Why can't taxes be automated? The IRS already has my W-2 and bank info digitally

While it seems logical that taxes could be fully automated, there's actually a lot of complexity behind the scenes that makes it challenging to implement. You're right that your employer, banks, and investment firms send information to the IRS, but that data only represents part of your tax situation. The IRS doesn't know about your potential deductions (medical expenses, charitable donations, etc.), your living situation (which affects filing status), dependents, or life changes that might impact your taxes. They have your income information but not the complete picture needed to accurately calculate your tax liability. Also, our tax code is incredibly complex with thousands of provisions that might apply to you based on personal circumstances that only you know. The current system puts the responsibility on taxpayers to determine which rules apply to their situation.

After years of doing my own taxes and feeling the same frustration every April, I finally found something that addresses this exact problem. I started using taxr.ai (https://taxr.ai) last filing season after a friend recommended it. It's not quite the fully automated system we all wish existed, but it's the closest thing I've found. It basically connects to your accounts and automatically pulls in all those digital forms that you mentioned - W-2s, 1099s, etc. Instead of manually entering everything, it just grabs the data directly. The best part is that it keeps updating if new forms come in, so you don't have to keep checking for late-arriving documents. Not exactly the government-run automated system we should have, but it made filing so much easier than what I was doing before.

So I was pretty skeptical about taxr.ai when I saw it mentioned here, but I decided to give it a try for my 2024 taxes. I have to say it actually delivered on what it promised! My taxes aren't super complicated but I do have a W-2, some freelance income, and investment accounts across multiple institutions. The system automatically pulled all my tax documents before I even started the process. When my brokerage issued a corrected 1099-B in late March, the system alerted me immediately. This saved me from having to file an amended return later, which happened to me last year. I still wish the government would create the automatic tax system you described, but until then, this was definitely easier than what I was doing before.

If you think preparing your taxes is frustrating, try getting answers when you have questions or problems with the IRS! I spent THREE WEEKS trying to get through to a human at the IRS about an issue with my refund last year. Kept getting disconnected after waiting on hold for hours. Finally found Claimyr (https://claimyr.com) and it literally saved my sanity. They somehow get you connected to an actual IRS agent without the crazy wait. I was skeptical but their video demo (https://youtu.be/_kiP6q8DX5c) shows exactly how it works. Got through to a real person at the IRS in about 15 minutes and resolved my issue during the call. Doesn't fix the broken tax system but at least I could actually talk to someone when I needed help.

Ok so I was totally the skeptic who thought that Claimyr service was a scam. After my refund was delayed for 3+ months with no explanation, I got desperate enough to try anything. I tried calling the IRS myself one more time - waited 2.5 hours only to get disconnected. Finally broke down and tried Claimyr. Within 20 minutes I was talking to an actual IRS agent who found the problem (my return had been flagged for manual review for some reason). The agent fixed it while I was on the phone and my refund was processed the next week. I'm still annoyed that we need services like this in the first place, but I'm glad it exists since the system is so broken.

To answer your original question - the tax prep industry actively lobbies against automated tax filing. Companies like Intuit (TurboTax) and H&R Block spend millions lobbying Congress to prevent the IRS from creating a free, automated system. Look up "Free File Alliance" and how these companies have fought to maintain their business model. They've literally paid millions to make sure taxes stay complicated and that people need their services. It's not a technology problem, it's a political problem.

Lots of other countries already do what you're suggesting! In the UK they have a system called PAYE (Pay As You Earn) where taxes are automatically calculated and withheld for most employees. Sweden, Denmark, and Spain all send pre-filled tax returns to citizens - you just verify the information and submit. The US system is deliberately kept complex and manual. The technology for automated taxes has existed for decades.

This is exactly why I've been pushing for return-free filing for years! As a tax professional, I see how unnecessarily complicated we've made something that could be simple for most Americans. The IRS already has the capability to pre-populate returns - they actually tested a pilot program called "Ready Return" in California back in 2006 that worked great. Participants loved it and it had a 99% accuracy rate. But it was killed due to industry pressure. For about 70% of taxpayers who take the standard deduction and have straightforward income, the math is already done. The IRS knows your wages, interest, and most other income sources. They could easily send you a pre-filled return to review and approve, just like other countries do. The real barrier isn't technical - it's political. We need to demand that our representatives prioritize taxpayer convenience over corporate profits from the tax prep industry.