Doesn't the IRS already know how much money we owe them every spring or how much money they owe us as a refund? Why don't they just calculate our taxes for us, instead of having us do them ourselves?
Doesn't the IRS already know how much money we owe them every spring or how much money they owe us as a refund? Why don't they just calculate our taxes for us, instead of having us do them ourselves?
Dude, seriously? You're pretty naive.
If they do the calculations, they won't factor in any deductions.
i was wondering this too- too scared to ask
The IRS can figure out roughly what you owe, but if you have deductions, such as mortgage insurance or business expenses they won't necessarily know about it. That's how people get money back from the government (although it's really their money, the government just took a loan on it at 0% interest).
Their system isn't sophisticated enough to do all of that for every person in the entire country, either. The tax code changes frequently in ways that do not affect most individuals or even most businesses. But, for those that the changes in tax law do affect, the tax costs or savings can be astronomically relevant and complicated.
Additionally, you are supposed to report all income you materially make, even if you aren't neccasarily going to pay taxes on it. Think gifts, scholarships, etc. I suppose that it is possible if there were perfect synergy between all tax related document issuers and stakeholders seamlessly and electronically, then yes, the IRS might be able to do your taxes for you. But that would never happen because it just wouldn't politically.