Ken,
April 15 has come and gone. If you're like most clients, your return feels like an exercise in confusion and red tape. Have you ever wondered just how the system got so complicated? Was it always this hard just playing by the IRS rules?The IRS published the first Form 1040 back in 1913. (Click here to see a copy for yourself.) It weighed in at a whopping 3 pages, plus a fourth for instructions.You didn't have to file a return unless you had a net income of $3,000 or more. That doesn't sound like much today. But it works out to about $65,000 in today's dollars. So someone back in Washington was taking "middle class tax relief" seriously!The tax itself started at a whopping 1% on income up to $20,000. It climbed to 2% on the next $30,000, 3% of the next $25,000, and rose all the way to 7% of income above $500,000. Those of you earning today's equivalent (roughly $10,870,000) would probably love to pay just 7%!Your "net income" included your salary or wages, business income, interest and dividends, rents, partnership proceeds, fiduciary proceeds, plus "income derived from any source whatever, not specified or entered elsewhere" on the form. The IRS very quickly established that everything was taxable, unless specifically excluded.Of course, you could deduct all sorts of expenses, including "necessary expenses actually paid in carrying on business," any interest you paid, any state or local taxes you paid, and even "losses actually sustained during the year incurred in trade or arising from fires, storms, or shipwreck." (That last deduction survives to this day, although the Somali pirates may be the only ones deducting shipwreck losses.)There were no deductions for "personal, living, or family expenses." But you could take a "specific exemption" of $3,000 if you were single or $4,000 if you were married. There was no head-of-household status, no earned income or child tax credit, and no stimulus package to consider. This was long before the Tax Code had become so complicated that Jimmy Carter would call it "a disgrace to the human race."Once you were done, you signed your return, had it notarized, and filed it with the Collector of Internal Revenue for the state where you lived or had your principal place of business. The due date was March 1, and the penalty for failing to file ranged from $20 to $1,000.Oh, and you didn't have to worry about including your Social Security number because Social Security numbers hadn't been invented yet!The tax system has certainly changed since 1913. You can count on it to change more as we move forward -- and you can count on us to help you make the most of every opportunity to save. Be sure to call us with any questions!
William T Zumwalt CPA, PLLC5416 South Yale AveSuite 120Tulsa, OK 74135918-583-1040
http://www.teamzumwalt.com/
April 15 has come and gone. If you're like most clients, your return feels like an exercise in confusion and red tape. Have you ever wondered just how the system got so complicated? Was it always this hard just playing by the IRS rules?The IRS published the first Form 1040 back in 1913. (Click here to see a copy for yourself.) It weighed in at a whopping 3 pages, plus a fourth for instructions.You didn't have to file a return unless you had a net income of $3,000 or more. That doesn't sound like much today. But it works out to about $65,000 in today's dollars. So someone back in Washington was taking "middle class tax relief" seriously!The tax itself started at a whopping 1% on income up to $20,000. It climbed to 2% on the next $30,000, 3% of the next $25,000, and rose all the way to 7% of income above $500,000. Those of you earning today's equivalent (roughly $10,870,000) would probably love to pay just 7%!Your "net income" included your salary or wages, business income, interest and dividends, rents, partnership proceeds, fiduciary proceeds, plus "income derived from any source whatever, not specified or entered elsewhere" on the form. The IRS very quickly established that everything was taxable, unless specifically excluded.Of course, you could deduct all sorts of expenses, including "necessary expenses actually paid in carrying on business," any interest you paid, any state or local taxes you paid, and even "losses actually sustained during the year incurred in trade or arising from fires, storms, or shipwreck." (That last deduction survives to this day, although the Somali pirates may be the only ones deducting shipwreck losses.)There were no deductions for "personal, living, or family expenses." But you could take a "specific exemption" of $3,000 if you were single or $4,000 if you were married. There was no head-of-household status, no earned income or child tax credit, and no stimulus package to consider. This was long before the Tax Code had become so complicated that Jimmy Carter would call it "a disgrace to the human race."Once you were done, you signed your return, had it notarized, and filed it with the Collector of Internal Revenue for the state where you lived or had your principal place of business. The due date was March 1, and the penalty for failing to file ranged from $20 to $1,000.Oh, and you didn't have to worry about including your Social Security number because Social Security numbers hadn't been invented yet!The tax system has certainly changed since 1913. You can count on it to change more as we move forward -- and you can count on us to help you make the most of every opportunity to save. Be sure to call us with any questions!
William T Zumwalt CPA, PLLC5416 South Yale AveSuite 120Tulsa, OK 74135918-583-1040
http://www.teamzumwalt.com/
Ken Rutherford,CRS
kensellshomes
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