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

[Midpack]

Another improvement we can’t have because of special interests $ - nothing partisan about it.

Filing taxes is a time-consuming, bureaucratic chore that the Internal Revenue Service estimates will take the typical American 11 hours. Nationwide, that works out to some 6 billion lost hours a year, according to T.R. Reid, author of the 2017 book “A Fine Mess: A Global Quest for a Simpler, Fairer, and More Efficient Tax System.”

The thing is, filing taxes just doesn’t have to be this hard. In 36 countries, the nation’s tax agency sends eligible residents a pre-filled return, and asks them to sign if they agree with the amount that’s indicated is owed or should be credited to them. Japan does this. So do Sweden, the Netherlands, Spain and others. A 2018 German study found that the pre-filled forms raise tax compliance.

https://www.washingtonpost.com/opin...hours-preparing-their-taxes-we-shouldnt-have/

The 10-Second Tax Return
Letting the government do its citizens’ taxes is cheap, efficient, and accurate. Naturally, the United States won’t do it.

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

 

[foxfirev5]

Another reason why I will continue to file paper forms. If the problem gets big enough maybe something will happen.

 

[ncbill]

1040EZ works fine if you're within its limits...you can practically fill it out with crayon.

Doubt any government provided form would correctly reflect depreciation (& other tax breaks) from directly-held residential real estate investment or properly handle more exotic ones like direct oil & gas investments (significant upfront and on-going tax breaks)

 

[Car-Guy]

Using TT it takes me about a hour (usually). Probably two hours since I wait a few weeks after it's done and then check it over a couple of times before sending it in.

 

[cathy63]

1040EZ works fine if you're within its limits...you can practically fill it out with crayon...

1040-EZ was discontinued 5 years ago. Now we have 1040 and 1040-SR, which are the same except the SR has bigger print for seniors.

 

[ivinsfan]

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.



It's not political it's just that virtually every taxpayer would rather have the "other" guy pay for it.


My broke friend got another letter from the state of MN for his 2018 non filed state return. He didn't file federal either. The state said Dear Broke friend we asked for your 18 return to be filed, since you didn't file it we made one for you...after taxes and fees you now owe us 1958.000 remit within 30 days to avoid more penalties...

 

[scrabbler1]

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

 

[cathy63]

...the Internal Revenue Service estimates will take the typical American 11 hours...

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.

 

[tulak]

But how would Intuit and H&R Block stay in business?

I at least take some consolation that our tax industry helps employment. If we make all industries efficient, what will people do?

 

[scrabbler1]

1040-EZ was discontinued 5 years ago. Now we have 1040 and 1040-SR, which are the same except the SR has bigger print for seniors.

I also miss having 1040A, a shorter form than 1040 but not as short as 1040EZ. In the 37 years of preparing and filing my own tax returns, I used all 3 of those forms over the years, mostly 1040 (which has made me appreciate the shorter forms when I realized I could switch to one). I have been preparing tax returns for 2 friends and my dad for various years since 2002, and I have been able to switch to shorter forms sometimes, when they existed, further making me appreciate their value.

 

[scrabbler1]

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.

Also remember that as more and more cost basis are being reported to the IRS (stocks, bonds, mutual funds bought since 2012, for example), completing Schedule D has become easier because form 8949 is not always needed. Hasn't helped me much, but with one friend's return I do it has helped.

 

[Midpack]

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.



It's not political it's just that virtually every taxpayer would rather have the "other" guy pay for it.


My broke friend got another letter from the state of MN for his 2018 non filed state return. He didn't file federal either. The state said Dear Broke friend we asked for your 18 return to be filed, since you didn't file it we made one for you...after taxes and fees you now owe us 1958.000 remit within 30 days to avoid more penalties...

My taxes take about 11 hours eve with TT, including gathering info, reading IRS rules, etc. - and by no means am I the most complicated situation here. And there are tons of financially illiterate peeps out there, 99% not on this forum. That said, I’d be surprised if the average is 11 hours. The financially illiterate just pay someone or underpay without knowing better.

Part of my point was why do 36 countries do taxes for their citizens, while we claw through a system made deliberately skewed and arcane. I know the answer, doesn’t make it right…

 

[euro]

Using TT it takes me about a hour (usually). Probably two hours since I wait a few weeks after it's done and then check it over a couple of times before sending it in.

Right. I think most people are making way too big a fuss about it. Yes, SOME situations are tricky and demanding, but that just isn't true for the vast majority of people.

 

[Magus]

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.

Yes, seems crazy high - I have a number of rental properties, a variety of other type of income and of course W2 income and it takes me about 4 hours to do my taxes at the most. Most folks in the country with just w2 income should be a few minutes at most. Sounds like a stat that tax accountant firms make up to get you to pay for them lol

 

[easysurfer]

I wonder if the average includes both folks who are very organized and folks not organized at all.

When does the clock start ticking as the beginning of the filing process? As soon as someone in imputing data? Whether typing on computer or pencil on tax form? Or does this also include the procrastinator digging through a disorganized box paperwork?

For me, I'm organized at least to the point of having all the paperwork I need in a physical folder or folder on computer.

I say it takes me about 5-6 hrs with Turbotax. A good part proof-reading, double checking I've entered things in correctly. As for complexity, I'd guess my taxes probably less complicated than average.

 

[W2R]

I wish we had that system in the US! But we don't, oh well.

And then, in the "If I ruled the world!" category: I'd even like it if every cent we earned had a fixed percentage, say, 10%, taken off the top and sent to Uncle Sam, fulfilling our tax obligation for that money. Sure, it may not be 100% fair, but I don't think spending hours doing taxes is very fair either.

 

[Dash man]

This year was more complicated for me than usual and I procrastinated a lot. It still didn’t take me 11 hours. But it did take me three months! [emoji23]

 

[ivinsfan]

My taxes take about 11 hours eve with TT, including gathering info, reading IRS rules, etc. - and by no means am I the most complicated situation here. And there are tons of financially illiterate peeps out there, 99% not on this forum. That said, I’d be surprised if the average is 11 hours. The financially illiterate just pay someone or underpay without knowing better.

Part of my point was why do 36 countries do taxes for their citizens, while we claw through a system made deliberately skewed and arcane. I know the answer, doesn’t make it right…

I do get your point and I also know that you are well above a "typical" American in all aspects

 

[Midpack]

I do get your point and I also know that you are well above a "typical" American in all aspects

No idea what you’re getting at. But the plots been lost anyway…

 

[MC Rider]

I could def be more organized. But don't think it took 11 hours, even with the schedule C etc. First I had to go over the car mileage log and calculate business miles and personal for the year. Then sort the business expense receipts and stuff from the last year, not a huge amount. It's a PITA for sure but not 11 hours worth here. And there's 2 places right there where I could save time.

 

[eyenitnoy]

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/

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.

 

[Gumby]

I spend a lot of time on tax planning, but actually filling out the tax forms is trivial.

 

[Letj]

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 estimate my return (in excess of 120 pages) takes at least 60 hours. By the time I gather all the data for each property by analyzing, tagging expenses on my 4 different statements to produce a multitude of schedule Es and depreciation schedules for my rentals and load the data manually including allocating mileage to individual properties and keep track of the myriads of documents and bank statements for several loans, categorize all my expenses vs capital, etc, I want to pull my hair out. I am sure there’s an easier way to do it where I can load data automatically but I’ll have to spend time figuring it out.

 

[aja8888]

I spend a lot of time on tax planning, but actually filling out the tax forms is trivial.

Same here. I have a folder for next year's tax filing in my desk and add relevant information to it when it becomes available. Then when tax time rolls around, I have the documents and info I need to file.

When I ran my business for 20 years, this became a habit as it was absolutely necessary to be accurate and thorough. Now it's much simpler and entering data into the tax program take a short time. Then I let it sit for a while then go back and recheck all my entries.

 

[Zathras]

If they are including the time spent filing, recording and organizing through the year, 11 hours seems very likely.
Our system is unnecessarily complicated and archaic.