(01-02-2021, 07:37 PM)mikesez Wrote:

(01-02-2021, 06:48 PM)KodiakJag Wrote: Mike, how is the IRS expected to know if you bought a house, had a child born, donated money to charities, etc. if all they had was your payroll info?  It's more than just filling out the forms with all the info the IRS has on you, it's filling out the forms AND providing the info that they don't have.

They know more than you think.  Even though charities don't have to pay taxes, they are expected to declare what they receive with the IRS.  Anyhow, most people don't itemize, meaning their charitable contributions are irrelevant. 
If you have a mortgage, your lender is filing interest statements with the IRS the same way your employer does. Your broker also loops the IRS in on your investment activity, and your bank or credit union loops them in too. Any tax form you get from them, that same info already went to the IRS.
The IRS probably wouldn't know about how many kids you have, birth and death, or if any of your kids aren't dependent on you anymore.  So yes, you'd have to correct that aspect.  But that's like 5% of the work.  The other 95% is busy work they dump on us for no good reason.  It's a gift to H&R Block and others.  Those guys have excellent lobbyists.

What you call "the other 95%" is the easiest part of preparing your tax return.  That's actually 5% of the work, not 95%.  If you use something like Turbotax, you can auto-load all the information that comes from financial institutions or brokerages.  

The time consuming part is the part the IRS does not have information on.  For example, if you own a rental property, you have to do the accounting for that, and put that accounting on your return.  That's just one example.  How about a guy who paints houses for a living?  He might get a check made out to him personally, and how does the IRS know what that was for?  

It is theoretically possible for the IRS to do your return for you, but that would require every single transaction in our entire economy and lots of other information to be automatically recorded in an extremely large computer system.  AND, every time someone originated a transaction, they would have to document what it was for.  That would be big brother on steroids, where the government knows absolutely everything about us.  We're not at that point yet.

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