Taxing Answers to Taxing Questions

Why is Tax Day in the US on April 15th?

Tax Day in the United States wasn’t originally on April 15. Under the current income tax system, although no particular reason was given, March 1st was the original filing deadline. Likely to give people time to gather the past year’s information and prepare their filings.  In 1919, Congress decided to give people a couple of more weeks and moved the deadline to March 15th.  By 1955, doing taxes had become so complicated that Congress added another month – to April 15th – where it stands today.

Why is Tax Day moved to the 18th this year?

Emancipation Day is a holiday celebrating the freeing of slaves in the US capital and is celebrated either on April 16th, but if the 16th occurs on a weekend, Emancipation Day is celebrated on the weekday closest to the 16th.  All US Federal employees are given the day off, including those working at the Internal Revenue Service. Since April 16th falls on Saturday this year, the 15th (Friday) is the closest weekday and the day the holiday is celebrated. Result: the deadline for tax filing is Monday, the 18th.

When was the first Federal income tax imposed on US citizens?

Taxes have been around for thousands of years, with tax payments recorded as far back as 2500 BCE in ancient Mesopotamia.  The Pharaoh in ancient Egypt went around collecting taxes in his roles as the living incarnation of the god Horus and as leader of the Egyptian people and even in the Bible, Joseph collects a fifth of their crops for Pharaoh’s coffers.

In the US, Abraham Lincoln signed the Revenue Act in 1861, imposing the first federal income tax of a flat 3% tax on income above $800. The money was used to fund the Civil War and income tax was repealed 11 years later. Although replaced with another revenue act, that was also repealed about ten years later and in 1894, another new federal income tax was ruled unconstitutional by the US Supreme Court. Ultimately, Federal income taxes were here for good when the 16th Amendment to the US Constitution was ratified in 1913. FYI, in 1913, IRS Form 1040 US citizens all know and love today was one page!

Which is the only other country in the world, aside from the US that imposes tax on the income of its citizens even if they live and work outside their country?

Other than the United States, the nation of Eritrea (in case you didn’t recognize the flag this past Monday) is the only other country that obligates its citizens to pay taxes on income, regardless of where they live or work.

If you are interested in some added tax trivia, here are a few more fun facts:

In 1987, the US Internal Revenue Service required taxpayers claiming dependents on their income tax forms to not only include their names, but also list these dependents’ Social Security numbers.  Curiously, about 7 million children — one tenth of all dependent children in the US in 1987 – simply disappeared.

There are seven States in the United States that do not have a State income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.  Although New Hampshire and Tennessee don’t have any income tax on wages or earnings, these two States do tax dividends and interest income.

If you have lived in the State of New Mexico (The Land of Enchantment) for at least one hundred years, you don’t have to pay state taxes. Gives new meaning the Spock’s phrase “Live long and prosper.”

Enjoy the weekend!