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Annette Nellen
Annette Nellen

Test your knowledge of individual tax data

How well do you know our individual tax system? Take this quiz to find out.

August 14, 2014
by Annette Nellen, Esq., CPA

Here is an opportunity to test your knowledge of our individual tax system by examining some statistics provided by the IRS and other governmental agencies.

Questions

  1. In FY 2013, ____% of total tax collections were generated from the individual income tax.
    1. 21
    2. 33
    3. 42
    4. 54
    5. 60
  2. For 2011, __________ individual tax returns were filed.
    1. 99,564,242
    2. 116,789,120
    3. 130,988,450
    4. 145,370,240
    5. 161,450,970
  3. Among 2011 individual returns, _____% were filed using the married-filing-jointly status.
    1. 25
    2. 37
    3. 42
    4. 51
  4. For 2011, _____% of individual returns were filed using Form 1040EZ, Income Tax Return for Single and Joint Filers With No Dependents.
    1. 8
    2. 12
    3. 16
    4. 21
    5. 30
  5. Which of the following statistics is true for 2011 individual returns?
    1. 90% were electronically filed.
    2. 15% included a deduction for self-employment tax.
    3. 54% claimed itemized deductions.
    4. More individuals who itemized deductions claimed the mortgage interest deduction than the charitable contribution deduction.
    5. More individuals reported qualified dividends than taxable Social Security.
  6. For 2011, the average tax rate based on taxable returns for individuals with adjusted gross income (AGI) of at least $30,000 but less than $50,000 was ______%; and for individuals with AGI of $1 million or more, the average tax rate was ______%.
    1. 0.0; 30.0
    2. 2.5; 31.4
    3. 4.2; 28.0
    4. 6.7; 33.2
    5. 7.1; 23.4
  7. For 2011, returns with a marginal rate of 15% represented ____% of all individual returns while returns with a marginal rate of 35% represented ____% of all individual returns.
    1. 20; 20
    2. 30; 10
    3. 25; 4
    4. 29; < 1
  8. About _____% of individual returns for 2011 reported AGI of $200,000 or more.
    1. 3
    2. 6
    3. 12
    4. 16
  9. For FY 2013, _____% of individual returns were examined by the IRS.
    1. < 1
    2. 3
    3. 4
    4. 7
  10. The largest projected individual tax expenditure for FY 2014–2018 is:
    1. Mortgage interest deduction
    2. Earned income tax credit (EITC)
    3. Exclusion for employer-provided health insurance
    4. Lower tax rate for dividends and capital gains
    5. Deduction for nonbusiness state taxes
    6. Exclusion of capital gains at death

Answers

  1. (D) 54% of collections were from individual returns. Per IRS Stats, Gross Collections, by Type of Tax, Fiscal Years 1960–2013, Table 6. The breakdown was as follows:
    Individual income taxes 54.0%
    Employment taxes 31.4%
    Corporate and unrelated business income tax 10.9%
    Excise taxes 2.1%
    Income tax on estates and trusts 0.9%
    Estate and gift taxes 0.7%
  2. (D) 145,370,240 individual returns were filed. Per IRS Statistics of Income Bulletin, Spring 2014, page 6.
  3. (B) 37% of individual returns were filed as married filing jointly. Per IRS SOI Bulletin Historical Table 1. The breakdown among filing status options for 2011 was as follows:
    Married filing jointly 36.7%
    Married filing separately 1.8%
    Head-of-household 15.2%
    Surviving spouse < 1%
    Single 46.3%
  4. (C) 16% of individual returns were filed using Form 1040EZ. Per IRS SOI Bulletin Historical Table 1. Among three individual forms used, the breakdown for 2011 was as follows:
    1040 57.9%
    1040A 26.6%
    1040EZ 15.5%
  5. (E) More individuals reported qualified dividends than taxable Social Security. Data per IRS SOI Bulletin Historical Table 1, among 2011 returns:
    81.8% were electronically filed
    12.6% reported a deduction for self-employment tax
    17.3% reported qualified dividends
    11.5% reported taxable Social Security benefits
    19.2% reported the earned income tax credit (EITC)
    31.8% reported itemized deductions
    For returns with itemized deductions, 77.7% claimed the mortgage interest deduction, and 81.6% claimed the charitable contribution deduction. This represented 24.7% and 26.0% of all returns, respectively.
  6. (E) For individuals with AGI of at least $30,000 but less than $50,000 average tax rate was 7.1%; and for individuals with AGI of $1 million or more, average tax rate was 23.4%. IRS Statistics of Income Bulletin, Spring 2014, page 8.
  7. (D) Returns with a marginal rate of 15% represented 29% of all individual returns; returns with a marginal rate of 35% represented < 1% of all individual returns. IRS Statistics of Income Bulletin, Spring 2014, page 10. Returns with a 15% bracket represented the largest marginal rate group. These returns represented 21.1% of total modified taxable income and reported 14.3% of total income tax (before any credits or alternative minimum tax (AMT)). The returns with a 35% marginal rate made up 0.6% of all returns for 2011, reporting 18.1% of total modified taxable income and 28.4% of total tax (before credits or AMT), which was the most for any marginal rate group.
  8. (A) 3% of individual returns. IRS Statistics of Income Bulletin, Spring 2014, page 52. For 2011, 3.2% of individual returns (about 4.7 million) reported AGI of $200,000 or more.
  9. (A) < 1% of individual returns. IRS Stats, Examination Coverage: Individual Income Tax Returns Examined by AGI (Table 9b). For returns with AGI of over $10 million, the examination coverage rate was 24.16%, a group that represented less than 0.1% of all returns.
  10. (C) Exclusion for employer-provided health insurance. Per the annual tax expenditure report of the Joint Committee on Taxation (JCX-97-14; 8/5/14), for FY 2014–2018 (in billions):
    Exclusion for employer-provided health insurance $785.1
    Lower tax rate for dividends and capital gains $632.8
    Mortgage interest deduction $405.2
    EITC $352.8
    Deduction for nonbusiness state taxes $316.4
    Exclusion of capital gains at death $174.8

How this quiz is relevant to practice

The IRS and other governmental and nongovernmental organizations collect a variety of tax data. Knowing these data can help tax preparers and clients understand the bigger tax system beyond the tax returns they prepare. The data can also help lawmakers understand who pays taxes and uses various tax preferences, as well as their cost. The data can clarify questions about how many individuals claim the mortgage interest deduction or other deductions and credits, and the tax benefit derived. The data can all be useful in understanding proposals for change.

Resources for federal tax data

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Annette Nellen, Esq., CPA, CGMA, is a tax professor and director of the MST Program at San José State University. She is an active member of the tax sections of the AICPA, ABA, and California State Bar. She is a member of the AICPA Tax Executive Committee and Tax Reform Task Force. She has several reports on tax policy and reform and a blog.