Why is Filing a Tax Return "Voluntary"?

[KrazyHorse]

Also, what about those whose salary changes throughout the year (as most people's do at least slightly)

The way it works (both in US and in Canada) is that on any given pay period (say the period is biweekly) your salary for that period is multiplied by the number of such periods in a year (26). The government calculates the total taxes due based on this projected annual salary. It then divides this total by the same number (26) and withholds this amount. Due to the progressive nature of the tax system, anybody whose salary is not perfectly even throughout the year has more taxes withheld than was necessary, and must file to get his refund.

I generally get at least a few hundred dollars back every year.

[MichaeltheGreat]

Originally posted by Berzerker
The IRS

Really? Where, and in what (non-edited for convenience) context, and under what conditions? When I look at my form 1040 instructions booklet, it gives three charts setting forth under what circumstances you must file a return. Doesn't say "its voluntary" anywhere.

The 5th Amendment says we dont have to incriminate ourselves, what happens when income is gained illegally? We gotta report it, thats self-incrimination.

See Leary v. United States 395 US 6 (1969)
If you're going to make silly arguments, you might want to at least go through the motions of looking for the factual basis.

Reporting the existence and amount of income is not in itself incriminating. Answering questions about the source of the income may be, and such answers are subject to Fifth Amendment protections.

And the 5th doesn't require us to have something to hide, just that we dont have to provide the gov't with evidence to be used against us.

You can play all the semantic games you want. The language is clear, and so are the court interpretations. The right against self-incrimination only applies in criminal proceedings.

Its criminal prosecution when the IRS decides you made more and didn't report it, and there is always a prospect of prosecution when filing a return, says so right on the form.

Really? I've been to tax court, and had disputes with IRS on jurisdiction over foreign earned income, applicability of certain deductions, and other issues, involving quite a bit of money. Never the slightest threat of prosecution.

And the return says: "Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year."

I don't see a threat of prosecution. I see an acknowledgement that there is potentially a legal penalty (which may lead to prosecution) for knowingly making false statements or omissions. Real "mistakes" don't meet that criteria, nor the more detailed criteria under the Federal perjury statutes.

I dont know where you get your tax forms but there's all sorts of stuff I gotta report. Mistakes dont lead to prosecutions?

Depends on your personal (or is it common the Liberterrarium) choices of convenient definitions of "mistake" and "prosecution." I guess you could argue it would be a "mistake" to flagrantly violate the law to the point where you get prosecuted, but semantic masturbation is your gig, not mine.

A "mistake" where you "forgot" to mention that extra million bucks you made from winning Survivor, because you "thought" that the show's producers would pay the tax for you, despite signing several documents acknowledging you were responsible for all taxes on winnings, isn't too credible of a "mistake."

They tell me what I owe after I tell them what I made and what I owe and they disagree. It aint my job to tell them what I made and what I owe, thats their job.

Amendment XVI and a whole bunch of legislation under its authority says otherwise. You have to report what you made. If you refuse, they will get it from their own sources and fill out returns for you, but they don't have to look into whatever deductions you might have, so they'll short form you and determine tax on income only, without respect to credits or deductions, if you really want to push it.

You offer the information on a tax form as a testimonial of your conduct.

Semantic masturbation again. You're not making a "testimonial" of any "conduct." You're answering questions about how much you made, not how, or why, or whether it was made legally or otherwise, and about any deductions or credits you want to claim. Conduct doesn't enter into it.

That aint the point, the 5th protects against self-incrimination and it dont matter what you have to hide, or anything to hide.

That is the point entirely. There is no "self-incrimination" in accurately listing your income and claimed credits and deductions in a tax return. Therefore, invoking the Fifth Amendment can not be a defense to refusing to file or accurately quantify income, credits or deductions, or to sign a return when required to do so by law.

The definition of "sources" of income doesn't include if/how it was obtained illegally. It simply means whether it was employment income, self-employment income, interest income, capital gains, etc. Sell dope for a living? Call yourself a salesman and report the amount of income on your Schedule C, and voilá, no self-incrimination.

[KrazyHorse]

A "mistake" where you "forgot" to mention that extra million bucks you made from winning Survivor, because you "thought" that the show's producers would pay the tax for you, despite signing several documents acknowledging you were responsible for all taxes on winnings, isn't too credible of a "mistake."

That's exactly what I was thinking...

[Dauphin]

Originally posted by KrazyHorse
Also, what about those whose salary changes throughout the year (as most people's do at least slightly)

The way it works (both in US and in Canada) is that on any given pay period (say the period is biweekly) your salary for that period is multiplied by the number of such periods in a year (26). The government calculates the total taxes due based on this projected annual salary. It then divides this total by the same number (26) and withholds this amount. Due to the progressive nature of the tax system, anybody whose salary is not perfectly even throughout the year has more taxes withheld than was necessary, and must file to get his refund.

I generally get at least a few hundred dollars back every year.

It makes no difference under the UK system unless you earn less than your personal allowance

Using simplified tax brackets and rates..

Say you have a salary of £36k for 6 months, you get £3k income for each month. Personal allowance, say £6k/year, or £500 a month. You are therefore taxed @ 20% on £2,500 = £500 for 6 months. This is collected by your employer.

You have a salary of £48k for the next 6 months and your tax band changes (you pay 40% on the £36k-£48k portion), you get £4k income for each month. Personal allowance remains at £500 a month. You are therefore taxed @ 20 % on £2,500 and @ 40% on £1,000 = £900 for 6 months, still collected by your employer.

End of year, you have earned £42k. Your personal allowance is £6k so you should have paid 20% on £30k and 40% on £6k = £8,400. You have paid £500 x 6 + £900 x 6 = £8,400.

No tax still to pay or be rebated.

[Zulu Elephant]

Isn't this like saying that you could lie about your age to avoid the draft - because telling them would be handing over evidence for them to charge you with

[MichaeltheGreat]

Originally posted by Zulu Elephant
Isn't this like saying that you could lie about your age to avoid the draft - because telling them would be handing over evidence for them to charge you with

"Charge you" or "draft you?" Two totally different things, each with completely different basis in the Constitution.

[KrazyHorse]

Originally posted by Dauphin


It makes no difference under the UK system unless you earn less than your personal allowance

Using simplified tax brackets and rates..

Say you have a salary of £36k for 6 months, you get £3k income for each month. Personal allowance, say £6k/year, or £500 a month. You are therefore taxed @ 20% on £2,500 = £500 for 6 months. This is collected by your employer.

You have a salary of £48k for the next 6 months and your tax band changes (you pay 40% on the £36k-£48k portion), you get £4k income for each month. Personal allowance remains at £500 a month. You are therefore taxed @ 20 % on £2,500 and @ 40% on £1,000 = £900 for 6 months, still collected by your employer.

End of year, you have earned £42k. Your personal allowance is £6k so you should have paid 20% on £30k and 40% on £6k = £8,400. You have paid £500 x 6 + £900 x 6 = £8,400.

No tax still to pay or be rebated.

This only works if you don't cross a tax bracket at any point. Not just whether or not you fall under personal exemption. If you'd done your example with 30k annual for the first 6 months and 42k annual for the next 6 months you would have paid 0.2*(30k - 6k)*6/12 + 0.2*(36k - 6k)*6/12 + 0.4*(42k-36k)*6/12 = 2400 + 3000 + 1200 = 6600, but your tax paid should have been 0.2*(36k - 6k) = 6000

[Dauphin]

It would actually be

0.2*(30k - 6k)*6/12 + 0.2*(42k - 6k)*6/12 = 2400 + 3600 = 6000.

The higher rate wouldn't kick in until you surpassed your basic rate earnings limit for the time apportioned amount (this is where it differs from the personal allowance). Assuming your payroll know what they are doing - that and any accidental over or underpayments can be rebated or deducted by payroll.

[KrazyHorse]

Ah. That's the difference. Here they don't bother calculating backward. Withholdings are calculated independentl of other pay periods (at least AFAIK)

You have to claim any refund at the end of the year by filing a return.