Politicians decided to use the tax system as an incentive system. The IRS knows roughly how much money you made, there’s a handful of ways you could make money they wouldn’t know about like gambling winnings below $600.
What the IRS doesn’t know is if you installed new windows, had a child, donated to charity, paid state or local taxes, paid for daycare, went through adoption, paid tuition expenses, and more. All of those things can be used to reduce your tax burden, so you have to file taxes to tell the IRS how much you spent on these things.
There’s also the standard deduction, which negates most of those deductions and works for about 80% of the country.
Politicians decided to use the tax system as an incentive system. The IRS knows roughly how much money you made, there’s a handful of ways you could make money they wouldn’t know about like gambling winnings below $600.
What the IRS doesn’t know is if you installed new windows, had a child, donated to charity, paid state or local taxes, paid for daycare, went through adoption, paid tuition expenses, and more. All of those things can be used to reduce your tax burden, so you have to file taxes to tell the IRS how much you spent on these things.
There’s also the standard deduction, which negates most of those deductions and works for about 80% of the country.