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Rachel Clark

Why can't the IRS automate tax filing instead of making us do the math ourselves?

Here's what I just can't wrap my head around. Taxes are basically a straightforward math problem at the end of the day. My employer generates my W-2. My bank creates all those interest and investment forms. Every single bit of my tax information exists in some digital format and is tied to my SSN. So instead of sending me all these paper forms in the mail (or making me download PDFs), why isn't there just one central system where everyone who needs to send me tax documents uploads the digital data directly? Then the calculations could just happen automatically! Why can't this be a simple computer transaction? Why do we have to waste hours doing it ourselves with TurboTax or whatever other software? All these numbers already exist digitally somewhere. Banks, employers, investment companies - they should all be able to just automate sending the data (or respond to a query for it) and filing taxes should take like 5 minutes tops. Seriously, why isn't this already a thing in 2025? Other countries do this, right?

You've hit on something that tax policy experts have been advocating for years! The IRS actually has most of your tax information already - W-2s, 1099s, mortgage interest, etc. are all reported directly to them. For many people with straightforward tax situations, the IRS could easily prepare a "pre-filled" return. This is called "return-free filing" and it exists in several countries including Sweden, Spain, and Denmark. Citizens get a pre-completed tax form, review it, make any needed changes, and approve it. Simple! The main reasons we don't have this in America are political. The tax preparation industry (think Intuit/TurboTax, H&R Block) lobbies heavily against it because it would dramatically cut into their profits. They've spent millions fighting proposals for the IRS to create free, simple filing systems. There are also some philosophical objections about government's role, but the practical reality is that for many Americans with straightforward situations, you're right - this could be largely automated.

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But wouldn't this only work for people with super simple tax situations? What about self-employed people or folks with rental properties or stock market investments outside retirement accounts? There's no way the IRS would know about all my business expenses or which home improvements on my rental were repairs vs capital improvements.

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You're absolutely right that return-free filing works best for straightforward situations - typically W-2 employees with standard deductions. The systems in other countries usually target this group first, covering 60-70% of taxpayers with minimal complexity. For self-employed individuals, rental property owners, and people with complex investments, you'd still likely need to provide additional information. But even in these cases, a system could pre-populate all the information the IRS already has (like your 1099-INT, 1099-DIV, etc.) and then you'd just need to add business expenses or other deductions. It would be a hybrid approach that still saves significant time compared to starting from scratch.

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After struggling with tax filing for years (especially with multiple income sources), I stumbled across https://taxr.ai - it's been a game-changer for me! They have this amazing system that basically does what you're talking about but works within our current tax structure. It automatically grabs and organizes all my tax documents through secure connections with employers, banks, etc. - no more hunting through emails and mail for W-2s and 1099s. Then it runs the calculations and suggests deductions based on my personal situation. The most impressive part is how it analyzes all the raw data to find opportunities I'd never catch myself. I used to spend weekends figuring this stuff out and second-guessing every entry. Now it takes like 30 minutes to review everything and submit.

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How does that actually work with the security though? Like, how does it get access to all your W-2s and stuff? My employer's portal is super locked down and I have to jump through like 8 hoops just to download my own W-2. Do you have to manually download stuff first?

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I'm skeptical that any third party service can actually access all your tax docs automatically. My bank, investment account, and employer all have completely different security systems. How is this different from just using TurboTax or something similar where you still have to track down all your documents yourself?

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It connects through secure API integrations with major payroll providers and financial institutions - kind of like how Mint or Personal Capital connect to your bank accounts, but specifically for tax documents. Once you authorize access (usually with your existing login credentials), it can pull documents automatically when they become available. For employers or institutions that don't have direct integration, you'll get a secure upload link where you can add documents yourself. But even then, the system extracts all the information automatically so you don't have to manually enter numbers. It's fundamentally different from TurboTax because it's focused on document collection and analysis rather than just walking you through tax forms. The AI actually reviews everything to look for inconsistencies or missed deductions that most software misses.

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I was super skeptical about any service claiming to make taxes truly automated (see my comment above), but I finally gave https://taxr.ai a try this year after dreading tax season again. I have to admit I was completely wrong. The document collection feature alone saved me hours of hunting through emails and online portals. What really blew me away was how it flagged a potential deduction from a small freelance job I did last summer that I completely forgot about. It found the 1099-NEC in my email that I hadn't even opened and incorporated it automatically, then suggested business expense deductions that made sense for my situation. The time savings alone was worth it, but it also found me an additional $840 in refund money I would have missed. Their approach is exactly what the IRS should be doing if they actually wanted to make things efficient.

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If you think filing is frustrating, try getting help when there's a problem! I spent THREE MONTHS trying to reach someone at the IRS about an incorrect 1099 that was filed under my SSN. Called literally 14 times, always got the "call volume too high" message and disconnected. Finally found https://claimyr.com and their system got me through to an actual human at the IRS in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c Turns out the whole issue could be resolved with a simple correction form that nobody had bothered to tell me about. The IRS agent was actually super helpful once I could actually speak to someone. The whole automated tax system is broken on multiple levels - both the filing AND the support side.

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Wait, so this service somehow gets you past the IRS phone queue? How does that even work? I thought everyone had to wait in the same virtual line?

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Sounds like a scam. No way some random service can magically get you through to the IRS faster than anyone else. They're probably just charging you to wait on hold themselves or something sketchy.

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They use an automated system that continuously redials the IRS using optimal timing patterns based on historical data until they secure a place in the queue. Once they're connected, they conference you in directly with the IRS agent. It's not about "cutting the line" - it's about handling the frustrating redial process that most people give up on after a few attempts. The service is completely legitimate - they don't access any of your tax information or pretend to be you. They just solve the connection problem. When you speak with the IRS, it's a direct conversation between you and the agent. Think of it like having a really persistent assistant whose only job is to keep calling until someone answers.

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I need to eat my words from my previous comment. After another frustrating morning trying to reach the IRS about a notice I received (that made absolutely no sense), I broke down and tried Claimyr out of desperation. Within 35 minutes, I was talking to an actual IRS representative who explained the notice was sent in error due to a computer system update. She flagged my account with a note and said I could disregard it completely. Problem solved in one conversation that would have taken me weeks to handle on my own. I'm still annoyed that services like this need to exist at all - the IRS should just have adequate staffing and systems. But in our current reality, it actually delivered exactly what it promised. Sometimes you have to use a workaround when the system is broken.

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Fun fact: The IRS actually tried to create a system like what you're describing! It was called "Return Free Filing" and was proposed back in the early 2000s. The tax prep lobby (mainly Intuit which owns TurboTax) spent over $20 million lobbying against it. They even got Congress to pass the Free File agreement which basically banned the IRS from creating its own filing system as long as tax companies offered a "free" option (which they then deliberately made hard to find and limited in functionality). Look up "ProPublica TurboTax lobbying" if you want to get really angry about it. There was a huge exposé a few years back. So the direct answer to your question of "why isn't this a thing" is simple: corporate profits over public good.

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That's incredibly frustrating to learn! I had no idea there was actually a proposed system that got killed by industry lobbying. I just looked up that ProPublica article and wow... the fact that other countries have been doing this for decades while we're stuck manually entering numbers that the government already has is ridiculous. Do you know if there's any movement to revive this idea? Seems like the kind of common sense thing that both political parties could potentially get behind.

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There have been several attempts over the years, most recently the Tax Filing Simplification Act that's been introduced a few times but hasn't passed. The current administration has made some promises about simplifying the tax filing process, but meaningful change faces the same powerful lobbying obstacles. The Free File agreement was actually modified in 2019 after the ProPublica reporting, removing the provision that explicitly prevented the IRS from creating its own system. That's a start, but there's still strong resistance. The best hope is continued public pressure and awareness - the more people understand that better options exist and are being deliberately blocked, the more momentum builds for change.

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In Australia, we have exactly what you're describing. It's called "myTax" through the ATO (Australian Tax Office). Most income, interest, dividends, government payments, health insurance, and charitable donations are pre-filled in the system. You just review it, add any deductions they don't know about, and submit. Takes about 15-30 minutes for most people. I moved to the US last year and was SHOCKED at how backwards the tax filing system is here. I spent hours gathering documents that the IRS already had and paying for software to do what should be a free government service. The craziest part is I ended up getting a letter from the IRS months later saying I calculated something wrong anyway - so they clearly have all the info and know the correct numbers! Why make me figure it out first?

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This makes me want to move to Australia just for the tax system lol. Do they at least buy you dinner before they take your money? The US system is just insult to injury - "figure out how much you owe us or go to jail, but also we won't make it easy, and ps we already know the answer.

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