WHAT IF YOUR TAXES TOOK … 15 MINUTES?

261

What if Tax Day didn’t have to be a hassle?

You may not want to hear this, but in many countries … it’s not.

The IRS estimates that the average American taxpayer spends 13 hours working on their returns.

The Dutch, meanwhile, simply get a pre-filled form with their tax information. Their revenue agency’s slogan: “We can’t make paying taxes pleasant, but at least we can make it simple.” Citizens simply check the government’s math and either turn in the form or ask for an adjustment.

There are similar programs in countries like Japan, Sweden, Estonia, and Great Britain. Many residents of these countries report that it takes them 15 minutes or less to do their taxes.

Could the U.S. institute a similar system? Kinda.

Because of the complexity of the American tax code, a pre-filled system would likely only work for the people with the simplest returns. But experts suggest that could still add up to about 40% of taxpayers.

Not only could this system make filing easier, it may especially benefit low-income Americans by helping them discover refunds or benefits they may not realize they can claim. Over 20% of Americans who are eligible for the Earned Income Tax Credit, for example, don’t claim it.

And even the IRS itself admits that trying to figure out eligibility is confusing.

So, why haven’t we already switched to a simpler system? Part of the issue is probably tax preparation companies, who’ve spent millions of dollars lobbying against such reforms.

Of course, the federal government could also just solve the problem by making the tax code simpler.

But we’re not holding our breath.

WHAT YOU NEED TO KNOW:

  1. The average American spends 13 hours a year working on tax returns.
  2. Citizens of countries with pre-populated tax forms often report spending 15 minutes or less on their returns.
  3. It’s estimated that around 40% of American taxpayers could take advantage of pre-populated tax forms.