In Australia, if you work in multiple places and at multiple companies, it’s still trivial to file your own taxes. You log in to the government portal, where the collected amounts of tax from each income source, including bank interest, is listed. It can get more complicated if you have your own business but for the majority of people it’s easy and doesn’t require a third party.
Australia has a progressive tax structure, right? If you have multiple income sources how does each source know the proper withholdings? How do they know what deductions you'll be eligible for or are wanting to take?
If it works anything like what we've got in Norway, they take a rough percentage, and once every year when the taxes are filed, the IRS equivalent charges or repays the missing amount.
That's how it works. You indicate if you want the company to take the tax free threshold (you only want to do this for one job if you have multiple), and then you can also elect to tell your employer(s) an estimated taxable income and they'll use that. Otherwise they just assume your income from that job is your taxable income.
At the end of the year you file online and put in your deductions, which hopefully cover any other taxable income (capital gains, dividends, interest, etc.) if you didn't give your employer a higher figure. Then you pay if you're owing or get a refund if not.
I don't understand how these could be issues. They aren't in my country.
You're still responsible.
Tell each company how much to withhold.
If they take too much, you get it back when you file taxes.
If they don't take enough, you pay a penalty for having too large of a bill when you file.
The issues you mention exist regardless of how many employers you have, because you can have income that does not come from an employer (e.g. stock dividends).
This sounds the same as the US then. If you have more than one income source or you're planning on taking something other than the standard deduction you need to tell your income sources to change withholdings. If they take too much, you get it back when you file taxes.
What's the big difference? You don't need a tax preparer to do your taxes in the US, and if all you have is a normal W-2 income and a bit of bank interest its a pretty simple couple of forms to file.
It's hard to tell if there's much of a difference or not since I don't really know the US system (and I'm, in all likelihood, from yet another country different than GP).
The simplest cases, however, don't really require filing forms at all. The withholding process sounds similar, and when the time for filing taxes comes, you get a pre-filled return sheet with withheld taxes and your pre-calculated actual tax based on the information the tax office has.
Employers directly report income to the tax office, so that information is already included. Banks also automatically withhold taxes on the interest they pay and report it to the tax office. I think banks and broker companies usually report sales of stocks etc. made through them as well.
The same pre-filled return sheet includes national and local income taxes that have been automatically calculated based on your place of residence. (I assume this is more complex in the US due to different state legislations; here the tax legislation is the same everywhere even though local tax rates vary.)
If you don't want to add deductions (in addition to standard ones) and you don't have any corrections to make, you don't need to file any forms. The only things you need to do are to pay the difference if you owe something or to report your account number for a refund if they don't have it already. Otherwise filing in a simple case is a no-op.
If you do want to file for deductions or make corrections, you can do that with an online form.
And of course you still do want to check that the pre-calculated information is correct and whether there are any non-automatic deductions for which you're eligible.
More complex cases are, well, more complex. If you've got income from renting an apartment, for example, you do need to report that information yourself. But it's still a relatively simple online form.
Real estate tax is handled separately from income tax. You get sent a bill with a pre-calculated sum based on property registered in your name. If you have no corrections to make, you just pay the bill.
In contrast, I think even small businesses commonly hire accountants since for them the process is probably more complex with all the deductibles etc.
If the simple cases are similarly simple in the US and making corrections is a relatively straightforward form away, I wonder why there always seems to be such a big fuss in the US about filing taxes. Because of state/local differences in tax code? Just overall complex legislation? Or maybe it's just more common to have income from a variety of sources so more people need to deal with the more complex cases? Is the filing process paper-only and the only way to do simple online filing with automatic calculation to go through commercial tax-filing software?
In the UK you get a code based on last year’s earnings, which the company uses to set a flat rate of withholding on each paycheck. If there’s any discrepancy that usually just feeds into next year’s code.
In Australia, you probably need to tell the companies about the other income sources, and they will attempt to withhold at the appropriate rate. Then at the end of financial year, you go to your pre-filled online tax return which has all the figures reported by each company you work for already present and sums up whether there’s a refund or payment due. This is also where you enter any deductions.
