>I’m one day late for the tax day post. Wife and I filed two nights ago, by turbotax. We ended up owing more than we had withheld, but that’s good (I hate lending the government money for free!).
Here are my observations on filing taxes:
Even though most people pay a lot more in Social Security and Medicare Payroll taxes than they do in Income taxes, people hate Income taxes more. If you’re a family of four making about $50K and have a child, you’re only going to pay about $1000 in income tax (and this year, you’re going to get about a $300 refund due to the stimulus payment). But on that same income, you’re going to pay about $3500 directly and another $3500 through your employer. According to the joint Brookings/Urban Institution Tax Policy Center, you have to make more than $100,000 per year for you to pay more in Income Tax than in Payroll Tax.
I think this is because even when the Income Tax is trying to do something good for you (like give you a childcare tax credit, or a reduced tax rate on capital gains), they make it so complicated that it feels like you’re getting screwed, even though you’re getting a benefit worth hundreds or thousands of dollars.
I’ve seen some proposals out there that I support where the IRS would send you a 1040A or 1040EZ (the simpler returns) with the information they knew already filled in. If your only income was from earning wages and interest on a regular bank account, and your only deductions were mortgage interest or the like, all you would have to do is sign, because the information is pre-filled in. They had this for a short time in California, but the Turbotax folks lobbied to kill it.
I apologize to you all for not posting much recently. I took the PE exam in Virginia this past weekend and my brain is recovering.