It doesn't necessarily tax everything but the IRS does seek God-level knowledge/insight into every transaction - and then it just exempts certain things based on size or other factors. If you are deducting charitable contributions to the church they actually do expect you to subtract out the value of coffee, meals, etc. Donate $100 to some non-profit that sends you a t-shirt as a thank-you? Your deduction is $87, not $100, because the t-shirt has to be valued at $13 or something similar that they consider reasonable. Somewhere they actually have federal employees tasked with determining this year's acceptable minimum value for a t-shirt.
The $20 gift from grandma is exempt, but not because they don't demand insight into intra-family transfers.. it's only non-taxable because of its size. If you have a rich grandma and she gives you $20k, that needs to be reported.. even if no tax is ultimately due, it probably reduces the future value of her estate tax exemption. Dying is a very complex taxable event!
If you want to follow the thousands of pages of rules to the letter - sufficient to sign a letter declaring under penalty of purjury, etc - the tracking and compliance burden on many US taxpayers is enormous, even with assistance from the commercial closed-source SW packages that you are more or less forced into buying each year because they won't let you e-file with them directly over HTTPS+JSON or whatever.
The $20 gift from grandma is exempt, but not because they don't demand insight into intra-family transfers.. it's only non-taxable because of its size. If you have a rich grandma and she gives you $20k, that needs to be reported.. even if no tax is ultimately due, it probably reduces the future value of her estate tax exemption. Dying is a very complex taxable event!
If you want to follow the thousands of pages of rules to the letter - sufficient to sign a letter declaring under penalty of purjury, etc - the tracking and compliance burden on many US taxpayers is enormous, even with assistance from the commercial closed-source SW packages that you are more or less forced into buying each year because they won't let you e-file with them directly over HTTPS+JSON or whatever.