History Form 1040

1 history

1.1 original form structure , tax rates
1.2 subsequent changes
1.3 changes complexity , tax rates
1.4 cost of filing

history
original form structure , tax rates

the first form 1040 published use tax years 1913, 1914, , 1915. 1913, taxes applied march 1 december 31. original form 1040, available on irs website elsewhere, 3 pages , 31 lines long, first page focused on computing 1 s income tax, second page focused on more detailed documentation of 1 s income , third page describing deductions , including signature area. there additional page of instructions. main rules were:

the taxable income calculated starting gross income, subtracting business-related expenses net income, , subtracting specific exemptions (usually $3,000 or $4,000). in other words, people net incomes below $3,000 have pay no income tax @ all. inflation calculator used bureau of labor statistics estimates corresponding amount in 2015 dollars $71,920.
the base income tax rate on taxable income 1%.
high earners had pay additional taxes. first high-earning tax bracket, $20,000–$50,000, has additional tax of 1% on part of net income above $20,000. thus, taxable income of $50,000 (over million dollars in 2015 dollars according bls) pay total of $800 (1% of $50,000 + 1% of $(50,000 − 20,000)) in federal income tax. @ time (when united states whole poorer) these higher taxes applied fewer 0.5% of residents of united states.

just on 350,000 forms filed in 1914 , audited.

subsequent changes

for 1916, form 1040 converted annual form (i.e., updated each year new tax year printed on form). initially, irs mailed tax booklets (form 1040, instructions, , common attachments) households. alternative delivery methods (cpa/attorneys, internet forms) increased in popularity, irs sent fewer packets via mail. in 2009 practice discontinued.

with current tax payment act of 1943, income tax withholding introduced. individual income tax act of 1944 created standard deductions on 1040.

in 1954 tax return deadline changed april 15.

form 1040a introduced in 1941 simplify filing process.

form 1040ez introduced internal revenue service 1982 tax year. title of 1982 form income tax return single filers no dependents.

electronic filing introduced in limited form in 1986, passage of tax reform act of 1986, , starting 1992, taxpayers owed money allowed file electronically. electronic federal tax payment system, jointly managed irs , financial management service, started in 1996 , allowed people make estimated payments.

changes complexity , tax rates

the complexity , compliance burden of form , associated instructions have increased considerably since 1913. national taxpayers union has documented steady increase in complexity 34-line form in 1935 79-line form in 2014, while quartz created animated gif showing gradual changes structure , complexity of form. ntu table below:

the number of pages in federal tax law grew 400 in 1913 on 72,000 in 2011. increase in complexity can attributed increase in number , range of activities being taxed, increase in number of exemptions, credits, , deductions available, increase in subtlety of rules governing taxation , edge cases explicitly spelled out based on historical experience, , increase in base of taxpayers making necessary offer longer, more explicit instructions less sophisticated taxpayers. example, whereas initial versions of form 1040 came rate schedule included in tax form itself, irs publishes complete tax table taxable income $100,000 people can directly tax liability taxable income without having complicated arithmetic calculations based on rate schedule. irs still publishes rate schedule people can compute approximate tax liability, , lets people incomes of on $100,000 compute taxes directly using tax computation worksheet.

in addition increase in complexity of form, tax rates have increased, though increase in tax rates has not been steady (with huge upswings , downswings) in contrast steady increase in tax complexity.

cost of filing

for tax return preparation, americans spent 20% of amount collected in taxes (estimating compliance costs , efficiency costs difficult because neither government nor taxpayers maintain regular accounts of these costs). of 2013, there more tax preparers in (1.2 million) there law enforcement officers (765 thousand) , firefighters (310,400) combined.

in 2008, 57.8% of tax returns filed assistance paid tax preparers, compared 20% of taxpayers employing paid preparer in 1950s.