As a Brit it's baffling that this is even an issue. I filed my taxes online with HMRC for free this year (we call it Self Assessment), it took 20 minutes, and I received a 4 figure refund in ~2 weeks directly in to my bank account.
the tax difficulty in the US is overstated, we have plenty of services that will let you do it for 20 minutes for free. the most popular one is obnoxious and tries to upsell you often, but there are alternatives and you don't need to pay
I finally tried FreeTaxUSA this past year based on recommendations on HN and it was a huge breath of fresh air compared to TurboTax! They treat you like a person and not a wallet, and it was also just way smoother and easier to understand than TurboTax's nightmarish interface.
This is true, but up until recently, tax filing companies would also do all kinds of underhanded tricks to make free filing difficult. For example, Turbotax had two different tiers of free tax filing software, one with a much lower income threshold than the federal mandate. You only find out you're in that tier when it comes time to file. Guess which one they bought tons of google ads for?
I can't speak for the UK, but in many other countries, the tax forms are already filled out and you simply need to verify the numbers. You don't get that in the US.
Turbotax and other like companies lobby for more complex tax law and to restrict access to government services that would assist citizens with filing taxes. The more complex the tax code is, the more people need Turbotax. It is not a healthy dynamic. https://abcnews.go.com/Business/turbotax-lobbies-lawmakers-t...
US government services are bad almost across the board. Most of us would pay a premium to use a private version over a government version of almost anything.
I’m guessing you would find it equally confusing if I told you we’d pay a premium to use a private DMV or private post office. Here in the US, that statement wouldn’t be controversial at all.
I recently renewed my global entry, and it was a piece of cake. I occasionally interact with the FCC because of my amateur radio license, and the FRS is super easy to use. I recently got passports for my kids, and that was super easy to do as well and the passports came much faster than expected.
> I recently got passports for my kids, and that was super easy to do as well and the passports came much faster than expected.
Interesting. I am currently renewing my and my spouse’s passports while also trying to get first time passports for my children and I couldn’t find the process more outdated and borderline kafkaesque. If you told me the website was built in 2003 and hasn’t been updated since then I would believe you.
I can only renew my passport by snail mailing everything including my existing passport. I can only get my kids a passport by physically taking them to an approved location for processing. I could not get an appointment for about a month at any location near me. As a bureaucrat myself, I just find this level of hoop jumping to be ridiculous.
I got an appointment within a week. The post office took the pictures and submitted everything for me. Couldn’t have been easier. Sounds like experience varies based on location.
I did a digital renewal for my passport and it was fine also. It’s a once in many year event, so it doesn’t bother me that I need to go to a special place to submit documents.
For a short time (maybe 6 months or so) the state department was testing out fully digital passport renewal. I was able to slip in and it was great, digital phone photo, fill in some forms and I had a new passport in the mail after a couple of weeks (I didn't pay for rush processing).
It was taken down after the pilot for them to adjust and fix the process but there are improvements in the works.
I'm from a third world country and have lived in a few European countries.
Switzerland was the only one with better govt service. Everywhere else it was significantly worse than the US.
Surprisingly France and Germany were worse than India in terms of obscure things needed for getting anything done and no exceptions for anything. The US on the other hand, if you can go talk to someone in person they'll make it happen.
I'm in the US and I find your statement confusing. With the exception of the irs which was deliberately made hard to use by the republicans, most government services are fine. I certainly doubt a corporation would do any better.
DMV varies quite a bit state by state. Where I live it’s quick and easy, but in some places you go early in the morning, and you should probably pack a lunch.
The tax system here (usa) is an absolute joke. I owed $5k this year and I literally did nothing different except receive a small 5% raise last year. I have the most basic taxes you can, single, no kids, no house. Literally just a salary paycheck every 2 weeks. Had no idea I would owe anything, much less that much money until I filed 2 weeks prior to our tax date in April and you're expected to pay everything you owe to them on that date.
I sold a house in 2019, I walked away with only about $15k profit after paying everyone. Bought the house for $335, sold for $370ish. I think my principal was around $310k at the sale. I got a letter in 2022 that I owed the IRS something like $150k or so, some shocking amount of money. Freaked me the hell out. I had to dig out all of my paperwork from the sale and send it to them. All of it but, I forget, maybe $100-1k was dropped. I have no idea what their deal with that was. I had a mortgage, paid the mortgage to my mortgage broker, and when I sold it paid the mortgage off to that mortgage broker. Don't they handle that? I don't know, it was my first house sale.
I'm 40, I've never had the IRS annoy the hell out of me until the last 5 years and now I get a letter from them and my heart stops.. Like, what is it now, masters of my w2? Where I have erred today? It feels like they're practically targeting me at this point. I get letters from them and wonder if they're even legitimate so I call in to verify. When I go to the irs.gov site that tells you what you owe, it doesn't even match what any of my letters say. Right now it says I owe money from I think 2016 that was sent to collections and I've never received a letter for that. Collections! For my taxes? That you pull out of my paycheck?? I don't have ANYTHING about that on my credit report. I also have no way to pay it because it's "In collections."
Seeing all of the rich assholes skate by with tax evasion and all of the loop hole work they do, then knowing they're on my ass when I'm just a dude getting a salary just pisses me off so much.
> I owed $5k this year and I literally did nothing different except receive a small 5% raise last year.
This is a common gripe I hear from US tax filers, and I fall into the same psychological trap myself. After all, it always feels bad to have to pay a 4 or 5 figure sum to anyone.
Instead, you should see this as a benefit -- you had the opportunity to extract gains from the stock market (or other investment) on money you rightfully owed to the government; they only came to collect it at the end of the year instead of with each paycheck. Conversely, a tax refund should be seen as a disadvantage, as the government withheld more money from you than it was entitled to.
I don't remember what all the limits are but the first time you underpay beyond a certain amount the government looks the other way but the second+ time you have to pay penalties. Penalties for a situation wholly in control of the government. They wrote the withholding tables your employer is abiding by to withhold _not enough_ to avoid you having a penalty at the end of the year.
Although I suspect this only matters to FANG where the changes to withholding from the Tax Cuts & Jobs Act meant you had to modify the supplemental withholding rates so you wouldn't get penalized.
Default federal income tax withholding on bonuses is 22%. If your marginal federal tax rate is higher than that, then you underwithheld, meaning you owe more in taxes than you paid over the year.
For your home sale, the person responsible for closing the transaction files Form 1099-S with the IRS, reporting the sale amount (which they're responsible for) but not how much you paid for it (because you're responsible for that). You should have gotten a copy of the 1099-S, which was your clue that you needed to report it on your return.
I do get a 20% bonus at this company and I think it is attributed to that. It was my first time getting that bonus. What do I even do here? Talk to HR? I don't think I can do anything and just suck it up and pay it and expect it next year? I dunno.
It might be worth a conversation with HR and reveiwing your tax withholdings just to make sure there is not an error and misunderstanding as to how your company or the HR software is handling it. I ran into a somewhat similar situation early on at my current job, but we were able to find an issue and correct before I got hit with a nasty surprise at tax time.
My issue was that my with-holdings and everything looked fine. But I was not having any federal taxes taken out on my paychecks for federal with-holdings. Turned out to be a software issue that the company who makes it was able to correct.
Thanks! I'll speak with them. I know everything is through Bamboo/whatever software nowadays so I wasn't sure if they really had any control/input on these things.
> I know everything is through Bamboo/whatever software nowadays so I wasn't sure if they really had any control/input on these things.
You have control, they don't.
Withholdings are calculated based on elections you make on an IRS form called a W4 (which could be electronic or paper). Neither your employer nor the IRS "control" that, but there are some common case defaults.
It's on each taxpayer to understand their actual tax liability situation and adjust withholdings accordingly.
Yep, here we go, the condescension of Hn. The point is they know my exact income and should be able to handle it, not make me figure it out at the end of the year. I have no idea why I got a random $5k bill. It could be something else. And that's the annoyance.
I'm not "blaming the IRS" for shit, I'm complaining that they don't give me THEIR side of the information which would massively help you (anyone) figure out issues. Fucks sake the reading comprehension on here.
I'd love to hear you disprove to some omnipotent government entity, with no information from their side, that you did NOT make $150k extra cash last year. Lets go, bud. Prove your lack of $150k. You didn't make an extra $150k last year? Prove it. Show your lack of paystubs against our information that we won't provide you with.
Some of you absolute mental giants think I'm crying about my anecdotes when they're literally just my examples of how the IRS gives you no information and just sends you a bill for $150k. That's the point of the post. I absolutely am not asking for your tax advice.
Use your W-2 and this calculator from the IRS[1] - ensure that your W-2 includes the bonus you received (I would imagine it would since you got taxed on it). That should give you the values you need to have in your W-2 to avoid a massive tax bill at the end of the year.
You can also set a additional flat amount of withholding per paycheck. You get any overpayment back as a refund.
It absolutely was taxed. I also have never received a paycheck that wasn't pre-taxed. It was something like a $30k bonus and I received about $17kish of it.
Be more condescending though, that's helpful, wise one.
I didn't say I KNEW it was the issue, I said it was potentially that. The IRS doesn't say "Hey you messed up here, fix this, that's the problem." They just send you a bill, which sucks. I had NO information on my $150k house sale tax and had NO idea what information they needed to rectify it.
