If the IRS already knows how much I owe in taxes, why do I have to crunch the numbers myself?

You're absolutely right that the IRS already has most of your income information through W-2s and 1099s that are reported directly to them. The reason we still have to file is actually more complicated than it seems. The IRS knows your reported income, but they don't know all your potential deductions, credits, or life changes that might affect your tax situation. Things like charitable donations, medical expenses, education expenses, childcare costs, or business expenses aren't automatically reported to the IRS. They know what you earned but not necessarily what tax breaks you qualify for. There's also a powerful lobby from tax preparation companies that has fought against simplifying the process. Companies like Intuit (makers of TurboTax) and H&R Block have spent millions lobbying against pre-filled tax returns because it would hurt their business model.

After struggling with this exact frustration last year, I found this amazing tool called taxr.ai (https://taxr.ai) that actually addresses this problem! It uses AI to analyze your tax documents and automatically extracts all the information the IRS already has. Then it shows you exactly what the IRS sees compared to what you're reporting. The thing that blew my mind was seeing all the discrepancies between what I thought I owed and what the IRS records showed. It caught a missing 1099 form I didn't even know about that could have triggered an audit. It basically gave me that "pre-filled" starting point and then helped me identify where I could add legitimate deductions.

Just wanted to follow up about taxr.ai that was mentioned earlier. I was skeptical but decided to try it with my complicated tax situation (multiple W-2s, investment income, and a rental property). It was honestly eye-opening to see what information the IRS already had on file for me! The tool showed me that one of my stock sales had incorrect basis information reported to the IRS, which would have made my tax liability look $3,400 higher than it actually was. I would have never caught this on my own because I assumed the brokerage reported everything correctly. Being able to see the "IRS view" of my taxes before filing saved me from what would have definitely been a headache later.

After spending HOURS on hold with the IRS last year trying to resolve a discrepancy in my reported income, I discovered Claimyr (https://claimyr.com). They have this system that actually gets you through to a real IRS agent without the endless waiting. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was trying to figure out exactly this issue - why the IRS was calculating my taxes differently than I was when they clearly had all my information. Once I finally got through to a human at the IRS (thanks to Claimyr), the agent explained exactly which forms they had received from employers and what was showing in their system. Turns out my employer had submitted an amended W-2 that I never received! No wonder our calculations were different.

Ok I need to publicly eat my words about Claimyr. After posting that skeptical comment yesterday, I decided to try it myself because I've been trying to reach the IRS for THREE WEEKS about a notice I received claiming I underreported income from 2023. It actually worked exactly as described. I got a call back about 1.5 hours after signing up, and was connected directly to an IRS representative who pulled up my file. Turns out there was a 1099 from a brief freelance gig I'd completely forgotten about! The agent was able to tell me exactly what forms they had on file and what was missing from my return. This is exactly what OP was talking about - the IRS already knew exactly what was wrong, but instead of just telling me, they sent a vague notice that caused weeks of stress. Being able to actually talk to someone and see what they were seeing made everything clear in 10 minutes.

The real reason we still file taxes this way is 100% because of lobbying from the tax preparation industry. Countries like Denmark, Sweden, Spain, and Estonia all use return-free filing systems where the tax authority prepares returns for approval. Intuit (TurboTax) and H&R Block have spent over $20 million lobbying against the "Tax Filing Simplification Act" and similar legislation over the years. The IRS actually developed a free, simple filing system called "ReadyReturn" that was tested in California, but intense industry opposition killed it. It's pure corporate greed keeping this inefficient system in place. The tax prep industry makes billions by inserting themselves as middlemen in a process that could be much simpler.

I worked for the IRS for 7 years and can confirm that we do already know most of what should be on your return. But here's what most people don't realize: the IRS is SEVERELY underfunded and outdated technology-wise. The systems that hold your W-2 and 1099 info are completely separate from the systems that process returns. They literally don't talk to each other until AFTER you file, when a matching program runs to flag discrepancies. The IRS is still using computer systems from the 1960s for some core functions. I'm not exaggerating - actual 60-year-old COBOL programming. Congress has repeatedly cut IRS technology modernization funding. So yes, in theory, pre-filled returns would make sense. But the current infrastructure literally can't support it without a massive overhaul that politicians refuse to fund.

This whole thread really validates what I've been thinking for years! As someone who runs a small business and deals with quarterly estimated payments, I'm constantly frustrated by the disconnect between what the IRS knows and what they make me report. What really gets me is that they'll send you a notice months later if something doesn't match their records, but they won't just tell you upfront what they have on file. I've had situations where a client issued a corrected 1099 to the IRS but never sent me the updated copy, leading to discrepancies that took forever to resolve. The former IRS employee's point about the outdated technology explains so much. It's mind-boggling that we're still using 1960s systems to manage the revenue collection for the world's largest economy. No wonder everything feels so backwards and inefficient. I really hope the recent funding increases actually lead to meaningful modernization rather than just hiring more people to work with the same broken systems.