eliminate most credits and deductions, which would make us more like all the countries that do have automatic tax levies.

This is exactly what should happen IMO.

 

[pb4uski]

+1

+2. I only do 7 returns but none of them take over 2 hours to prepare, review and file... and 2 of the 7 returns include Schedule E.

 

[pjigar]

I want to know on what planet does it take the "typical" American 11 hours to fill out a tax return? I call BS on that stat.

+1. I just filed a 35 page return using TT. I would say it took me a few hours to fill all the numbers. It took me a lot longer to do end-of-year recordkeeping than filing return.


My brother's 9 page return took only an hour.

 

[Sunset]

I can easily do my taxes if I choose to. However, I always elect to pay someone to do my taxes for me. I view it as insurance. If I am ever audited the person who filed it has to explain.

But you are the person responsible and the one that pays the fine and does prison time if needed, because you signed it.

 

[Sunset]

What you say is true...in theory.

In reality, this probably would not work at this time due to the following issues:

1) The I.R.S. is understaffed. They can't handle their current workload, let alone performing this huge additional task.

2) The I.R.S.'s computer system is OLD. In fact, it is over 60 years old and the oldest system in government.

https://www.nextgov.com/it-moderniz...essing-your-taxes-almost-60-years-old/146770/

3) Security: For reasons above, the I.R.S. is probably not the best equipped to secure all the personal information required to generate the forms. For people worried about security, filling out the old paper forms and snail-mailing them is much safer than the I.R.S. having a central repository.

Now, all of these issues could be solved with more money. But it seems very unlikely in this political environment that any politician would stick his or her neck out to update and improve the I.R.S.

Once we mail our returns in , the IRS has all that information in a central repository, so there goes the security..

 

[scrabbler1]

+2. I only do 7 returns but none of them take over 2 hours to prepare, review and file... and 2 of the 7 returns include Schedule E.

That's pretty much true for me, too. In all the years I have been doing tax returns for myself, my ladyfriend, my dad, and my best friend (the snake-bit one), the only times it has taken more than 2 hours were in certain years for specific people. For me, the tough year was 2008, when I cashed out $300k in company stock and had several extra forms and worksheets to complete, such as the AMT. For my ladyfriend, it was 2004 when she moved to NY to be near me. She had part-year tax returns for 2 states and was itemizing deductions for both states and her federal return. For my best friend, it was 2012 when his remaining parent died and he received a large inheritance, triggering many 1099R forms and some unusual itemized deductions.

The other years, it's pretty routine. I've only been doing my dad's returns since 2020. Once I finished some initial work setting up my skeleton tax spreadsheet, it has become pretty easy.

 

[RobbieB]

It doesn't take me much time either. I enter the 1099's as they come in and then efile.

Easy.

 

[Midpack]

That said, I do agree that the IRS should be able to do the income part of most returns automatically. They can't do returns with rental, farm, fishing or cash business income, but the majority of taxpayers don't have any of that. Making it possible for the IRS to do the entire return means we have to rewrite the tax code to eliminate most credits and deductions, which would make us more like all the countries that do have automatic tax levies.

+1, exactly. Our tax code is so ridiculously onerous in part because special interests want it to be so complicated that many people think they have to use their services. But I also know it’s tilting at windmills to think there will be a change…special interests run DC, literally.

 

[sakowitzm]

I suspect the 11 hours figure is correct, because it includes a (relatively) small number of returns that require hordes of accountants to prepare (non political wink going out to Donald Trump.) If you threw out everyone earning more than $XXXX (a million? few hundred thousand?) I suspect the estimate would drop significantly.

 

[frayne]

It will never change as there is a whole industry built around our tax code, from tax preparers, payday advance lenders, to lobbyists whose work it is to look out for special interests and keep the tax code complicated. I've done my own taxes for fifty years and have a fairly good understanding of the personal income tax code, my prep and filing time is more like three to four hours.

 

[marko]

It should be as simple as this:
Line 1: How much did you make?
Line 2: Subtract 0 from Line 1
Line 3: Write a check in the amount on Line 2 and send it in.

 

[scrabbler1]

under that system it seems like the taxpayer would have two choices. assume the govt is right and accept the refund or balance due. or...spend X-hours checking the govt figures. i would take door #2...trust but verify. why not a flat tax where everybody...everybody...pays something.

A flat tax won't do that. If you mean the current system with a single rate, then you are missing the fact that the complexity in the code is not its multiple tax brackets, or rates, but in the determination of taxable income. If you mean a flat tax system which eliminates most or all deductions, then that by itself will ensure that everybody pays something, without needing a single rate.

 

[Car-Guy]

I can easily do my taxes if I choose to. However, I always elect to pay someone to do my taxes for me. I view it as insurance. If I am ever audited the person who filed it has to explain.

That is true, if you gave him/her all the correct information.

unfortunately there are many people who are below average intelligence.

About 1/2.

 

[Car-Guy]

I suspect the 11 hours figure is correct, because it includes a (relatively) small number of returns that require hordes of accountants to prepare (non political wink going out to Donald Trump.) If you threw out everyone earning more than $XXXX (a million? few hundred thousand?) I suspect the estimate would drop significantly.

I never made millions in a year but I was well into the hundreds of thousands back in the days when I worked. Since it's been around, I always used TT to do my own returns and I don't think I ever spent more than an hour on the actual return. However in those days I'd spend many hours reading/researching ways to reduce my taxes.

 

[38Chevy454]

A flat tax won't do that. If you mean the current system with a single rate, then you are missing the fact that the complexity in the code is not its multiple tax brackets, or rates, but in the determination of taxable income. If you mean a flat tax system which eliminates most or all deductions, then that by itself will ensure that everybody pays something, without needing a single rate.

X2, the difficulty in the US tax system is determining the end result net income. All of the allowable deductions are where the complications arise.

I am perfect example of this. Because of my small home based business, even though I make profit by the time I take all the allowed deductions my end result is a deduction for Sch C.

 

[Aerides]

11 hours is about right for us. Especially if you consider the time DH and I spend combined. When we were both strict W2 only, no taxable investments to speak of much, it was simpler. And no kids, no real deductions to deal with.

Actually filling out the forms is a good couple of hours (so, x2 since that's both of us). This is where we plug in the stuff from Vanguard, Fido, banks, etc. In addition I have a small business. So adding up all the costs of goods, fees, opex... that takes me a while, reconciling paypal, amazon, etc., making sure I've accounted for everything properly, counting inventory...

If we were a working family with a business and kids, sure, 11 hours easy. Or two parents with W2's, one with a side gig.

I'm sure there are tons of singles/couples out there doing a straight up W2 only return, but with so many these days in the gig and self-employed, contracting world, then it does get more complex.

 

[ktdtx]

The couple was completely disorganized and had to visit us three times because they were missing info about their home's basis, their business expenses, and one of the 1099s. Possibly if you add up all the time they both spent looking for info at home and then working with us on their return you might hit 11 hrs, but this is definitely not typical.

This time counts in the preparation of a tax return. Saving donation forms, giving donations a value. Collecting W-2's, 1099's any investment forms, capital gains, home deductions and so forth. All the required record keeping thru the year should count as time required to prepare the return.



I have a relatively simple return and it is approximately 30 +/- pages long.
When the tax code in 2020 is 74,608 pages long it can't help but be complex. AND, the odds of getting it completely correct are slim.


Our government has no regard for their citizens time.

 

[Winemaker]

I file a return with 2 Schedule E's. During the the course of the year, I enter my rental income and expenses in Quicken as they occur, maybe 10 minutes/week. Then I do a printout in November to hone in what I can do to top off my bracket or stay below a threshold. Planning takes more time than completing forms except that K-1s in a taxable account are onerous.

The tax code was never meant to be fair; it was made to alter and control citizens behavior. Buy a house, buy solar, invest in re urbanization projects, hurricane zones, charity, buy health insurance.

 

[Midpack]

It will never change as there is a whole industry built around our tax code, from tax preparers, payday advance lenders, to lobbyists whose work it is to look out for special interests and keep the tax code complicated. I've done my own taxes for fifty years and have a fairly good understanding of the personal income tax code, my prep and filing time is more like three to four hours.

While I am afraid you're right, I wonder if social media creates opportunities to get to get the attention of voters and incumbent politicians to break or diminish the hold special interests have on our current state of affairs. Can our system defy "we the people" forever? One can only hope...

Again, this is not a partisan observation, both sides are totally beholden to special interests at present.