Find Out What You Know About Income Tax History
If it seems like the income tax has been around forever, well, it’s sort of true.
The modern Form 1040 was unveiled in 1913. After paying for the Civil War, Americans were required to pay income taxes to the federal government. With the April filing deadline right around the corner, this fun quiz, first printed in our Newsletter, will test your knowledge about this very first individual income tax form.
With inflation still upon us, included are some great ideas to help manage your money and tips to help reduce your monthly bills. All this and suggestions on identifying and managing scams that are all too frequently targeting older Americans round out, read this month’s Newsletter.
As always, feel free to pass this information on to anyone that may find it useful and call if you have any questions or concerns.
The 1040 Individual Tax Form
The modern 1040 individual income tax form was introduced in 1913. Here’s a short quiz to see how well you know what was included on this very first tax form.
The Very First Form 1040
The Very First Form 1040. While Lincoln introduced the country to income tax to fund the Civil War, the modern 1040 individual income tax form was introduced in 1913. To find out what was included check out the remaining Q & A.
What was the due date of the initial 1040 tax form?
March 1, 1914. The first year Americans were required to report their income was 1913, with the tax return due March 1, 1914. Failure to file on time could lead to a fine of between $20 and $1,000. A 30-day extension could be granted by the tax collector because of sickness or absence. Today we have an additional 45 days to file our tax return (March 1 to April 15) and can file for a six-month extension.
What tax rate was applied to most incomes on this first Form 1040?
The tax rate applied to most 1913 tax returns was 1%.
If you had taxable income that exceeded $500,000, you became subject to the Super Tax. What was the rate on these earnings?
The tax rate was 6%. The maximum tax rate of 6% applied to taxable income that exceeded $500,000. The 1913 tax brackets were 1%, 2%, 3%, 4%, 5% and 6%, compared to our current tax brackets of 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
Was a marriage penalty built into the original Form 1040?
Yes. If single, your exemption amount was $3,000. If you lived with your spouse, your exemption amount was only $4,000. If you and your spouse worked (a rare event in 1913), you could divide the $4,000 exemption any way you wanted to minimize your taxes.
Name items that weren’t taxed on the original Form 1040 but are taxed on today’s form.
The most common untaxed items were dividends and net earnings from corporations. The double taxation of corporate earnings we experience today started in 1954.
True or False: All the original tax returns required a signed affidavit before an authorized officer of the government before being filed.
True. All properly-filed tax returns required affidavits made before an officer authorized by law to administer an oath of accuracy. This could be a justice of the peace, a magistrate, or a certificate from a court clerk. Mailing in your tax return was not an option.
Our Colorado Springs Location Information
Cash Tracks Financial Colorado Springs
525 N Cascade Ave #200
Colorado Springs, CO 80903