I guess it's a fair assumption you never once attempted to calculate your own taxes in the first decade of filing taxes? Did you just drop some papers off to an accountant the first year that you reached adulthood?
I've used an accountant occasionally, but only when I had genuinely confusing tax issues involving international work or work across many states where I wasn't sure whether there existed a "nexus" that required me to pay taxes in State A or State B. Even then I did my best to double-check their work, and often caught errors/omissions. Most of my friends also do their own taxes (and have since 2006), regardless if they were line cooks or painters or engineers or MBB consultants. So I'm just not familiar with the lifestyles that lead to this.
I'd actually understand it more for people who've entered the workforce since 2005, because TurboTax/etc became much more popular. I did taxes with my dad in the mid-90's before most homes had internet, and back then it seemed far more likely that people would understand how taxes worked, because there wasn't super-easy software to do it for you.
If you're in the lowest tax bracket making just above the poverty line, as I was then (as well as most people around me), it was what we all understood to be.
I was in that tax bracket for half my adult life (often did not have enough money to eat chicken and rice at home and just went hungry). I had to do my own taxes because I couldn’t afford an accountant and TurboTax starting taking the piss on their dark pattern pricing schemes. All of my friends at the time were also very poor, it was a giant recession and we worked in restaurants that weren’t getting customers. We got paid $2.65/hr so if we actually had a “good week” our paychecks were $0 (actually negative, honestly, but paychecks bottom out at $0) due to taxes on tips.
Now I’m even more confused. Accountants were genuinely expensive and none of my peers in my economic class could afford one.
At the risk of repeating myself: how did you file taxes for the first decade of adulthood? If you were too poor pay an accountant like I was…how did you misunderstand how to calculate taxes owed for ten years, but still arrive at the correct amount to pay? Did the IRS often return money to you saying that you over-paid? Did anyone ever try to correct your misconception?
I’m trying to understand this in more detail than just “memorize the fact that 50% of Americans were lied to by (someone?) about taxes, and also just blindly accept that there is some magic unknown to me which allowed them to not be affected by that misunderstanding through most of their adult life”.
You were in poverty when you had this misunderstanding. This other commenter bought a house while they had the same misunderstanding. (So, “being poor” isn’t the experience you both had in common while holding this misconception and can’t explain it for both of you). I’m trying to understand how that misunderstanding never affected either of you. I’m trying to understand how neither of you ever had to read about how to calculate taxes owed.
When you're in that tax bracket, there are plenty of tax break/benefit cliffs that are more impactful than tax rates. And they can certainly make your take-home pay go down if you accept a raise. See:
But that still doesn't explain the common denominator between a person living comfortably and a person in poverty both not understanding how tax brackets work or ever having to consider the most basic parts of how their own taxes are calculated, for so, so many years of their lives.
I've used an accountant occasionally, but only when I had genuinely confusing tax issues involving international work or work across many states where I wasn't sure whether there existed a "nexus" that required me to pay taxes in State A or State B. Even then I did my best to double-check their work, and often caught errors/omissions. Most of my friends also do their own taxes (and have since 2006), regardless if they were line cooks or painters or engineers or MBB consultants. So I'm just not familiar with the lifestyles that lead to this.
I'd actually understand it more for people who've entered the workforce since 2005, because TurboTax/etc became much more popular. I did taxes with my dad in the mid-90's before most homes had internet, and back then it seemed far more likely that people would understand how taxes worked, because there wasn't super-easy software to do it for you.