It's Tax Day in America. Do you...

[kphoger]

And no, not every electronic transaction is reported to the IRS, they were, then it would mean you'd receive a 1099K every time you were Venmo'd $20 for dinner by your best friend.

Please explain how that would fall under the requirements of the 1099-K.

"Payments you got from family and friends should not be reported on Form 1099-K."  —the IRS

Exactly, so contrary to what Vdeane claimed, not every electronic transaction is reported to the IRS

You misunderstood me.

You claimed that, if every electronic transaction were reported to the IRS, then the IRS would send you a 1099-K for receiving $20 from your best friend.  Please explain why you think that, when the IRS explicitly says payments from friends should not be reported on the 1099-K.

[JayhawkCO]

There are all sorts of reasons why home ownership is good. Children benfit from a more stable environment. Home ownership usually means people who are more vested in their communities. It almost always the first or second source of individual wealth for most Americans, etc. etc. etc.

I'll agree with your first two points. I'll happily disagree with the third. The third is accurate. I don't agree that that is necessarily a good thing.

[kernals12]

It isn't commonsense in a taxation system where you have so many deductions. The IRS doesn't know what my mortgage interest is. They don't know how much I have contributed to my IRA, paid in student loans, etc. etc.

And I'd argue that those things affecting your tax liability is not a commonsense taxation system.

I disagree. Giving people financial incentive to do good things (gifts to charity, home ownership, save for retirement) is a great way to motivate them to do those things.

Why is home ownership "good"?

There are all sorts of reasons why home ownership is good. Children benfit from a more stable environment. Home ownership usually means people who are more vested in their communities. It almost always the first or second source of individual wealth for most Americans, etc. etc. etc.

Having hundreds of thousands of dollars tied up in one asset goes contrary to all expert advice on portfolio allocation. The difficulty of selling your home reduces economic mobility. And as we saw in the other thread about people in Wisconsin complaining that a new Buc-ee's will reduce their property values, it fuels NIMBYism.

It's also important to remember that even if we repealed the deductions for property taxes and mortgage interest, owner occupied housing would still have the benefit of the implicit rent that homeowners pay themselves not being taxed.

[hotdogPi]

kernals12 favors urban planning. Got it.

[kernals12]

kernals12 favors urban planning. Got it.

How did you infer that from my comment?

[SEWIGuy]

It isn't commonsense in a taxation system where you have so many deductions. The IRS doesn't know what my mortgage interest is. They don't know how much I have contributed to my IRA, paid in student loans, etc. etc.

And I'd argue that those things affecting your tax liability is not a commonsense taxation system.

I disagree. Giving people financial incentive to do good things (gifts to charity, home ownership, save for retirement) is a great way to motivate them to do those things.

Why is home ownership "good"?

There are all sorts of reasons why home ownership is good. Children benfit from a more stable environment. Home ownership usually means people who are more vested in their communities. It almost always the first or second source of individual wealth for most Americans, etc. etc. etc.

Having hundreds of thousands of dollars tied up in one asset goes contrary to all expert advice on portfolio allocation. The difficulty of selling your home reduces economic mobility. And as we saw in the other thread about people in Wisconsin complaining that a new Buc-ee's will reduce their property values, it fuels NIMBYism.

It's also important to remember that even if we repealed the deductions for property taxes and mortgage interest, owner occupied housing would still have the benefit of the implicit rent that homeowners pay themselves not being taxed.

You asked, I answered. And I don't find your counters to be compelling.

[Rothman]

Wait...no one is going to point out that the IRS "tax gap" is not tax evasion?  Fine.  I will.

[vegas1962]

I e-filed in late March. Got refunds from both federal and state, which usually is what happens. We've already received our federal refund, but still waiting for state.

When I was preparing our federal return, the last thing I entered was the info from our Form 1095A for our medical insurance. Before I entered it, we were set to owe a three-digit figure. After entering it, we suddenly had a four-figure refund.

[NWI_Irish96]

As an IRS employee, I'm just gonna pretend I didn't read most of this thread.

[kphoger]

As an IRS employee, I'm just gonna pretend I didn't read most of this thread.

So you do know about kernals12's unauthorized Wendy's payment!

[Rothman]

As an IRS employee, I'm just gonna pretend I didn't read most of this thread.

There are still IRS employees left?

[NWI_Irish96]

As an IRS employee, I'm just gonna pretend I didn't read most of this thread.

There are still IRS employees left?

Today, yes. Tomorrow, who knows??

[wanderer2575]

Having hundreds of thousands of dollars tied up in one asset goes contrary to all expert advice on portfolio allocation. The difficulty of selling your home reduces economic mobility. And as we saw in the other thread about people in Wisconsin complaining that a new Buc-ee's will reduce their property values, it fuels NIMBYism.

I don't own my home for investment purposes.  I own it to live in.  Which helps lead to stable environment, vesting in community, etc.  Any NIMBYism I have is primarily because the proposed development is incompatible with the existing quality of life in the area, not because of a concern over property value.

As an IRS employee, I'm just gonna pretend I didn't read most of this thread.

As a payroll professional, I can say with some authority that I have dealt with several IRS reps over the years and have found them to be pleasant, helpful, and professional.  I'm sure there are a few bad apples in customer service roles who don't know and don't give a sh!t, but that's as it is in any organization.  And IRS folks are just as unhappy about the tax code complexities and last-minute changes because they're the ones who have to work out how to make them happen.

[kphoger]

There are still IRS employees left?

Don't you care if that gets you banned?

[Scott5114]

The really stupid thing is in many other countries, the government sends you the information they have and if you agree you just sign it and send it back with your payment (if you owe anything). You only need to fill out forms if you have complications that the government doesn't know about ...

It's incredible how commonsense that is.

Other than corporate insurance plans, is there any other situation in which the 'customer' has to figure out for himself what amount the 'company' should invoice him for?

It isn't commonsense in a taxation system where you have so many deductions. The IRS doesn't know what my mortgage interest is. They don't know how much I have contributed to my IRA, paid in student loans, etc. etc.

I guess what they could do is send you a "here's what you owe if you took the standard deduction," and then you would need to log into a system to itemize or something. That would be roughly akin to a customer asking for a rebate.

That alone would be a massive improvement. The majority of people don't need to itemize because the standard deduction would be larger than the sum of their itemized deductions.

Hell, I have a small business and while that adds all sorts of schedules and attachments, I still take the standard deduction.

[Rothman]

The really stupid thing is in many other countries, the government sends you the information they have and if you agree you just sign it and send it back with your payment (if you owe anything). You only need to fill out forms if you have complications that the government doesn't know about ...

It's incredible how commonsense that is.

Other than corporate insurance plans, is there any other situation in which the 'customer' has to figure out for himself what amount the 'company' should invoice him for?

It isn't commonsense in a taxation system where you have so many deductions. The IRS doesn't know what my mortgage interest is. They don't know how much I have contributed to my IRA, paid in student loans, etc. etc.

I guess what they could do is send you a "here's what you owe if you took the standard deduction," and then you would need to log into a system to itemize or something. That would be roughly akin to a customer asking for a rebate.

That alone would be a massive improvement. The majority of people don't need to itemize because the standard deduction would be larger than the sum of their itemized deductions.

Hell, I have a small business and while that adds all sorts of schedules and attachments, I still take the standard deduction.

A sad statement on the level of home ownership.

[Scott5114]

A sad statement on the level of home ownership.

When I bought my first home and my CPA didn't change me over to itemized deductions, she said it was because it still didn't make a difference, even with the mortgage interest. I got home and, just to satisfy my own curiosity, filled out the itemized deduction sheet. I was surprised to find that not only was she absolutely right, but that it wasn't even close.

Then again, I bought that house for $137,500 in 2017 when interest rates were still at record lows. I imagine the interest on my current house, which I bought in December, is high enough it might materially affect my 2025 return.

[SEWIGuy]

The really stupid thing is in many other countries, the government sends you the information they have and if you agree you just sign it and send it back with your payment (if you owe anything). You only need to fill out forms if you have complications that the government doesn't know about ...

It's incredible how commonsense that is.

Other than corporate insurance plans, is there any other situation in which the 'customer' has to figure out for himself what amount the 'company' should invoice him for?

It isn't commonsense in a taxation system where you have so many deductions. The IRS doesn't know what my mortgage interest is. They don't know how much I have contributed to my IRA, paid in student loans, etc. etc.

I guess what they could do is send you a "here's what you owe if you took the standard deduction," and then you would need to log into a system to itemize or something. That would be roughly akin to a customer asking for a rebate.

That alone would be a massive improvement. The majority of people don't need to itemize because the standard deduction would be larger than the sum of their itemized deductions.

Hell, I have a small business and while that adds all sorts of schedules and attachments, I still take the standard deduction.

A sad statement on the level of home ownership.

I think its just that most people don't have as much mortgage interest given the higher standard deduction.

[kkt]

I wasn't even close to hitting the standard deduction even with a mortgage payment.

[vdeane]

It isn't commonsense in a taxation system where you have so many deductions. The IRS doesn't know what my mortgage interest is. They don't know how much I have contributed to my IRA, paid in student loans, etc. etc.

I guess what they could do is send you a "here's what you owe if you took the standard deduction," and then you would need to log into a system to itemize or something. That would be roughly akin to a customer asking for a rebate.

Given how much information banks report to the federal government (to the point where many banks outside the US refuse to open accounts to people with American citizenship), they probably do know all that.  In fact, I've been reading this year that pretty much every electronic transaction gets reported to the IRS (certainly anything involving banking/ACH, but possibly even credit card transactions).

I'm sure the transaction is reported. Does tht IRS know how much of my mortgage payment is principal, interest and escrow? And what the escrow is for?

Back when I still had student loans, I'd get a form 1098-E every year detailing the interest.  I can't imagine mortgages are much different on this.

The really stupid thing is in many other countries, the government sends you the information they have and if you agree you just sign it and send it back with your payment (if you owe anything). You only need to fill out forms if you have complications that the government doesn't know about ...

It's incredible how commonsense that is.

Other than corporate insurance plans, is there any other situation in which the 'customer' has to figure out for himself what amount the 'company' should invoice him for?

It isn't commonsense in a taxation system where you have so many deductions. The IRS doesn't know what my mortgage interest is. They don't know how much I have contributed to my IRA, paid in student loans, etc. etc.

I guess what they could do is send you a "here's what you owe if you took the standard deduction," and then you would need to log into a system to itemize or something. That would be roughly akin to a customer asking for a rebate.

That alone would be a massive improvement. The majority of people don't need to itemize because the standard deduction would be larger than the sum of their itemized deductions.

Hell, I have a small business and while that adds all sorts of schedules and attachments, I still take the standard deduction.

A sad statement on the level of home ownership.

I think its just that most people don't have as much mortgage interest given the higher standard deduction.

Not to mention that the state/local tax deduction has been capped for close to a decade now.

[Rothman]

*has proudly beaten the standard deduction for more than over a decade*

<.<

>.>

*spends too much money for the tax benefits gained*

[1995hoo]

Regarding the standard deduction versus the itemized deduction, remember that there are a lot of people who used to itemize who now take the standard deduction because of the 2017 amendments to the tax code. The cap on deducting state and local taxes on your federal return, in particular, took away a lot of the advantage to itemizing for a lot of us. This is one of those things that would be less obvious to people who live in states that don't impose their own income tax, although the deduction wasn't limited to income tax. You could deduct income tax, real estate tax, and personal property tax based on the value of the property, to give three examples. But the 2017 tax law capped the deduction at $10,000.

I haven't itemized since then, but I still record all the data all year because of the possibility that something unexpected might happen in a given year to make itemizing advantageous that year. (TurboTax does the work of figuring out which is better, so I enter the data in the interest of verifying what I already know.) Candidly, a major advantage for me to taking the standard deduction has been that getting my wife to be conscientious about giving me the information when she donates to charity or has a medical bill or whatever has always been like pulling teeth. She never itemized before we were married, so she never thought about keeping track of that stuff for tax purposes and it wouldn't occur to her to tell me the amounts so I could put them in my spreadsheet and save any receipts. I'm sure we missed out on a few hundred dollars of itemized deductions over the years. Regarding the medical bills, those are the classic example of tracking just in case—you hope never to be in a position to deduct those because if you are, it means either you had a lot of medical expenses that year or your income was extremely low.

[jeffandnicole]

I haven't needed to itemize for a few years before 2017. I loosely keep track of what would be itemized, but I'm so far removed from the threshold it's not much of a thought at tax time.

[Rothman]

The threshold for deducting medical expenses is so high that they didn't even make a difference when I went through a nine week chemotherapy treatment.

[1995hoo]

The threshold for deducting medical expenses is so high that they didn't even make a difference when I went through a nine week chemotherapy treatment.

The one time I was able to deduct them was in 2009 because I was out of work that year and had fairly minimal income, but I decided to milk the COBRA coverage I had for all it was worth (understandable, in my view, given how expensive it was). That was the year when I first started wearing eyeglasses and when I was diagnosed with sleep apnea. So relative to my income, the copays and deductibles added up to enough where I was able to deduct them.

But yeah, your point about "the threshold is so high" is why I said I hope never to be in a position to deduct them because it means something bad happened. I believe prior to the 2017 amendments the threshold was 7.5% of adjusted gross income and I think it's 10% now.