How well do you know tax history?

As April is tax month, included here is a short quiz to see how well you know your tax history.

While Abraham Lincoln’s administration introduced the income tax to finance the Civil War, the first modern 1040 Individual Income Tax form was introduced in 1913. How well do you know what was on this original 1040? Enjoy!

Question What was the original due date of the initial 1040 tax form?
Answer March 1st, 1914. Failure to file on time could lead to a fine of between $20 and $1,000. A 30-day extension by reason of sickness or “absence” could be granted by the tax collector. Today we have an additional 45 days to file our tax returns (April 15th) and can file for a six-month extension.

Question What was the tax rate applied to most individuals’ income?
Answer The “normal” tax applied to most 1913 tax returns was 1%.

Question If you had Taxable Income of over $50,000 you became subject to the “Super Tax”. What was the maximum tax rate on these excess earnings?
Answer Six percent. 2% was owed on income from $50,000 to $75,000. The maximum tax rate of 6% was owed on Taxable Income over $500,000. The 1913 tax brackets were; 1%, 2%, 3%, 4%, 5% and 6%. Compare this to our current tax brackets of 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

Question Was there a marriage penalty built into the
original Form 1040?
Answer Yes. If single (or married but not living with your spouse) your exemption amount was $3,000. If you lived with your spouse your exemption amount was only $4,000. If both you and your spouse worked (a rare event in 1913), you could divide the $4,000 exemption any way you wished to minimize your taxes.

Question Name two things that are currently taxed, but were not
taxed on the original 1040 tax form?
Answer There were many, but perhaps the most common untaxed items were dividends and net earnings from corporations that were already taxed. The double taxation of corporate earnings that we experience today would be added later.

Question True or False. All the original tax returns required a signed affidavit
before an authorized officer of the government prior to being filed.
Answer 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 of the clerk of the court. Mailing in your tax return was not an option in 1914.