Why Are Taxpayers Leaving Behind Billions of Dollars at Tax Time?
Why Are Taxpayers Leaving Behind Billions of Dollars at Tax Time?
The 2018 tax season is officially over. Most Americans are happy to have their tax returns in the rearview mirror. After all, nobody really enjoys doing taxes. Why is that? For the most part, it’s because doing taxes is such a complicated, frustrating experience for the majority of taxpayers. In fact, it’s can be such a huge pain for so many individuals that they don’t really care if they get the maximum amount back. They just want to get them done.
The Process Is Too Much Work
The problem is Americans are actually laving billions of dollars on the table every tax season. So why would hard-working people not claim all the money that’s rightfully theirs? The answer: they don’t want to spend the necessary time it takes to itemize their deductions. Therefore, common deductions like charitable donations and mortgage interest payments that could save taxpayers thousands go left unclaimed.
Taxpayers Are Missing Out
First off, it’s hard for many people to keep track of these and other deductions. Secondly, it can be difficult to figure out how these deductions work when you file your return. According to a study by the National Bureau of Economic Research, about 30 percent of taxpayers in the US itemized their deductions last year. For the most part, these taxpayers did not itemize because the standard deduction amounted to more than their itemized deductions. However, there are many who are missing out on larger returns if they chose to itemize.
Not Worth the Trouble
In fact, according to the study, in 2016 for example, “there were far more households who itemized amounts close to $12,000 than close to $7,000.” The researchers say that doesn’t make sense because there are many more people who would be closer to $7,000 in itemized deductions than there are with $12,000. So, the researchers concluded that these households simply chose not to itemize because it was such a pain to go through the process. So instead of getting a larger refund, they chose the easier route just to get their return done.
Hundreds of Dollars Per Household
So how much is the typical household willing to give up for the sake of avoiding the pain of itemizing? According to the researchers, they estimate that the average household is giving up between $200 and $600 simply to avoid the hassle. The researchers estimate that the total cost of doing taxes in recent years was more than $200 billion, or about 1.2 percent of the GDP in the U.S.
Itemizing Could Be Even More Scarce
There might be some good news for those taxpayers that prefer not to itemize. With the recent tax reform put in place, the standard deduction has nearly doubled, meaning most people will no longer have more in itemized deductions than they would get if they took the standard amount. Thus, itemizing will likely become even less common in the coming years. That should mean less time and money is wasted on filing tax returns.
We hope you found this article about “Why Are Taxpayers Leaving Behind Billions of Dollars at Tax Time?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business. Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most. They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges. Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Successful Entrepreneurs Share Unique Qualities In the dynamic landscape of business, entrepreneurship stands as a beacon of innovation and change. Behind every successful venture lies an individual with a unique blend of qualities that propel them toward success. Whether it’s a tech startup disrupting an industry or a small local business thriving in a competitive…
Tom Wheelwright sits down with Alan Olsen, Host of the American Dreams show to discuss tax free wealth. Transcript: Alan Olsen Welcome to America Dreams. My guest today is Tom wheelwright CPA, Tom, welcome to today’s show. Tom Wheelwright Thanks, Alan. It’s really always good to be with you. Alan Olsen I am really excited…
Determining The Best & Worst States for Wealthy Retirees Can be Subjective Retirement marks a significant phase in life, offering a new world of opportunities and choices. One critical decision for affluent retirees is selecting the right state to enjoy their golden years. In this post, we’ll explore the 5 best and worst states for…