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Income Tax Frustration
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According to the Internal Revenue Service, it takes an average of four hours for a taxpayer to fill out their tax return. And that's for those lucky folks who are only required to fill out and file Form 1040EZ. If you have to file Form 1040 (this accounts for about 70 percent of all tax returns), you'll spend an average of 16 hours during the course of a year getting the job done -- the bulk of the time (12 hours) on record-keeping and completing/submitting the proper forms.

Believe it or not, this wasn't always the case.

A recent article from Business Insider shares a typical tax return from 1948. The return consisted of just one page -- and could probably have been completed in less than 10 minutes!

Today's Form 1040 is just slightly longer, comprising a manageable two pages. But it's the set of rules for completing those two pages (along with the slew of additional worksheets many of us must also complete), explained over 206 technical pages, that leaves most of us crying uncle.

It's little wonder more than 80 million of us pay $10 billion each year to hire professional tax help (unqualified though they may be) to complete our returns for us.

It's Not That Complicated ... If You Live in One of These Countries

A handful of countries (Denmark, Estonia, Finland, Iceland, Norway, Sweden, Chile, and Spain) already use "pre-populated" tax returns.

For the most part, this means that the country prepares a tax return (using the wage data received from the citizen's employer), runs the relevant calculations, and then mails the return to the citizen for review.
  • If it's correct, you're done.
  • If a change needs to be made, you make it, mail it back -- and you're done.
Simple as that! No waiting by the mailbox for your W-2. No interest deduction forms that your kids can accidentally toss away. Heck, you may not even need a calculator.

More than just being a welcome stress relief,
this process also results in quicker tax refunds, fewer audits -- and of course fewer employees needed at the tax department (which trickles down into smaller taxes!).

Of course, this free, automatic form of filing taxes is possible because those countries have simpler rules surrounding personal income taxes (meaning you may not be able to deduct mortgage interest, student loan interest, or charitable deductions) -- which is a topic for another article entirely.

Nevertheless, a simpler method for filing taxes is not only possible, but it's also receiving much praise. Unfortunately, you'd have to move outside of the U.S. to take advantage of it.

Adam Wiederman is a Motley Fool contributing writer.​


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scottee

tax preparation and compliance should not be a major job sector.

what if congress scrapped the 73,000 pages of tax code
and everyone just paid a small national sales tax with no deductions for anyone for anything?
they would probably collect more, everyone would pay some, the rich would pay more, we could close down the IRS, congress would have a lot less power, and April 15 would just be another spring day.

April 11 2014 at 7:40 AM Report abuse rate up rate down Reply
dopey.obamite

A no deduction across the board flat tax sounds easier. An awesome side effect is taxation would no longer be able to be politicized.

April 10 2014 at 4:06 PM Report abuse +1 rate up rate down Reply
2 replies to dopey.obamite's comment
karen1963yorks

So no investment whatsoever? No building factories or employing people or buying equipment? The same road tax for a MASSIVE car as for a tiny one?

April 10 2014 at 4:43 PM Report abuse rate up rate down Reply
1 reply to karen1963yorks's comment
dopey.obamite

On income, dear. Revenue will soar. No more WMD known as the IRS. No more politicizing tax rates. We're spending upwards of $3.8 trillion a year. I don't know how you jumped to no investment on this one. Private companies and individuals could still invest and build.

April 10 2014 at 10:08 PM Report abuse rate up rate down
scottee

but then that would take power away from congress...to pick and choose who they tax.

April 11 2014 at 7:41 AM Report abuse rate up rate down Reply