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50 Interesting and Fun Facts to Lighten Up Tax Time

Fun Tax Facts by Jerry Jones, CPA

Incoming!

"Fun tax facts" may seem like an oxymoron, but sometimes taxes can be amusing. From a tax on beards in czarist Russia to an American astronaut who forgot to pay his taxes before heading into space, here are 50 unusual, funny, interesting — and sometimes practical — tax-related tidbits.

Taxes Go Way Back

Governments have imposed taxes for thousands of years. There are recordings of tax payments made in ancient Mesopotamia circa 2500 B.C. At the time, people who didn't have money to pay taxes often had to pay with livestock, food, or labor.

We Tried a Flat Tax

America’s tax laws have been in flux for generations and remain so to this day. The first income tax in the United States came about with the Revenue Act of 1861. A flat 3% tax on income above $800 was used to fund the Civil War and repealed 11 years later. In 1894, a new flat federal income tax was ruled unconstitutional by the U.S. Supreme Court. It was not until the 16th Amendment was ratified in 1913 that the federal income tax finally stuck for good.

Tax Day Used to Be in March

Federal tax returns were not always due April 15. In 1913, March 1 was the big day; in 1918 it was moved to March 15; and finally in 1954 the current Tax Day was established as April 15. (Until this year, when it was delayed due to the coronavirus.)

Withholding Started Because of a Cash Crunch

In the 1940s, the government needed a steady flow of cash to fund the war effort. It passed the Current Tax Payment Act of 1943, which required that companies withhold income taxes from employees' paychecks and make ongoing payments on employees' behalf. Before this (from 1916 to 1943), Americans paid income taxes quarterly or annually.

Few People Owed at First

Before World War II, few individuals or families owed income taxes. Due to a high personal exemption, only 1.1% of working-age people filed a return, according to the Tax Foundation, and about 17% of those filers did not have to pay income taxes.

Many People Pay No Tax Now

According to the Tax Policy Center think tank, 42.8% of tax filers will owe no individual income tax or have negative taxable income for 2020.

The Average Refund Is Worth Thousands

As of Feb. 21, the average income tax refund was $3,125, according to the Internal Revenue Service. With 48 million individual returns processed, the IRS has paid out more than 37.5 million refunds.

1040EZ Is Gone

Because of the 2017 Tax Cuts and Jobs Act, the simple 1040EZ form is now gone, along with the 1040A and the standard 1040. They have all been replaced by a redesigned 1040 form.

Even Einstein Didn’t Understand Taxes

Albert Einstein apparently found taxes more inscrutable than theoretical physics. He once said, "The hardest thing in the world to understand is the income tax" (that is, according Leo Mattersdorf, the math genius' tax preparer).

Tax Prep Time Really Adds Up

According to the IRS, the average time it used to take to complete a Form 1040 was 16 hours; a 1040A took seven hours; and a 1040EZ took five hours. Overall, the average was 13 hours. In 2019, the IRS processed more than 154 million individual tax returns, equivalent to about 83.4 million days' worth of prep time.

There’s Only One Way Out

Aside from the nation of Eritrea, in Africa, the United States is the only country that requires citizens to pay taxes on their income if they work and live outside the country. Some wealthy individuals have renounced their citizenship and moved to another country to avoid paying taxes.

There’s Another Tax Day on the Calendar

Americans collectively had to work until April 16 last year — 106 days — to pay the country's tax burden, according to the Tax Foundation, which has declared that date Tax Freedom Day. On a state-by-state basis, New York residents had to work the longest, until May 3. Residents of Alaska and Louisiana had the earliest Tax Freedom Day, March 25.

 

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The Selfstorage CPA
Jerry Jones, CPA
775.828.0767
fax 775.348.9518
jerry@theselfstoragecpa.com