Ok, random question.

Can’t the government just tell me what I owe? Why do I have to figure out the number?

Pay it, and if it’s wrong, they’ll send me a letter telling me what I really owe.

Because you may have deductions or credits that they don’t know about.
Agreed, if there is nothing to claim/report, it should be as simple as Box 1 - what I made and Box 2 - what is owed, box 3 - what I paid in, Box 4 - difference.

That said, I prefer to check my own numbers and make sure I have accounted for everything. With the standard deduction raised, it should be as simple as 1,2,3,4.

Years ago a friend with a masters in taxation and another in finance said there are many times four or five correct answers to any tax question. One example they explained involved deducting mileage on a personal vehicle used for work. They said there were several IRS publications describing very different ways to deduct mileage and it was up to you to review them, pick the one that benefits you most and is reasonably defensible for your situation, and use it for your taxes. They said to document the IRS publication and reasoning with your taxes and one should be fine with any audit.

My taxes haven't been that complicated, but I've seen examples of what they said since then. You can take the default position with taxes and pay one amount, or you can can do some research and at times save considerable money.

That’s actually the screen shot where I got the question from. I thought it was a good question, and didn’t just want to post a meme.

A very good question in my opinion.
Here's some info I found interesting/infuriating:

They don't. That's how so many people get away with cheating or just flat out not filing for years on end.

But every once in a while they spot check. And even that they can screw up.

Had that happen to me once, got a notice that there was an error on my return and I owed some vast sum, plus penalties.

I figured it out, and sent in supporting documentation. Turned out they were idiots and had calculated the gains on a stock transaction as if I'd gotten the stock for free. Pointed out to them, writing slowly using small words, this is where it shows what I paid for the stock, this is where it shows what I got for selling it, so the gains are the second number minus the first number, not the second number.

Got a letter basically, 'oops, OK you're clear'.

Here's another question.

Why do we have money deducted from our paychecks for taxes? Why can't they just send a bill, and we send in payment once a year?

quote:

Originally posted by btanchors:
Here's another question.

Why do we have money deducted from our paychecks for taxes? Why can't they just send a bill, and we send in payment once a year?

Perhaps because many (most?) folks these days are absolute shit when it comes to budgeting and saving. Quite a few spend every cent they earn, as soon as they earn it, and then borrow more on top of that. These people couldn't handle a multi-thousand-dollar bill once a year, and there's not enough time or resources for the government to pursue them in court, so the government would never get a huge chunk of the tax money it needs to function.

quote:

Why do we have money deducted from our paychecks for taxes? Why can't they just send a bill, and we send in payment once a year?

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
I run a business. If people do not pay at the time of service, you can forget it. You are always chasing money. You might pay but the world is full of deadbeats.

the feds know what they have collected from you, but they don't know what you owe

they don't know your deductions, charitable giving, deductible expenses

thats why you start with a number and try to reduce it

quote:

Originally posted by btanchors:
Here's another question.

Why do we have money deducted from our paychecks for taxes? Why can't they just send a bill, and we send in payment once a year?

How many people can't pay rent / mortgage / car / insurance on time?

There is your answer.

quote:

Originally posted by bryan11:
Years ago a friend with a masters in taxation and another in finance said there are many times four or five correct answers to any tax question. One example they explained involved deducting mileage on a personal vehicle used for work. They said there were several IRS publications describing very different ways to deduct mileage and it was up to you to review them, pick the one that benefits you most and is reasonably defensible for your situation, and use it for your taxes. They said to document the IRS publication and reasoning with your taxes and one should be fine with any audit.

At the ripe old age of 57 and with 20+ years of high level tax work under my belt (including big 4 and public companies), I completed a masters of tax at one of the top programs in the country and graduated with distinction. (The lowest I've ever seen it ranked is #5) I have no idea where your friends went to school, or whether you misheard them, but your comment that there are 4 or 5 ways to do many things is just simply WAY overstated. Generally there are no more than 2 options.

I do not follow your comment about looking at IRS publications and documenting what you did. Generally one either follows the IRS instructions/publications or they don't follow the publication. It's pretty hard for non tax professionals to document, support and win a position that is different from the one the IRS sets out in a publication.

quote:

Originally posted by btanchors:
Here's another question.

Why do we have money deducted from our paychecks for taxes? Why can't they just send a bill, and we send in payment once a year?

LOL - The system started out that way. Amazing, at the end of the year, folks had spent all their money and couldn't pay the tax. That's when they required every employer in the country to become a tax collector (by requiring payroll tax withholding).

quote:

Originally posted by SR:

quote:

Originally posted by btanchors:
Here's another question.

Why do we have money deducted from our paychecks for taxes? Why can't they just send a bill, and we send in payment once a year?

LOL - The system started out that way. Amazing, at the end of the year, folks had spent all their money and couldn't pay the tax. That's when they required every employer in the country to become a tax collector (by requiring payroll tax withholding).

I think that came about during World War II, but I may be wrong.

As for the original question, since there are multiple tax brackets and there are things that do not have tax withheld (such as interest income), you have to reconcile what was withheld with what you owe, and also take appropriate deductions. Other countries have the banks withhold tax before paying out interest or dividends; I asked my ex-wife what would happen if, say, someone were unemployed (in a low tax bracket), then got a new gig and went to making 6 figures, say. How does the bank know how much tax to withhold from the interest income on his accounts?

I don't think I ever got a satisfactory answer. That said, I would much rather _NOT_ have employer withholding and pay quarterly similarly to how one who is self-employed or a 1099 pays taxes.