What is a 1040 Form?

A 1040 form is the basic tax form which individuals use to file their tax returns.

The 1040 form summarizes information about an individual’s income and deductions and calculates whether the individual owes the government money or receives a tax refund.

Tax forms 1040 must be filed by the tax deadline, April 15, unless you file for an extension.

When Do I Use a 1040 Form?

All individuals filing a tax return will use a 1040 form whether they realize it or not. There are various 1040 forms, based on how complicated your taxes are.

  • When you input information into software like TurboTax Online, TaxAct or H&R Block, they fill out a 1040 for you.
  • If your tax situation is complicated, you may have multiple schedules (for example, Schedule A) that support the 1040 tax, but you are still using a 1040 tax form.

Other 1040 Tax Forms for 2013

If your taxes are not complicated, you may be able to use one of the simplified IRS 1040 forms:

How Do I Get My IRS 1040 Form?

If you are doing your taxes without the help of software or want to see what a 1040 form looks like, you can download the IRS 1040 form and 1040 instructions at the IRS website:

If you and any of your dependents have had a significant amount of medical expenses over this past tax year, you may be eligible to claim a medical tax deduction.

Medical Expense Threshold

The Medical Expense deduction is not meant to cover typical taxpayer expenditures from visiting a doctor a few times a year, filling one or two prescriptions, etc. In order to claim medical expenses as a deduction, you must prove that your health expenditures for the past year have made a significant dent in your budget. The way that you do this is by meeting a certain threshold of medical expenses in proportion to your income. By law, you may deduct only the amount by which your total medical care expenses for the year exceed 10% of your adjusted gross income for 2013.

Author’s Note: With the healthcare reform law, the threshold amount was raised from 7.5% to 10% for the 2013 tax year:

  • Medical Expense Deduction Threshold for 2012: 7.5%
  • Medical Expense Deduction Threshold for 2013: 10%

What Can and Cannot be Included in the Medical Expense Deduction

According to the IRS, medical care expenses include “payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.” As with any regulation, this definition is not clear cut in what is and is not included.

Here are some examples that are not included in meeting the medical expense deduction:

  • Funeral or burial expenses
  • Over the counter medications
  • Toiletries (toothpaste, cosmetics, etc.)
  • Most cosmetic surgery
  • Nicotine gum/patches that do not require a prescription
  • Maternity Clothes
  • Health Club Dues

Some other rules also apply. For example, you cannot prepay medical services and take the amount as a tax deduction; the medical expenses can only be used towards your itemized deductions once the service has been rendered. Also, any medical expenses paid with pre-tax dollars cannot be claimed towards the itemized deduction (think Flexible Spending Accounts where you already receive a tax benefit). In addition, you cannot use the medical expense deduction if you are claiming the same amount under the Self Employed Health Insurance Deduction. One final rule is that the amount of premium paid by your employer does not count towards the threshold.

Here is a comprehensive list of what can and cannot be included in meeting the threshold to claim the medical tax deduction.

What is the Earned Income Tax Credit?

The earned income tax credit (EITC) is an incentive to work for low to moderate income individuals and families.

The earned income credit is refundable, which means that even if you don’t owe any taxes, you can still get a refund.

2016 Earned Income Tax Credit Income Limits

***We will update this page soon with requirements for this year. If you need it updated right away, feel free to drop us a note!

The maximum 2016 income for your tax return filed in 2017 (earned income and adjustable gross income) for the IRS EITC is as follows:

  • Three or more qualifying children: You must earn less than $47,955 ($53,505 married filing jointly).
  • Two qualifying children: You must earn less than $44,648 ($50,198 married filing jointly).
  • One qualifying child: You must earn less than $39,296 ($44,846 married filing jointly).
  • No qualifying children: You must earn less than $14,880 ($20,430 married filing jointly).

EITC Tax Credit Requirements

  • Qualifying children must meet relationship, age, and residency tests, which is different than the dependent rules.
  • If you don’t have children, you must be age 25 – 64 to qualify for the earned income credit.
  • To get the earned income tax credit, you must have earned income and file a tax return.
  • You cannot claim foreign earned income.
  • Your investment income must be $3,400 or less.
  • You cannot use the married filing separately filing status.

In addition, you must have a SSN and be a U.S. citizen or resident alien all year to claim the 2016 EITC credit.

EITC Will Delay Your Tax Refund

If you claim the earned income tax credit, your entire tax refund will be delayed until February 15. For more information, see IRS Will Delay Tax Refunds if You Claim These Tax Credits.

More information on EITC tax is available in Publication 596.

EITC Calculator

To calculate the amount of your earned income credit, use the tax calculator.

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Teachers often spend money out of pocket on supplies for their classroom. If you are a teacher make sure you are taking advantage of a tax deduction specifically for you.

The Educator Expense Deduction, which is also referred to as the tax deduction for teachers, is a $250 tax deduction.

What is the Educator Expense Deduction?

If you are an eligible educator as defined by your state, you can deduct any unreimbursed expenses you occurred for your classroom during the school year. This deduction can consist of anything that you spent money on for your classroom that came out of your own money and you were not reimbursed for by the school.

Expenses can include any books, supplies, computer equipment, software, and other supplementary supplies. For physical education or health related classes, any equipment related to athletics can be deducted.

Who Can Claim the Educator Expense Deduction?

Eligible educators are grade school and high school (kindergarten through grade 12) teachers, instructors, counselors, principals, and aides. This deduction is not eligible for parents who home school their children.

You also have to work 900 hours during the school year to qualify for the deduction.

Educator Expense Deduction Rules

You cannot claim both a deduction for Educator Expenses and the same deduction for Unreimbursed Employee Expenses.

In addition, the expenses must exceed any tax-free withdrawals from:

Educator Expense Tax Deduction

The deduction is the total amount you spent in this tax year. You can deduct up to $250 or $500 if you are married filing jointly and both spouses are educators.

This deduction is one of adjustments that will lower your Adjusted Gross Income. Claim your educator expense deduction 2014 on line 23 of Form 1040 or line 16 of Form 1040A. You do not need to itemize to claim this tax deduction.

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With the New Year comes the inevitable… tax time. Just writing those two words sends chills down my spine. Not because I dislike completing my taxes, but because this time of year reminds me of what is easily my worst job ever. I worked on New Year’s Day. I worked 14 hour days for the first two weeks of January for three years preparing the 1099’s for mutual funds. It was not fun at all. I know that many readers dislike tax time. I’m here to hopefully help to take some of the pain out of tax time for you.


Taking The Pain Out of Tax Time

Get Organized

The more organized you are, the smoother tax time will be for you. I cannot guarantee that it still won’t have its ups and downs, but the ride will be much smoother. To help me stay organized, I have a folder where I put anything related to taxes in during the year. This includes any copies of donations I made, tax bills I paid (think real estate taxes) as well as 1099’s and W-2’s.

To keep my 1099’s in order, I place a sticky note on the front of the folder and list out all of the 1099’s that I expect to receive from financial institutions. The first year I did this, I missed some of the firms, but when I received the 1099, I added them to the sticky note. As the years have passed, I now have a complete list of the 1099’s I am expecting. Since I don’t move my investing accounts and bank account around, the list tends to stay static.

All of this helps me to know when I can begin working on my taxes. By having a list of the forms I am expecting, I know when I have everything I need to begin my taxes. Additionally, by having all of my tax documents already in one place, I save myself time and the frustration of trying to find them.

Understand The Dates

Other than the deadline to file your taxes, you only need to be concerned with one other date: January 31st. This is when companies have to send out your 1099’s. What this means is that you can’t begin your taxes until after this date – assuming you have 1099 income (think interest and dividends from bank accounts and investment accounts). That leaves you with a window of mid-February to mid-March to tackle your taxes.

I say mid-February because some investment firms hold on to your 1099 until the middle of February. This is because there are times when mutual funds need to correct their distribution amounts. Instead of confusing you and sending you two 1099’s – an original and a corrected – they hold off and just send you one.

Schedule Your Appointment or Block Off Time

If you do your taxes yourself, as I have done for many years, make it a point to block off a Saturday or Sunday to complete your taxes. This includes Federal, State and Local taxes. I found that by having a set day to prepare my taxes helped me get them done quicker.

If you hire a professional to complete your taxes for you, schedule you meeting early – late February or early March. If you schedule your appointment with your tax accountant the week before April 15th, you are adding unneeded stress to your life. You know that there will be questions you need to answer as well as having to find a missing statement or form. The more time you have to answer any question or find documents, the less stressed you will be. For many, the sooner you get your taxes done, the happier you will be. So don’t suffer by putting off your taxes, get them done!

Change Your Outlook

Many people dislike paying taxes simply for the fact that they are giving up some of their hard earned money. I understand this completely. But this is negative thinking. Learn to think more positively. The more you pay in taxes means the more successful you were last year and the more money you made. Celebrate that! Paying taxes simply means you went out there and worked hard all year long.

At the end of the day, is paying 25% or 33% (How do tax brackets work?) of what you make really the end of the world? No! (In fact, what you actually pay in taxes in probably less than that when you take into account deductions, credits, and exemptions.) Be happy that you live in a place where you are free to be successful and you have a government that isn’t 100% corrupt. Your tax dollars go to help make this country a much better place than it would be without the tax revenue. So instead of hating taxes and thinking that the government is stealing your money, be proud of how successful you are.

Final Thoughts

At the end of the day, taxes are a necessary part of life. Instead of getting bent out of shape when tax time rolls around, do the things you can control to make the process much easier and less stressful for you – get organized, don’t procrastinate and have a positive outlook on things. Doing these will make tax time much more bearable and you won’t waste your energy worrying during the first three and a half months of the year.

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There’s a growing trend in today’s wayward economy. It started before the actual Recession hit, but has certainly gained momentum in the five years since the stock market crashed. The trend is in bringing in side income. Not only are we being told to hold down a good-paying full-time job, but weekends and evenings should be spent bringing in side money, working a part-time job, or building a business.

Of course, people have been doing this for years, both out of necessity and out of the desire to earn more income. However now, the reasons for doing so have changed. Jobs became scarce for some during the Recession, and the amount of time that employees stay at one particular job has dramatically increased. No longer are we able to rely on our employer to keep us on and pay our health insurance and pension needs. Instead, we have to rely on ourselves and our own abilities to bring in money. This means that it is a great idea to have a Plan B. And why not start Plan B while still going with Plan A, your full-time job?

My History of Extra Income

I’ve done this myself. From March 2009 until February 1, 2013, I worked a full-time job as well as worked on the side building up my online blogging and freelance business. Working four ten-hour days at my day job, I then spent Friday-Sunday writing, tweaking my blog, and gaining an audience. It paid off; as of February 1stI quit my day job in order to pursue my writing and blogging full-time. Being able to test the waters and build the business while still earning a full salary was key in how I’ve found myself where I am today. But I’ve also realized that doing the side business on top of a full-time job really lowered my family’s risk in the event of layoffs and other life transitions.

So, what are the tax consequences of taking on side income or part-time jobs?

Do You Pay Taxes on Extra Income?

This one is easy to answer: income is income, no matter if it is through a full-time job, part-time job, or from mowing someone’s lawn (this could include your kids’ side income as well). So long as you meet the minimum criteria for having to file taxes, then you need to include any of your extra income.

You have to pay taxes on extra income.

Are Taxes Typically Withheld from Side Income?

I have worked many jobs to bring in extra income over my life: farm stands, driving Amish to appointments, and side income from my current business. In none of these circumstances was any tax withheld from my pay. That doesn’t mean that all extra income will work this way, as typically a part-time job will automatically withhold taxes. However, be aware that if taxes are not automatically withheld, it does not mean you do not owe them. When you receive your forms at the end of the year or during tax season, then you will need to pay taxes owed.

Because of this, it is a good idea to set aside part of each paycheck in an account earmarked towards tax obligations. Otherwise, you may not have the money required when you file taxes.

Common Tax Forms from Side Income and Part-Time Jobs

You could be classified as an employee, or as an independent contractor by someone. Some may not classify you as anything, such as if you are mowing people’s lawns and they do not want to report anything to the IRS. Depending on how you are classified, you will receive certain forms.

  • If you are an “employee”, then you should receive a W-2 form (just like from your full-time job). Income, taxes withheld, and the information on this form was generated by a W-4 you filled out at the start of your employment.
  • If you are an independent contractor and have earned over $600 from one company or person, then you will likely receive a 1099-MISC.
  • If you were paid in cash, then you will likely not receive any tax form. In this case, you need to keep an accurate record of the money that you earn and report all of this on your tax return.

Consider the Tax Impact of Extra Income

Earning extra income is a smart move in this economy, and with the changes in our employment works. However, you should weigh the extra money gained against time lost for you personally and to spend with family and friends (of course if you need the money, then you don’t have this luxury). The way to do this is to figure out how much you will make after taxes by knowing your estimated tax bracket, and then seeing if you are still making a decent hourly wage. Will this extra income put you into a higher income tax bracket? Even if your answers to these two questions are not positive ones, if you are building a side business, or genuinely enjoy the extra work, then this could still be a good deal for you.

Do you earn extra income outside of a full-time job? What do you do?

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With only four months left in 2013 (where did the time go?), now is a good time to look over your finances. I usually look over my tax situation for the year in September because it gives me plenty of time to make any necessary adjustments. If you wait until December, it might be too late. Likewise, if you wait until you file your taxes in 2014, you will have missed out on some benefits. Let’s take a look at areas to review.


Photo Courtesy: Stuart Miles

Financial Areas to Review

  1. Determine Your Taxable Income. The first thing you should do is look at your taxable income for the year. Is it the same as last year or higher or lower? Did you get a nice sized refund last year and are expecting the same this year? Depending on your answers, you may want to look into deferring more of you paycheck into your 401(k) account to shelter the income from taxes.
  2. Adjust Your HSA. Another area to look at is your health savings account (HSA) if you have one. Calculate how close you are coming to the maximum annual contribution ($3,100 for individuals in 2013) and make an adjustment to get there. While you don’t have to have your employer adjust your withholding, it makes sense to go this route.

    When you employer takes your HSA contribution from your paycheck, you pay zero tax on that money. When you contribute money to your HSA on your own, you will be able to get a write off on your taxes for federal income tax, but you still paid FICA and Social Security tax on that money. Save yourself some money and just have your employer take the contribution from your paycheck.

  3. Review Your Filing Status. The next area to look at is your personal situation. Are you having a child this year? How about getting married? Understand that when it comes to marriage, whatever your tax filing status is on December 31st, that is how the IRS considers you for the entire year. So regardless when in 2013 you were married, if you are still married on December 31st you are considered married for the year. This can impact your taxes in a large way depending on your incomes.

    I have a friend who makes a large amount of money while her spouse doesn’t make much. But, when you combine their salaries, they are pushed into a higher tax bracket. If he contributes the majority of his paycheck to his 401(k) – limited to $17,500 in 2013 for those under 50 years old – they can avoid this situation. If they didn’t do this, they would have had a nasty tax bill come April 15th, 2014 since their withholdings are still based on filing single.

  4. Contribute to Your IRA. A final area to look at is IRA accounts. When the year starts out, many of us make the goal of funding our IRA accounts to the maximum for the year. But at some point during the year, that goal gets pushed aside. While you can still contribute to an IRA until the tax deadline next year, depending on how much you can still contribute determines when you should contribute. For some, contributing $5,000 at one time is not doable. By contributing each month over the next seven months, your savings in your IRA account will start to add up.

Final Thoughts

These are just a few of the important areas to look at when it comes to taxes. It’s never too early to think about taxes. It’s not a fun subject to talk or write about, but the more money you can shelter from the government, the more of your money you get to keep.  To me, keeping as much of my money as possible makes spending an hour in September reviewing my tax situation worth it.

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If you reference Obamacare and 2014 in the same sentence, prepare to get a plethora of comments from the group you are speaking with. This is because many additional provisions of the new Patient Protection and Affordable Health Care Act (typically referred to as “Obamacare”) go into effect in that year. Some people are happy about these provisions, while others foretell economic devastation, massive layoffs, and a Wall Street collapse.

Politics aside, it’s important for us to understand how one of these new provisions will affect us beginning January 1, 2014. This provision I am talking about is the fee, or insurance penalty tax, that will be assessed on people who do not have an acceptable health insurance plan.

2014 Health Insurance Penalty Fee

Beginning January 1, 2014, people who do not carry health insurance (and who can afford it) will be charged an annual fee. And this annual penalty fee does not give you actual health care coverage. Paying this insurance penalty fee is like getting a speeding ticket where you do not benefit at all and still have to pay something. The penalty is also referred to as the Obamacare tax or Obamacare penalty.

The reason this fee was imposed is because of the huge costs to the taxpayer when uninsured people end up in the hospital and other urgent care facilities. When people do not carry health insurance and show up at hospitals and other facilities the hospitals treat them, and then charge them amounts that are many times never paid. Someone has to pick up the tab on this, and it’s typically taxpayers. By imposing a fee on the uninsured, the government hopes to get more people onboard with health insurance plans, thus reducing the overall cost.

How Much is the Penalty for No Health Insurance?

The penalty tax for going without health insurance by year is the higher of 1% of income or $95 per adult/$47.50 per child (up to $285 per family) in 2014. For the years 2015 and beyond see How Much is the Penalty for No Health Insurance?

You will report the health insurance premium tax credit penalty on your tax return.

What Counts and Doesn’t Count as Minimum Essential Coverage

In order to avoid the Obamacare penalty, you must have minimum essential coverage or be determined to be unable to pay the fee (more on this below). According to this law, minimum essential coverage includes the following: any Marketplace plan, or any individual insurance plan you already have, employer-sponsored plans (including COBRA, and retiree plans), Medicare, Medicaid, the Children’s Health Insurance Plan (CHIP), TRICARE, Veterans’ healthcare programs, and Peace Corp Volunteer Plans. If your plan is not one of these, call your provider and ask if the plan counts or not. Plans that cover only dental/vision, worker’s compensation, coverage for a specific disease or condition (like cancer insurance), or plans that only offer discounts for medical services do not count as minimum essential coverage.

Open Enrollment Period

Let’s say for whatever reason you have lost your health insurance coverage or never had any to begin with. If your employer does not offer a plan, then your next step is to shop around through something called The Marketplace. Think of shopping around for healthcare insurance sort of like you currently shop around for car insurance on an aggregate site where you get multiple quotes and offers at the same time. All plans offered through The Marketplace will be state-certified and approved according to the state where you reside. Also, some plans will be discounted with subsidies depending upon your income level via the New Health Insurance Premium Tax credit. To see the plans and if you are eligible, you can use the online questionnaire. The discounts will not apply if you go through that individual insurance company’s website; it will only apply by going through The Marketplace.

When Can You Sign Up?

The Marketplace has not been built yet; the goal is to launch it in the fourth quarter of 2013. Open Enrollment begins on October 1, 2013, which is when you can sign on and begin your healthcare search for plans that will begin on January 1, 2014. Update: The Deadline for Obamacare is Delayed.

How to Get Out of Paying the Obamacare Penalty Fee

Only uninsured people will need to pay the fee. If you are uninsured and any of the following applies to you, you do not have to pay the penalty for Obamacare mandate:

  • You are uninsured for less than 3 months of the year
  • It is determined that your income is very low, making coverage unaffordable (specifically if you make too little income to be required to file a tax return)
  • If you would qualify for the new income limits for Medicaid but your state has chosen to not expand Medicaid eligibility
  • If you are a member of a federally-recognized Indian tribe
  • If you participate in a healthcare sharing ministry
  • If you are a member of a recognized religious sect with objections to health insurance

Even if you do not meet one of these exceptions, you can still apply for an exemption through The Marketplace. Instructions on how to apply for an exemption will be in a future article as The Marketplace becomes available.

Do you currently have healthcare insurance? How do you feel about the insurance penalty fee?

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While tax season may have wrapped up for this year, there’s already some buzz about a new tax topic for next year, the Health Insurance Premium Tax Credit and health insurance subsidies which will begin on January 1, 2014.

What is the Health Insurance Tax Credit?

The new health care premium tax credits are part of the Health Care Reform Bill called the Affordable Care Act (ACA). The tax credits will be used to purchase health insurance through the new health care exchanges.

Health Insurance Tax Credit

The Health Insurance Tax Credit is:

Refundable. The health care tax credit is refundable, which means you can receive a tax refund even if the credit is more than your total tax.

Advanceable. You can receive the tax credit in advance of filing your tax return to help pay for your premiums. However, if you take an advance of the tax credit, you will have to calculate the actual tax credit when you file your tax return. If your actual health insurance tax credit is less than the amount of money that was advanced, you will have to repay the difference. However, repayments will be capped based on income.

Who is Eligible for the Health Insurance Premium Tax Credit?

Eligibility for the health care tax credit is based on the following:

  • You must purchase health insurance through the new insurance exchanges.
  • Your household income for the tax year is between 100% and 400% of the Federal Poverty Level (FPL).
  • If you are eligible for other coverage (Medicare, Medicaid or affordable employer coverage) you are not eligible for the tax credit.

Health Care Tax Credit Amounts

What is the amount of the tax credit?

The tax credit will adjust the annual premiums you pay to be a percentage of your household income. Annual premiums for those who qualify will not exceed 9.5% of household income. The contribution percent goes from 2% at the 100% of FPL to 9.5% at 400% of FPL. There is a helpful chart showing the contribution percentages at each income level on page 5 of this document from the NCSL.

What is Federal Poverty Level?

The 2013 Federal Poverty Level income ranges for 100% of FPL to 400% of FPL are:

  • 1 Person Household: $11,490 – $45,960
  • 2 Person Household: $15,510 – $62,040
  • 3 Person Household: $19,530 – $78,120
  • 4 Person Household: $23,550 – $94,200
  • 5 Person Household: $27,570 – $110,280

You can see the complete Federal Poverty Level ranges for various sized households.

What is household income?

Household income for the tax credit is defined as Modified Adjusted Gross Income. MAGI currently excludes income that is tax deferred under 401ks.

Health Insurance Tax Credit Calculator

Calculating the tax credit based on your family size, age, and income is best done with one of the health care tax credit calculators.

As soon as the tax credits are finalized, we will add the calculations to our tax calculator for next year.

The ACA Cliff

If you play around with the calculator, you’ll notice the large “cliff” at the end of the tax credit. For example, for my family of 5, to qualify for the health insurance tax credit at the 400% level, the tax credit is $2503. This is based on a premium of $13126 and an income of $111,823. If the household income goes up to $111,824 (or you earn $1 more), the tax credit drops to $0. Essentially, the extra dollar is taxed at a rate of 250300%.

If you plan to use this tax credit and your income is near the cliff, it will be very important to not only understand tax brackets, but also understand how the cliff can dramatically impact your taxes.

You can see an illustration of how the cliff works in detail on the Obamacare Cliff website.

Claiming the Premium Tax Credit

Filing a tax return. Even if you don’t normally file a tax return, because you don’t normally meet the minimum income to file taxes, this will be a case where you will need to file a tax return to claim the tax credit.

Filing Status. Your health insurance credit will depend on your filing status. If you are married, you must file jointly to claim the health care tax credit. In addition, if someone else claims you as a dependent, you will not be eligible for the health insurance subsidies.

Tax Penalties. The Individual Mandate and tax penalties for skipping health insurance will also go into effect at the same time as the ACA tax credit.

For more, see How to Claim the Health Insurance Premium Tax Credit.

Health Care Tax Credit Helpful Resources

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The annual tax deadline is here. Is your return done… or is it time to file an extension? If you are done, it’s time to celebrate with some fun tax facts. You might think to yourself that it is an oxymoron, since taxes can’t be fun. I’m not here to talk to you about the 1040, your 1099 or the sales tax deduction. No, I am here to point out some of the more interesting facts about taxes. Hopefully by the end of this post, you will have a smile on your face, or at least learned a new fact – that isn’t boring!

tax facts

Photo Courtesy: Stuart Miles; Free Digital Photos

Did You Know…

  • The IRS sends out 8 billion pages of forms and instructions each year? If you laid all of this paper out, end to end, the trail would stretch around the Earth 28 times!
  • There are over 7 million words in the tax law and tax regulations. That is more words than the Declaration of Independence (1,337 words), the Gettysburg Address (269 words), and the Bible (773,000 words) combined.
  • Added to the above, the 1040EZ Form, which is the form people fill out when they have a simple tax situation, has 33 pages of instructions. Talk about an oxymoron!
  • The first income tax was created in 1861 during the Civil War to help finance the war effort.
  • In 1894, Congress passes the Wilson-Groman tariff which taxed income over $4,000 at 2%. The following year, the Supreme Court overturned the tariff.
  • The first e-file (electronic transmission) of a tax return took place on January 24, 1986.
  • According to estimates, there are approximately 1.2 million tax preparers in the United States.
  • Effective in 2006, the Treasury Department said it will no longer collect the 3% federal excise tax on long-distance calls. The tax was imposed in 1898 to help pay for the Spanish-American War. The Treasury said it was conceding its battle to uphold the tax after five appeals courts declared it illegal.
  • American taxpayers spend $200 billion and 5.4 billion hours working to comply with federal taxes each year. That is more time than it takes to produce every car, truck, and van in the United States in a year.
  • Pennsylvania’s alcohol tax was designed to help the city of Johnstown, which had a devastating flood in 1936. That tax is still collected and brings in $200,000,000 a year.
  • Blueberries from Maine are subject to specific tax: Anyone who grows, purchases, sells, handles, or processes blueberries in Maine has to pay a penny and a half tax per pound.
  • Over the past 30 years, car accidents have consistently increased by 6% on that date when taxes need to be filed.
  • President Obama’s 2011 tax return reported adjusted gross income of $789,674. Their tax liability was $162,074, giving them an effective tax rate of 20.5%.
  • The IRS spends $2.45 for every $100 that it collects in taxes. (We need these guys to start running the country!)

Final Thoughts

There are certainly some interesting tax facts that I have included in this list. I am sure there are plenty more as well. Do you know of any interesting facts about taxes? Have you heard any of the ones I listed? Share away!

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