Sunday, January 02, 2005

Income Taxes

As the 2004 tax year has just ended, I have now had my first argument of the year with my father about the income tax. He seems to view taxes as a game -- I think that he has filled out enough forms that now everything that he buys can be deducted as a business expense. I find taxes (specifically, tax forms) to be an annoyance worthy of very little effort on my part. I always take the standard deduction. The only reason that I fill out the long form is that my dad has bought and sold investments in my name and with my SSN. Every year around April 12 I consider sending the IRS a large check and the extension form to further procrastinate my filing until August. I always owe money. I can't fill out a W4 correctly; for the past 3 years I've owed so much that I had to pay penalties.

I let it slip that I'm sometimes really sloppy when filing my taxes, that I've been known to disappear forms that I've found too confusing to deal with quickly. My dad said that I have to use all the forms sent to me by financial institutions because the IRS knows what's on them and knows what I owe.

So here is my question: My employer and financial institutions send the IRS electronic copies of the forms they send me. If the IRS knows how much money I made and what all my assorted transactions were and how much tax I owe on it all, why can't they just send me a bill? Why do I need to spend the time to copy the numbers onto a form?

If the IRS would total up all my income/interest/etc, subtract off the standard deduction and personal exemption, calculate the taxes owed on what's left, subtract off what I've already had withheld, and send me a bill, that would be fabulous. If they included a pre-printed W4 for me to sign and bring to HR to make my taxes come out closer to even next year, that would be even better. Of course, people like my dad would be free to fill out all the forms they want to. But the current system has me considering the advantages of replacing the income tax with a national sales tax.