35 quirky tax facts for this tax season
35 quirky tax facts for this tax season
Ever since taxes were first levied against citizens, they’ve been controversial among citizens. In some cases, they’re praised for contributing to society. Taxes, after all, are how people pay for many of the public services they benefit from every day, including firefighters, public schools, federal employees, libraries, and public television. Taxes have also been so reviled as to start massive uprisings, revolutions, and war.
Despite this back and forth, one thing is for certain: No one loves Tax Day, whether they have to give up a chunk of money to the government or simply have to fill out pesky paperwork. Make tax season a little more fun with Stacker’s 35 quirky tax facts, full of odd knowledge that might just come in handy.
Be sure to read on before you file—something you learn here could easily save you some money this April.
America didn't have income tax for much of Its history
Prior to 1913, the United States' federal government was largely funded through tariffs and excise taxes. The Sixteenth Amendment allowed the government to tax income, generating much more money.
What are excise taxes?
The government levies “excise taxes," also known as “sin taxes," against specific goods. Alcohol, tobacco, and wagering on sports are among the usual targets, although tanning services and long-distance phone calls have also made the list.
90% of taxpayers file electronically
Filing paperwork is nearly a thing of the past. The IRS began offering e-filing in the mid-1980s to cut down on costs. Today, 90% of all taxpayers use e-filing through services like Turbotax or TaxSlayer.
Disaster victims get a break
The IRS offers tax relief for survivors of natural disasters. These individuals don't pay fewer taxes, but they do get an extension on their filing deadlines. The IRS also offers assistance for people looking to reconstruct their financial records.
The tax gap is considerable
Think the IRS won't miss your portion of unpaid taxes? Guess again. They tally what is known as the “tax gap," which is the sum of missing taxes. In 2016, the IRS said that the average gap per year was a whopping $458 billion.
Seven states have no income tax
The United States has seven states without income tax, including Wyoming, Washington, Texas, South Dakota, Nevada, Florida, and Alaska. Many of those states make up for the deficit in taxes through sales and property tax.
Athletes must file in every state where they have played
Professional athletes have to file in their home state as well as in every state where they played. It becomes even more complicated for players who have homes in multiple states, or who are traded to a different team partway through the year.
Tax day used to be in March
Following the Sixteenth Amendment, Congress decided all taxes should be filed by March 1. The date was bumped back to March 15 in 1918, then again to April 15 in 1955.
Always file on time to avoid late fees
Even if you can't pay in full, you should always file your taxes on-time. Why? To avoid accruing late fees. You'll get charged 5% of what you owe for each month you're late. The IRS allows you to pay as much as you can, and may even let you pay in installments.
Many would be surprised to know that Lady Godiva's famous nude horseback ride was actually a tax protest. Lady Godiva's husband told her he'd reduce the taxes on the people of Coventry when she jumped on a horse naked and rode naked through town.
The Boston Tea Party
The most famous tax protest in American history may be the Boston Tea Party. Furious with the British for imposing “taxation without representation" in Parliament, colonists in Boston dumped more than 300 chests of British tea into the harbor.
Taxation without representation: Washington D.C.
The motto from the Boston Tea Party carries over to modern times. In Washington D.C., standard license plates feature a form of the motto “Taxation Without Representation," since folks in the district pay federal income tax, but have no voting member of Congress.
Drug dealers still pay taxes
Just because you're involved in illegal activity doesn't mean you're off the hook. The Internal Revenue Code includes a section about how drug dealers can pay taxes, with specific provisions about how drug dealers can't claim business expenses, which tax codes they should use, and details on penalties there may be for claiming narcotics distribution as a job.
Kansas' drug tax stamps
Kansas also has unusual rules about the taxation of illegal substances. Legally, drug dealers must purchase “drug tax stamps" equal to the value of the narcotics in their possession, which they have to affix to the packaging of their drugs. Technically, drug dealers can remain anonymous when they get those stamps, and the Department of Revenue isn't allowed to share information about them with the police. Still, it's a rather unusual arrangement, and drug dealers who have drugs seized sans stamps might have to pay fines or even have liens taken out on their homes.
High cost for marijuana businesses
Now that marijuana is legal in many states, many companies seek to file the appropriate taxes. Marijuana is still federally illegal, so when filing with the feds, many of these companies aren't allowed the standard deductions or credits.
Authorities have used the IRS to get convictions
The authorities have been known to turn to tax records when unable to pin crimesters on murder or drug-trafficking. Famously, in the case of gangster Al Capone, an IRS agent looked through 2 million documents to track down payments Capone hadn't listed as income, allowing the cops to arrest him over tax evasion.
Scandals in the IRS
In the 1950s, IRS commissioner Joseph Nunan failed to report $86,000 in income. That included money he won betting that Truman would be elected president in 1948. He may have won that gamble, but it cost him five years in prison. In 2013, the IRS got into hot water for targeting nonprofits and political groups affiliated with certain right or left-leaning ideals.
Hybrid cars get a tax break
Drive a Prius or Tesla? You're in luck. All-electric and plug-in hybrids made after 2010 are eligible for a federal income tax credit, depending on the capacity of the battery powering the car.
Why so many movies are filmed in Georgia
Hollywood may technically be the home of the entertainment industry, but movie buffs may have noticed that many of today's biggest blockbusters, and even smaller indie darlings, are filmed in Georgia. That's because the state gives companies a massive 20% tax credit if they spend $500,000 or more on production and post-production. There's an additional 10% credit in store if the movie includes a promotional Georgia logo in its credits.
Many corporations don't pay taxes
What do PG&E, Priceline, and General Electric all have in common? They don't pay anything in taxes. That's the case for many corporations, who either pay zero or very little tax. How can that be when they make so much profit? Tax loopholes, booking profits overseas, and industry-specific subsidies, among other tricks.
The Tax Code is lengthy
Some say the Tax Code is 400 pages long. Others claim it's 70,000 pages. Politifact put it closer to 7,000, but one thing's for certain: The Tax Code is so long that no one's sure of its precise length.
Service animals qualify as a write-off
If you need a seeing-eye dog or an animal that helps you cope with other medical conditions, you can deduct the expenses. The catch is that your total medical expenses need to be more than 7.5% of your adjusted gross income. If you qualify, not only can you write off the purchase, but you can also include training, food, grooming, and vet bills as itemized deductions.
Rent your home for fewer than 15 days, free of tax
The IRS has an interesting rule: If you rent out your abode for fewer than 15 days out of the year, you can't deduct expenses, but you also don't have to report the income or pay tax on it. That means that folks living near major events can make tax-free cash for just a few days of renting.
Losing at gambling might actually be A win
Winning a jackpot in Las Vegas is great, until you have to pay taxes on it. But gamblers should keep track of all their bets: Losses can be deducted from total winnings on your taxes.
No new taxes
Though George H.W. Bush promised not to introduce new taxes during his presidential run, things were different once he was in office. In a way, he kept his promise by not actually introducing new taxes, but he did raise the ones that already existed.
The IRS is impacted by government shutdowns
No, that doesn't mean you don't have to file your taxes. A small percent of IRS employees still work during shutdowns, mostly on the security and tech fronts. More than anything else, it's bad news for taxpayers: There will be less tax help available and more difficulty getting out routine tax transcripts. Refunds may also be issued more slowly than in previous years.
Taxation, war, and revolution
High taxes, caused by warmongering and high spending, among other things, made France one of the highest-taxing states in Europe. Among their taxes was “gabelle," an unpopular duty on salt.
Bitcoin holdings are not taxable
Holders of Bitcoin have experienced a lot of ups and downs in the value of cryptocurrency. The good news is that any value accrued isn't taxable, unless you sell that Bitcoin or use it as payment, in which case it's considered income and can be taxed as such.
Home improvements may be deductible
Freelancers know that there are all kinds of things that can be deducted from taxes, particularly business expenses. Freelancers who regularly work from home and meet their clients there can also write off things like snow-shoveling and other necessary upkeep expenses.
Russia once had a beard tax
That's right: If you had a beard during the rule of Peter the Great, you had to pay up. Apparently the ruler wanted his people to look like the more modern, smooth-faced Western Europeans. The ruler apparently took it upon himself to shave the faces of high-ranking men at a reception held in his honor.
Smokers trying to quit may get a tax break
Trying to kick cigarettes this year? In some cases, the IRS will allow deductions from smoking cessation programs. That's a good incentive to get healthy.
Paying nannies under the table could cost you
Though many people pay childcare workers under the table, it remains illegal. Getting caught could trigger an IRS audit. Worse, failing to pay employment taxes averages $25,000 in penalties and interest. Short-term neighborhood babysitters are a different story: They're typically considered self-employed, and have to report the income themselves.