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By Neo.Tax Team
5 min read
A recent study from the U.S. Department of the Treasury, the Minneapolis Federal Reserve, and Dartmouth College found the IRS can automate between 62 million and 73 million tax returns–which represents over 45% of US taxpayers who would be eligible for auto-filing.
A survey of 344,000 individual returns in 2019 found that pre-populated returns for low-to-moderate earning taxpayers would not only be accurate, but would also save taxpayers time and money when filing every year.
Even though accuracy decreases as the number of itemized deductions increases, 90% of Americans qualify for standard deductions.
That said, let’s explore the other ways automated tax returns could help the average American.
An automated tax system for taxpayers claiming the standard deductions means faster tax processes for everyone. Huzzah!
Automation would ease the burden on the IRS as they continue to deal with pandemic-related backlogs and slowdowns.
In countries where automated taxes filings are already standard practice, taxpayers can file in as little as 5 minutes–as is common practice in Estonia. In Sweden, where taxpayers receive a text message to review and approve their tax filing, the process is even faster.
Not to mention the economic benefits for the 12 million people who currently are not filing taxes because of a lack of access to resources necessary for filing, for instance. An automated filing could mean money in the pockets of people who had never or rarely filed previously.
Who knew working smarter could mean more money in your pocket?
Most Americans cite making a mistake and not getting their full refund as major stressors when filing their taxes. Not to mention the financial burden taxpayers face having to pay preparers when, in reality, a standard deduction and automated filing could suffice.
Tommy Lucas, a Financial Advisor At Moisand Fitzgerald Tamayo, told MSNBC “it would save so many people the stress and headache of figuring out what documents they need, or how they are going to pay for their return to be done.”
Since 90% of Americans can take advantage of standard deductions–especially after a 2017 tax overhaul that doubled the standard deduction for taxpayers–a majority of taxpayers could take advantage of an auto-filing system.
This means that because there are fewer deductions, there will be fewer mistakes on a pre-populated filing. Allowing for pre-populated or automated filing to increase the accuracy of your taxes. More accuracy also means a smoother, more efficient process that sees you with your return faster than ever.
Coincidentally, Neo.Tax is working to automate taxes for small and medium-sized businesses. We are empowering founders and accountants with innovative, tech-forward tools to make preparing your business taxes faster and easier. Our automated R&D Tax Credit solution has expanded the reach of this tax credit, so it is no longer just a benefit for large corporations—by putting money back into the hands of the companies who fuel our diverse economy. We’re saving businesses and accountants time without charging exorbitant fees. It’s what automation is all about.
We will continue to update you on the progress of the automation of IRS tax filings as the story develops.
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