TOPIC: No filing of tax returns if salary is only income

No filing of tax returns if salary is only income 11 years 6 months ago #10965

  • Fave5
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www.rediff.com/business/slide-show/slide-show-1-budget-2011-perfin-filing-returns-eased-for-salaried/20110228.htm

Isn't this a great idea? Think about it - this can be implemented so easily in USA.

Since most of us salaried tax-payers already submit W2 to IRS thru Company Payroll/HR. It already has the dependent credits in W9 and if we can include any interest/dividend income column on W9 or allow that entry to be made to HR to be included on W2, the compliance burden on IRS will be reduced more than 25%.

If there are any exceptions - those can always be filed as amendments or as an addendum to the W2s.

On the contrary today, even if we have zero tax liability we sill have to file the taxes - so 19th century :)

Thoughts?

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10966

  • Manoj
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Fave5 wrote:

Isn't this a great idea? Think about it - this can be implemented so easily in USA.
[/quote]

already here. It's called 1040EZ

Now there are apps which will file your 1040EZ with just a smart phone picture of your W2.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10967

  • Fave5
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It's still an additional filing or 2. One for the Fed & the other for the state. The W2 data can be routed to the state as well. What additiona info is being provided to the IRS that has not already been reported in W2 and W9?

Why not eliminate the process of filing another form (or 2) altogether if the income is purely from single source (salary) with Std Deduction? There could be exceptions for which we could file amendments or addendums.

In fact the elimination would also result in timely (by 1/31) the filing of the taxes rather than waiting till 4/15 or even extensions.

Manoj wrote:

already here. It's called 1040EZ

Now there are apps which will file your 1040EZ with just a smart phone picture of your W2.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10968

  • Manoj
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Fave5 wrote:

What additiona info is being provided to the IRS that has not already been reported in W2 and W9?


Your signatures are missing. Your signatures confirm that you have no other income or deductions to make. That the dependents you are claiming are not being claimed by anyone else. Not having signatures will make it a nightmare for prosecution to bring a case (or even levy a fine) against someone who has not disclosed all income. 1040EZ is simple enough.

You could have multiple jobs and multiple W2s, somewhat common in the low wage employment, where 1040EZ is commonly filed.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10969

  • Manoj
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I think it's a bad idea even for India where IT department will now know less about people and how much they make.

But anyways, not many people pay taxes in India. So, who gives a damn! In my own extended family back home, most people have own businesses, all transacted in cash and without documentation. Plenty of black money which shows up in delectable home interiors and during ostentatious weddings.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10970

  • Fave5
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Every employer is suppose to collect W9 (by law) which has the signatures. Based on W9 and the company offer which is also signed by the employee, the salaries & deductions are determined which in turn is your W2 - the annualized summary statement submitted to the IRS for each employee by it's SSN.

Even if they have multiple jobs - hence multiple W9/W2s - the IRS can still consolidate by SSN - which it does already.

Try a different number on the 1040EZ from your W2 & expect to receive a letter from IRS stating the difference which proves that they do consolidate & check the numbers by SSN. (based on my personal experience ;)


Manoj wrote:

Your signatures are missing. Your signatures confirm that you have no other income or deductions to make. That the dependents you are claiming are not being claimed by anyone else. Not having signatures will make it a nightmare for prosecution to bring a case (or even levy a fine) against someone who has not disclosed all income. 1040EZ is simple enough.

You could have multiple jobs and multiple W2s, somewhat common in the low wage employment, where 1040EZ is commonly filed.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10971

  • Fave5
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Which anyways they (IT, Accounting, Payroll folks) already know about the numbers since even in India the salaried class has TDS systems - something similar to W2.

Manoj wrote:

I think it's a bad idea even for India where IT department will now know less about people and how much they make.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10972

  • Manoj
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Fave5 wrote:

Every employer is suppose to collect W9 (by law) which has the signatures. Based on W9 and the company offer which is also signed by the employee, the salaries & deductions are determined which in turn is your W2 - the annualized summary statement submitted to the IRS for each employee by it's SSN.


W9 data is indicative. It does not require SSN of dependents, your tax form does. Your contributions to an IRA are not known to your employer, but deductible.

All this dual reporting confirms one data with the other. For example, if someone puts your SSN on a 1099 job, this is how you or IRS will find out. When IRS sends you a letter that you've not reported a certain income and you say that you've not received it, they go check with the institution that reported that 1099.

I think the US tax procedure is very good, although there is always a scope for improvement.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10973

  • Fave5
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So why not include the SSN & some optional items like IRA, Interest/Dividend entries on W9 and make it simple and eliminate filing?

I am not saying this will eliminate all the filings, but will greatly reduce the timing/filing/compliance burden on the IRS for those straight forward salaried class filings.

I understand the interest/dividend are variable and the actual values can only be computed after receiving the statements - but again the banks and the FI's report those numbers to the IRS as well.

Manoj wrote:

W9 data is indicative. It does not require SSN of dependents, your tax form does. Your contributions to an IRA are not known to your employer, but deductible.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10974

  • Manoj
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Fave5 wrote:

So why not include the SSN & some optional items like IRA, Interest/Dividend entries on W9 and make it simple and eliminate filing?


On W9? Do you even know when a W9 is filed? IRS allows you up to April 15th to make a deductible IRA contribution for the prior year. Your interest/dividend 1099s are due on Jan 31.

For making that suggestion, you'll have to call your congressman because I am sure he/she is not a visitor here. LOL

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10975

  • Fave5
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W9 is now mandatory every year - earlier it was only at the time of employment.

IRA contribution date is 4/15 to match with Tax Filing deadline.

Interest/Dividend statements are due by 1/31 - same as W2. There are reasons for all these dates basically to allow time for filing by 4/15.

Think about it as: if i don't contribute to IRA, don't have dividend/interest - straight salary income with family deductions - my filing is pretty much done when the W2 comes - no? Why can't W2 be considered as my 1040EZ for which you already mentioned there's an app :) I am sure there are smart peep in IRS that can pretty much write this code in matter of days if not hours.

I am willing to write to the local congress-person and do understand the process completely but wanted to validate the idea with fellow ATers and see if it made sense in the first place or had better suggestions.

you know if this becomes a reality - treating W2 as 1040EZ and no filing required - AT would be the first forum where this idea originated and was discussed by U, Me aur Hum (ATers) ;)

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10976

  • Manoj
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Fave5 wrote:

Think about it as: if i don't contribute to IRA, don't have dividend/interest - straight salary income with family deductions - my filing is pretty much done when the W2 comes - no? Why can't W2 be considered as my 1040EZ for which you already mentioned there's an app :) I am sure there are smart peep in IRS that can pretty much write this code in matter of days if not hours.


So, now you want another category of filers who will be non-filers, whose filing with IRS will be automatic and based on their W2. I think it's a crazy idea, but I won't stop you from calling your congressman/senator.

Please let me know of the response. Pretty please!

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10977

  • Fave5
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So if I summarize - you thought these were the loopholes/non-viable points in my "crazy" idea ;)

1. Signature & SSN Numbers (of dependents)
2. IRA/Interests/Dividend deductions
3. New category - Non-Filers (or Auto-Filers as I'd like to call it).

If these 3 issues are addressed then do you think it's a viable suggestion? As & when I write to the legislators, i need to backup my suggestions with the shortcomings and alternatives. Only Suggestions are dime-a-dozen in this day & age :)

I was expecting smore more discussion on this topic since it's the Tax season & it's really boring preparing/filig my taxes :(

Oh well.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10978

  • A
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Fave5,

Per your very first message on this subject. Does not the burden to capture Interest/Dividend also falls with Payroll/HR instead of just tax filers? Why would companies take additional responsibility?

I did not read the complete chain in details so it is possible I am missing something in this discussion. Sorry if it is stupid question.

Fave5 wrote:

So if I summarize - you thought these were the loopholes/non-viable points in my "crazy" idea ;)

1. Signature & SSN Numbers (of dependents)
2. IRA/Interests/Dividend deductions
3. New category - Non-Filers (or Auto-Filers as I'd like to call it).

If these 3 issues are addressed then do you think it's a viable suggestion? As & when I write to the legislators, i need to backup my suggestions with the shortcomings and alternatives. Only Suggestions are dime-a-dozen in this day & age :)

I was expecting smore more discussion on this topic since it's the Tax season & it's really boring preparing/filig my taxes :(

Oh well.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10979

  • Fave5
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Yes, the interest/dividend is currently missing on W9 and some other info (as Manoj has pointed out) as well.

It won't be any burden on HR since the law mandates them to collect W9 from each employee (even from Citizens) every year now. Yes, the W9 wil have to be modified to capture missing/additional information. IMHO, it's a small change for the benefits that the IRS will gain in return.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10981

  • A
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Fave5,

I am sorry I am bit lost again. Can you send me the link to the website/info that says W9 is for every EMPLOYEE. I thought it was Freelance and Contractors. I guess the rules have changed recently. I did not submit/no one asked me for W9 or given me W9 so far.


Fave5 wrote:

Yes, the interest/dividend is currently missing on W9 and some other info (as Manoj has pointed out) as well.

It won't be any burden on HR since the law mandates them to collect W9 from each employee (even from Citizens) every year now. Yes, the W9 wil have to be modified to capture missing/additional information. IMHO, it's a small change for the benefits that the IRS will gain in return.

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10982

  • Manoj
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A wrote:

Fave5,

I am sorry I am bit lost again. Can you send me the link to the website/info that says W9 is for every EMPLOYEE. I thought it was Freelance and Contractors. I guess the rules have changed recently. I did not submit/no one asked me for W9 or given me W9 so far.


W4 is for withholding from employees, W9 is for withholding from a 1099 payment.

But that's not the point of discussion here. No matter what IRS form it is, Fav5 is arguing that it could be the basis of auto-filing an individual's tax return, provided he/she has no other income like from a business etc.

Do you have any input on that subject, or are you trying to show off your knowledge of IRS forms?

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10985

  • Tax
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This type of statements would do any good with Congressman. Every Citizen. Getting the facts right is the first thing

Fave5 wrote:

Yes, the interest/dividend is currently missing on W9 and some other info (as Manoj has pointed out) as well.

It won't be any burden on HR since the law mandates them to collect W9 from each employee (even from Citizens) every year now. Yes, the W9 wil have to be modified to capture missing/additional information. IMHO, it's a small change for the benefits that the IRS will gain in return.



Manoj wrote:

A wrote:

Fave5,

I am sorry I am bit lost again. Can you send me the link to the website/info that says W9 is for every EMPLOYEE. I thought it was Freelance and Contractors. I guess the rules have changed recently. I did not submit/no one asked me for W9 or given me W9 so far.


W4 is for withholding from employees, W9 is for withholding from a 1099 payment.

But that's not the point of discussion here. No matter what IRS form it is, Fav5 is arguing that it could be the basis of auto-filing an individual's tax return, provided he/she has no other income like from a business etc.

Do you have any input on that subject, or are you trying to show off your knowledge of IRS forms?

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Re:No filing of tax returns if salary is only income 11 years 6 months ago #10986

I was reading an interesting article in Businessweek where Tea party backed senators are suggesting to start with a clean slate for tax rules. They suggest absolutely no tax deduction at all and all earnings are taxed. They claim that removing the home mortgage interest deduction would cut tax percentage for average income family by 5%. I feel that, it is very extreme measure but that would simplify the tax rules and allow for accurate withholding of tax at the root (be it an employee - w2 or contractor - w9). Accurate tax withholding would eliminate unnecessary filing!!

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