It'll be *so* easy to do your taxes!

09 April 2019, 03:55 PM

Because you will have already done them by filling out the withholding form....

quote:
You finally finished your taxes and are learning – for better or worse – the ins and outs of the new law.

But wait, the law isn’t done with you. There’s another complication coming out later this year: The Internal Revenue Service is changing how you adjust your paycheck withholdings, and early indicators show it won’t be easy.

The agency plans to release a new W-4 form that better incorporates the changes ushered in by the new tax law so that the amount held back for taxes in each of your paychecks is more accurate.

The agency’s goal: A taxpayer shouldn’t owe or be owed come tax time.

But the changes won’t be simple, says Pete Isberg, head of government affairs at ADP, the payroll and human resources company.

Filling out the new form will be a lot like doing your taxes again.

“It’ll be a much bigger pain,” he says. “The accuracy will be 100 percent, but the ease-of-use will be zero.”

While the new form hasn’t been released yet, the IRS last summer put out a draft version and instructions seeking feedback from tax preparation companies and payroll firms. Instead of claiming a certain amount of allowances based on exemptions – which have been eliminated – the draft form asked workers to input the annual dollar amounts for:

Nonwage income, such as interest and dividends
Itemized and other deductions
Income tax credits expected for the tax year
For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household

“It looked a lot more like the 1040 than a W-4,” Isberg says.

https://www.usatoday.com/story...orm-year/3401811002/

09 April 2019, 04:02 PM

ShiroKuro

quote:
“The accuracy will be 100 percent, but the ease-of-use will be zero.”

Ugh. I don't currently find filing my taxes very difficult, wonder how that will change.

Also, what about people who aren't sure what their income is going to be? Or people who might get a very large paycheck once or twice in a row, and then get some very small paychecks? If you planned withholding based on those large paychecks, then the person would have too much withheld and should get a refund. If you planned withholding based on those small paychecks, then the person would end up owing.

It looks like this would only work for those who are salaried and receive proper and consistent paychecks and W-2 type income. What am I missing?

09 April 2019, 04:08 PM

jon-nyc

Well, that’s generally true about withholding of any kind. That’s why a lot of folks do quarterly estimates on top of any withholding they may have.

09 April 2019, 04:23 PM

wtg

And on a tax prep-related note...

quote:
Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.

Last week, the House Ways and Means Committee, led by Rep. Richard Neal, D-Mass., passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis, D-Ga., and Mike Kelly, R-Pa.

In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.

“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.

https://www.propublica.org/art...iling-thank-turbotax

I know absolutely zilch about this. Anyone up to speed on the bill?

09 April 2019, 04:30 PM

jon-nyc

Not the bill but the effort is an old one and has been successful in the past.

The pecuniary motives of the tax prep companies is obvious.

There’s a more pro-social motive that gets thrown around - for better or for worse - namely that if the IRS pre-figured your taxes in some automated system (since they have the info already for most tax payers) people would be too intimidated to make corrections.

Personally I don’t put much weight on that argument.

09 April 2019, 04:34 PM

jon-nyc

I wouldn’t be surprised if the tax prep industry lobbied against this W-4 change. They make a lot of money loaning you your refund. No refund, no loan business.

Maybe they figure they can make money assisting people with the W-4. And still steer them toward overestimating their taxes so they can loan them their refund a few months later.

09 April 2019, 05:27 PM

pianojuggler

quote:
Nonwage income, such as interest and dividends

At least for me, this varies wildly from year to year.

Every several years, I look at my highest tax obligation on investment income, divide that by 26 and add it to my withholding for a bi-weekly paycheck. Most years it covers it. Some years I get a large refund.

I've never had to pay a penalty for underwithholding, but one year I had to fill out a very ugly form to avoid the penalty.

09 April 2019, 11:39 PM

Mary Anna

Royalty income is a mysterious and unpredictable thing. So are speaker's fees. So are investments.

I never have a clue how things will turn out at the end of the year, even after paying estimated taxes. Some years I get some back. Some years I owe some. I'd rather eat dirt than fill out a W-4 like that.

10 April 2019, 06:10 AM

Mikhailoh

The new 1040 form is much simpler than the old. This year I just did my taxes by hand. I've used software or an accountant for years.

17 April 2019, 09:47 AM

jon-nyc

quote:
Originally posted by wtg:
And on a tax prep-related note...

quote:
Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.

Last week, the House Ways and Means Committee, led by Rep. Richard Neal, D-Mass., passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis, D-Ga., and Mike Kelly, R-Pa.

In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.

“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.

https://www.propublica.org/art...iling-thank-turbotax

I know absolutely zilch about this. Anyone up to speed on the bill?

Seen on Twitter:

quote:
Government: You owe us money. It’s called taxes.

Me: How much do I owe?

Gov’t: You have to figure that out.

Me: I just pay what I want?

Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too.

Me: What if I get it wrong?

Gov’t: You go to prison

17 April 2019, 10:12 AM

Piano*Dad

quote:
Originally posted by jon-nyc:
I wouldn’t be surprised if the tax prep industry lobbied against this W-4 change. They make a lot of money loaning you your refund. No refund, no loan business.

Maybe they figure they can make money assisting people with the W-4. And still steer them toward overestimating their taxes so they can loan them their refund a few months later.

Refund? What's that? I don't get no stinking refund ...

17 April 2019, 10:40 AM

markj

quote:
Originally posted by jon-nyc:
quote:
Originally posted by wtg:
And on a tax prep-related note...

quote:
Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system.

Last week, the House Ways and Means Committee, led by Rep. Richard Neal, D-Mass., passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis, D-Ga., and Mike Kelly, R-Pa.

In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits.

“This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program,” said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center.

https://www.propublica.org/art...iling-thank-turbotax

I know absolutely zilch about this. Anyone up to speed on the bill?

Seen on Twitter:

quote:
Government: You owe us money. It’s called taxes.

Me: How much do I owe?

Gov’t: You have to figure that out.

Me: I just pay what I want?

Gov’t: Oh, no we know exactly how much you owe. But you have to guess that number too.

Me: What if I get it wrong?

Gov’t: You go to prison

Preventing the government from letting people do their taxes as part of the service of that government?

If this passes, is will be absolute confirmation that our government is bought and paid for by corporations. It will also confirm what we already know, that immoral, unethical criminals/traitors, are running our government.

17 April 2019, 01:44 PM

QuirtEvans

[pedantic]That meme is snort-worthy, except it's a lie. You don't go to jail unless you're committing tax fraud, and maybe not even then, if it's not egregious. At most, if you underestimate, you pay a penalty and some interest. [/pedantic]

17 April 2019, 01:48 PM

Mikhailoh

They just want the money. Where most folks screw themselves is by not having a position. You don't have to be right on your deductions, but you have to have a plausible argument as to why you took it.

(Pro tip: "I didn't think you'd notice it" is not a plausible argument.)

17 April 2019, 02:01 PM

Nina

Every year I get seriously cranky when doing my taxes. The bloated, loophole-ridden, special exemption clauses are why we're so screwed up.

A simple tax structure (like a flat tax, or something similar) would go a LONG way toward fixing the problems. However, that wouldn't make the tax prep industry happy, and wouldn't make those lucky individuals who benefit supremely from these loopholes happy, either.

It's also not helpful to my general crankitude to know that in Australia, the government sends *you* your tax bill, based on the information they already know. If you qualify for a certain (very few) exemptions, you file an additional set of paperwork explaining your exemption. Otherwise you simply acknowledge receipt/agreement. Refunds are common, to owe additional taxes is rare.