Friday, December 7, 2012

U.S. Federal Tax Return

United States Federal Income Tax

Letter dated January 3, 1862, from Treasury Secretary Salmon P. Chase to President Abraham Lincoln
recommending George S. Boutwell for the newly-created post of Commissioner of Internal Revenue.
The Abraham Lincoln Papers at the Library of Congress, American Memory Collections.

Far reaching in its social as well as its economic impact, the income tax amendment became part of the Constitution by a curious series of events culminating in a bit of political maneuvering that went awry.  Federal Income Tax, despite the remonstrations of many Republican pundits and politicians,[1] was not the brainchild of Woodrow Wilson but of Abraham Lincoln, whose congress enacted The Revenue Act of 1861, formally cited as Act of August 5, 1861.  
The Act, motivated by the need to fund the Civil War, imposed an income tax to be "levied, collected, and paid, upon the annual income of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever.." Rates under the Act were 3% on income above $800 (adjusted for inflation: $19,000 in as of 2010 dollars) and 5% on income of individuals living outside the country. The Revenue Act of 1861 was signed into law by Abraham Lincoln. This Act introduced Federal income tax as a flat rate tax.  Income tax, modified several times by Congress, remained in force after the war, funding reconstruction until the Supreme Court declared the Income Tax Bill of 1894 unconstitutional in Pollock v. Farmers' Loan & Trust Co (1895).  
William Howard TaftOfficial Presidential portrait

Fifteen years later, another Republican U.S. President would champion federal income tax, this time as an amendment to the Constitution of 1787.   Specifically, President William Howard Taft, in an address to Congress, proposed a 2% federal income tax on corporations by way of excise duties.  The President also proposed, on June 16th, 1909, a constitutional amendment to legalize income tax.

To the Senate and House of Representatives: 
It is the constitutional duty of the President from time to time to recommend to the consideration of Congress such measures as he shall judge necessary and expedient. In my inaugural address, immediately preceding this present extraordinary session of Congress, I invited attention to the necessity for a revision of the tariff at this session, and stated the principles upon which I thought the revision should be effected. I referred to the then rapidly increasing deficit, and pointed out the obligation on the part of the framers of the tariff bill to arrange the duty so as to secure an adequate income, and suggested that if it was not possible to do so by import duties, new kinds of taxation must be adopted, and among them I recommended a graduated inheritance tax as correct in principle and as certain and easy of collection. The House of Representatives has adopted the suggestion and has provided in the bill it passed for the collection of such a tax. In the Senate the action of its Finance Committee and the course of the debate indicate that it may not agree to this provision, and it is now proposed to make up the deficit by the imposition of a general income tax, in form and substance of almost exactly the same character as that which in the case of Pollock v. Farmers' Loan and Trust Company (157 U. S., 429) was held by the Supreme Court to be a direct tax, and therefore not within the power of the Federal Government to impose unless apportioned among the several States according to population. This new proposal, which I did not discuss in my inaugural addressor in my message at the opening of the present session, makes it appropriate for me to submit to the Congress certain additional recommendations.

The decision of the Supreme Court in the income-tax cases deprived the National Government of a power which, by reason of previous decisions of the court, it was generally supposed that Government had. It is undoubtedly a power the National Government ought to have. It might be indispensable to the nation's life in great crises. Although I have not considered a constitutional amendment as necessary to the exercise of certain phases of this power, a mature consideration has satisfied me that an amendment is the only proper course for its establishment to its full extent. I therefore recommend to the Congress that both Houses, by a two-thirds vote, shall propose an amendment to the Constitution conferring the power to levy an income tax upon the National Government without apportionment among the States in proportion to population.

This course is much to be preferred to the one proposed of reenacting a law once judicially declared to be unconstitutional. For the Congress to assume that the court will reverse itself, and to enact legislation on such an assumption, will not strengthen popular confidence in the stability of judicial construction of the Constitution. It is much wiser policy to accept the decision and remedy the defect by amendment in due and regular course.

Again, it is clear that by the enactment of the proposed law, the Congress will not be bringing money into the Treasury to meet the present deficiency, but by putting on the statute book a law already there and never repealed, will simply be suggesting to the executive officers of the Government their possible duty to invoke litigation. If the court should maintain its former view, no tax would be collected at all. If it should ultimately reverse itself, still no taxes would have been collected until after protracted delay.

It is said the difficulty and delay in securing the approval of three-fourths of the States will destroy all chance of adopting the amendment. Of course, no one can speak with certainty upon this point, but I have become convinced that a great majority of the people of this country are in favor of vesting the National Government with power to levy an income tax, and that they will secure the adoption of the amendment in the States, if proposed to them.
Second, the decision in the Pollock case left power in the National Government to levy an excise tax which accomplishes the same purpose as a corporation income tax, and is free from certain objections urged to the proposed income-tax measure.

I therefore recommend an amendment to the tariff bill imposing upon all corporations and joint stock companies for profit, except national banks (otherwise taxed), savings banks, and building and loan associations, an excise tax measured by 2 per cent on the net income of such corporations. This is an excise tax upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock.

I am informed that a 2 per cent tax of this character would bring into the Treasury of the United States not less than $25,000,000.

The decision of the Supreme Court in the case of Spreckels Sugar Refining Company against McClain (192 U. S., 397) seems clearly to establish the principle that such a tax as this is an excise tax upon privilege and not a direct tax on property, and is within the federal power without apportionment according to population. The tax on net income is preferable to one proportionate to a percentage of the gross receipts, because it is a tax upon success and not failure. It imposes a burden at the source of the income at a time when the corporation is well able to pay and when collection is easy.

Another merit of this tax is the federal supervision which must be exercised in order to make the law effective over the annual accounts and business transactions of all corporations. While the faculty of assuming a corporate form has been of the utmost utility in the business world, it is also true that substantially all of the abuses and all of the evils which have aroused the public to the necessity of reform were made possible by the use of this very faculty. If now, by a perfectly legitimate and effective system of taxation we are incidentally able to possess the Government and the stockholders and the public of the knowledge of the real business transactions and the gains and profits of every corporation in the country, we have made along step toward that supervisory control of corporations which may prevent a further abuse of power.

I recommend, then, first, the adoption of a joint resolution by two-thirds of both Houses proposing to the States an amendment to the Constitution granting to the Federal Government the right to levy and collect an income tax without apportionment among the States according to population, and, second, the enactment, as part of the pending revenue measure, either as a substitute for, or in addition to, the inheritance tax, of an excise tax upon all corporations measured by 2 per cent of their net income. 
Less than a month later, the resolution now known as the Sixteenth Amendment, was passed by the  Republican controlled 61st U.S. Congress.[2] 

The state legislatures considered the Sixteenth Amendment during the presidential election of 1912 between William Howard Taft (Republican Party), Theodore Roosevelt (Progressive Party) and Woodrow Wilson (Democratic Party) who were all advocates of a federal income tax. U.S. Senator Robert Lafollette’s National Progressive Republican League supported Theodore Roosevelt over Taft. The splitting of the Republican Party resulted in the election of Woodrow Wilson. And the 16th Amendment, on February 25, 1913, was ratified by 4/5th’s of the States. Shortly thereafter, the new Democrat-controlled Congress passed the Revenue Act of 1913, which was enacted with President Wilson’s signature on October 3rd, 1913.  The enabler of the current federal income tax system, therefore, was not Woodrow Wilson but the Taft Administration and the Progressive Republican Congress.  

 For More Information go to 
The Revenue Act of 1913 implemented a federal government tax that eventually would shift the balance of financial power between the federal government and the States to the Bi-cameral U.S. Congress.  Today the States often find themselves in a position where the choice is either to adopt U.S Congressional legislation as a state law or to lose federal funding.[3]   Under this new configuration, “the people” are now governed primarily by federal, as opposed to State, laws.  

The 16th Amendment also enabled the U.S. Federal government to use its taxing authority to implement numerous new programs, funded by income tax, such as social security.  

President Roosevelt signing Social Security Act into law, August 14, 1935

Most recently, Chief Justice Roberts sided with four other Supreme Court Justices upholding the Affordable Care Act citing U.S. Congressional power of taxation bequeathed to them by the 16th Amendment: " The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness."

President Barack Obama reaches for a pen as he signs the health insurance reform bill in the East Room of the White House, March 23, 2010. (Official White House Photo by Lawrence Jackson)

According to the US Trust Fund Board of 1995:

The full potential of the income tax for revenue and for the redistribution of wealth was realized for the first time during the New Deal. President Franklin D. Roosevelt declared our revenue laws have operated in many ways to the unfair advantage of the few, and have done little to prevent an unjust concentration of wealth and economic power. The Revenue act of 1935 popularly called the Wealth Tax Act, went a long way toward remedying the evils described. It provided steeply graduated personal income taxes up to 75% on income in excess of $5 million. Wealthy Americans deplored the leveling effect of a graduated income tax and called President Roosevelt a ?traitor to his own class.?  Almost immediately, income tax evasion became an important area of criminal activity.

 The income tax did not directly affect most Americans until World War II: In 1939 only 5 percent of Americans paid federal income taxes. But the Revenue act of 1942 raised tax rates, lowered exemptions, and created the Victory Tax of 5 percent on incomes over $624, broadening the income tax base considerably. The new payroll withholding tax was the greatest change for the majority of Americans. The  "Pay-As-You-Go" tax plan, developed by Beardsley Ruml, the treasurer of the R. H. Macy department store, was adopted in the Current Tax Payment Act of 1943. The result of the new tax plan was that over 74 percent of Americans were paying federal income taxes by 1945.

The income tax has become the most important source of federal revenue. Without it, the social reforms of the 1930?s, the financial costs of World War II, national defense during the cold war, and the programs of the "Great Society" of the 1960s would have been impossible. --- Published For the National Archives and Records Administration by the National Archives Trust Fund Board 1995 

 16th Amendment to the Constitution - Image Courtesy of the US National Archives 
  American citizens, the documents the rights of actions of federal officials, and the national experience

Finally, it is important to note that  the Sixteenth Amendment is a revenue law that remains subject to Constitution of 1787, Article I, Section Seven which states: “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”  Therefore, power of income tax revenue bequeathed to the U.S. Bicameral Congress by the Sixteenth Amendment must originate from the House of Representatives.  Additionally, since 1913 the tax codes that have sprung from the Sixteenth Amendment are so complex and time-consuming that more than 50% of Congressional members’ time is spent on revenue bills.   Indiana University’s Center of Congress reports:

The work involved in doing this is arduous, and — a reflection of its importance — it is the single most time-consuming thing Congress does. One veteran observer of Congress, asked to estimate how much time Members spend on budgetary matters, replied: "Almost all." That's an exaggeration, but it may not seem like it during those many weeks each year when Congress is preoccupied with the budget resolution or the appropriations bills. In recent decades, about half of all House roll call votes have been budget-related; in the Senate the percentage is even higher.[4]

With this stated, one can understand how much more important it is in 2012 for the House of Representatives to be truly accountable to We The People versus in 1789, when the First U.S. Bicameral Congress had no income taxing authority over U.S. Citizens.  Unfortunately, the Progressive Republicans also enacted the  Apportionment Act of 1911 which decimated We The People’s check over the House of Representatives.  

Students and Teachers of US History this is a video of Stanley and Christopher Klos presenting America's Four United Republics Curriculum at the University of Pennsylvania's Wharton School. The December 2015 video was an impromptu capture by a member of the audience of Penn students, professors and guests that numbered about 200.
Top Frequently Asked U.S. Federal Tax Return Questions

  1. What are the tax changes for this year?
  2. Is there an age limit on claiming my child as a dependent?
  3. How much does an unmarried dependent student have to make before he or she has to file an income tax return?
  4. If I claim my daughter as a dependent because she is a full-time college student, can she claim herself as a dependent when she files her return?
  5. Can I receive a tax refund if I am currently making payments under an installment agreement or payment plan for a prior year's federal taxes?
  6. For head of household filing status, do you have to claim a child as a dependent to qualify?
  7. What should I do if I made a mistake on my federal return that I have already filed?
  8. What is a split refund?
  9. How do I know if I have to file quarterly individual estimated tax payments?
  10. I retired last year, and started receiving social security payments. Do I have to pay taxes on my social security benefits?

Frequently Asked U.S. Federal Tax Return Question Categories

  1. IRS Procedures
  2. Filing Requirements, Status, Dependents, Exemptions
  3. Itemized Deductions, Standard Deductions
  4. Interest, Dividends, Other Types of Income
  5. Retirement Plans
  6. Social Security Income
  7. Child Care Credit, Other Credits
  8. Earned Income Tax Credit
  9. Estimated Tax
  10. Capital Gains, Losses, Sale of Home
  11. Sale or Trade of Business, Depreciation, Rentals
  12. Small Business, Self Employed, Other Business
  13. U.S. Aliens and Citizens Living Abroad
  14. Electronic Filing (e file)
  15. Electronic Filers
  16. Other
  17. Individual Retirement Arrangements (IRAs)

 Additional U.S. Federal Tax Return Information
Recent Developments for Tax Forms, Instructions, and Publications
Each year we update the answers to reflect the latest changes in tax regulations.
Additional Information by Tax Topics
These Tax Topics contain general individual and business tax information.
Additional Information by Tax Trails
Tax Trails is an interactive session which poses questions that you can answer by selection Yes or No.

Internal Revenue Service

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A 1040PC is a paper tax return prepared on a computer using the approved IRS tax preparation software. Taxpayers mail the form (return) to the IRS and the IRS can directly deposit refunds into savings and checking accounts. It's that simple.


Jane makes a ton of money each year, and flies (on her private jet) to and from her houses in Miami and New York. Tough life. John earns a more modest salary and rents a small apartment. Jane and John do NOT pay the same amount in taxes. Their ability to pay differs vastly. John pays less, for his amount of income (wages, interests, profits) and assets (houses, cars, stocks, savings accounts) is less than Jane's.

A person's entire income reduced by adjustments including a deduction for an IRA (Individual Retirement Account), medical savings accounts, and alimony paid to an ex-spouse. Note to the wise: Saving money now in an IRA for your retirement (yes, even though it seems like a million years away) could be one of your smartest moves yet.


When people pay taxes according to the amount of government aid (benefits) they receive. Examples of benefits the American public receives include (to name only a few): welfare, child care, Medicare, Medicaid. Some people believe it's only fair that people pay taxes based on the amount of government aid they receive.

Are you a budding entrepreneur? Just remember that businesses pay taxes to federal, state and local governments. Businesses pay taxes on their profits. Businesses also pay unemployment insurance, worker's compensation, social security and Medicare insurance.


If you have a store credit, you can use the credit to purchase merchandise free of charge. If you have a tax credit, your taxes are reduced by the amount of your credit. You can get tax credits for purposes such as child care expenses and the earned income credit for low-income taxpayers.


A person who relies on someone else for financial support. Sound like a mooch? Not really. Think about it- most "young adults" (under 21 years old) are supported by their parents. Is this you? If it is, your parents can claim an exemption for you-their adorable dependent-if dependency tests are met
When you give the IRS the go-ahead, they'll send your refund directly to your bank account. It's the fastest way to get your cash.
A direct tax cannot be shifted to others (unlike an indirect tax). A good example of a direct tax is the Federal income tax. You just gotta pay it.

Are you a stockholder? If you are, you receive dividends, or a portion of a company's earnings and profits.

In simple English: All the money you earn. This includes any wages, salaries, tips, net earnings (if you're self-employed), and any other income received for personal services. Add it all up, it's all earned income.
Not exactly rolling in dough? Low-income workers can file a tax return to get an earned income credit, even if no income tax was withheld from the worker's pay.
It pays to be computer savvy! Taxpayers can now file their tax information with personal computers and tax preparation software. The information goes directly to the IRS and the IRS can directly deposit refunds into the taxpayer's bank account. Electronic filing allows taxpayers to get their refunds quickly. Check out IRS e-file.
IRS e-file options allow you to file Federal income tax returns (and some state returns) through a tax professional, through your home computer or even through your telephone. It may also be available in many other places in your local community.
Excise taxes are taxes on the sale or use of certain products or transactions. So every time you make a telephone call, buy a plane ticket, or ride in a car (to name but a few) you'll be paying excise taxes.
EXEMPT (from withholding)
Have you ever been exempt from taking an exam because your average was high enough? What a feeling! Well, taxpayers can be exempt from paying a certain amount of federal income tax if they meet certain income, tax liability, and dependency requirements. In fact, you could be exempt from having certain taxes taken out of your paycheck. If you have a job, be smart and check into this.
EXEMPT (from tax liability)
Before a taxpayer pays taxes, he/she can claim a set amount of tax deductions for him/herself, a spouse and eligible dependents. The total amount is subtracted from the adjusted gross income. Then the tax on the remaining income is figured out.

FICA (Federal Insurance Contributions Act)
The Federal Insurance Contributions Act (FICA) consists of both a Social Security (retirement) payroll tax and a Medicare (hospital insurance) tax. The tax is levied on employers, employees, and certain self-employed individuals.
EINs are used to identify the tax accounts of businesses. You need to get an EIN if you have employees or operate your business as a partnership or corporation. An EIN is also needed if you have a Keogh retirement plan or file certain tax returns. Form SS-4An Application for Employers Identification Number, is used to request an EIN.
Cutting edge! Certain states allow taxpayers to file tax information for both federal and state income tax returns with home computers and tax preparation software.
Federal Employer Identification Number (EIN)/Form SS-4
EINs are used to identify the tax accounts of businesses. You need to get an EIN if you have employees or operate your business as a partnership or corporation. An EIN is also needed if you have a Keogh retirement plan or file certain tax returns. Form SS-4, An Application for Employers Identification Number, is used to request an EIN.
To file a return is to send in your completed tax forms, or return ("return" is the official term-use it, you'll sound smarter). All your tax information appears on the return, including income and tax liability.
Your filing status determines your tax bracket and amount of taxes you must pay. Factors such as marital status affect your filing status.
This form is great if you're single or married, don't have any dependents and aren't rolling in dough. If your income is $50,000 or less and your interest income is $400 or less --- use this easy (get it, EZ) IRS form to file your return.
By January 31 of each year --- your employer (even if you don't work there anymore) will provide you with a statement of how much you earned in wages, tips and other compensation from the previous year. This form will reflect state and federal taxes, social security, Medicare wages, and tips withheld. It also includes a lot of other really important information you will need to file your return.
FORM W-4 (Employee's withholding allowance certificate)
If you have or had a part-time or summer job, you probably completed this form on your first day of work. This form determines how much of your paycheck is withheld for federal income taxes.
There are strict steps (that involve the President and Congress) that a proposed tax must pass through before it becomes a law.

This deals with all the money, goods and property you receive that must be included as taxable income. Fact: people who use the barter system (exchanging non-monetary goods/services as payment) have to include whatever they've bartered for as part of their gross income.

Horizontal equity says that people in the same income groups should be taxed at the same rate. "Equals should be taxed equally."

These are taxes on income, both earned income (salaries, wages, tips, commissions) and unearned income (interest from savings accounts, dividends if you hold stock). Individuals and businesses are subject to income taxes.
You might not think you're paying this tax, but you probably are. It's the type of tax that can be shifted to others: hence the name. For example: A company might have to pay a specific tax to the government, let's say a fuel tax. The company pays the tax but can increase the cost of their products so consumers are actually paying the tax indirectly by paying more for the company's products.
Ever joined a book club? What about a study group? Well, if you're interested, there are also informal tax legislation meetings where individuals and interest groups get together to discuss tax issues. Once you become a steady wage earner, these are meetings you probably won't want to miss.
You deposit your money into a savings account for a reason, right? So you can earn interest on your money. People also earn interest from lending money to people. We're not talking about you lending your buddy Dave a couple bucks to buy lunch, we're talking about lending lots of money so the interest really accumulates on the loan. Well, add up all that interest you accumulate and there's your interest income. Not to burst your bubble, but that interest income is all fully taxable.

In addition to federal and state taxes, your local town or city may also need tax money to operate services such as garbage pick-up, water treatment, and street-cleaning.

The Medicare program funds the federal health program for people over 65. It helps out people at a time in their lives when they may have health problems but may not have a lot of money.

Your employer deducts a certain amount from your paycheck to pay for taxes. This tax money funds many finance specific programs, including social security, health care and worker's disability. These programs might not mean a whole lot to you now, but you may likely benefit from them when you're older. Check out It's Payday!
Everyone pays a tax on his/her yearly total amount of taxable income. Remember that the personal income tax is not a tax on the taxpayers total income (the taxpayer can take deductions). Deductions are subtracted first from the taxpayer's income and then he/she pays the tax on the remaining amount.

This type of tax takes a larger percentage of income from higher income groups than from low-income groups. Is this fair? Check out What is Fair?
It's likely you've landed on "property tax" when playing Monopoly. In real life, people pay taxes on property, including real estate, boats, cars, recreational vehicles, and business inventories. Something to think about before you buy that new car. Check out What is Fair?
Proportional taxes take the same percentage of income from everyone regardless of how much (or little) a person earns. This type of tax is not currently in use, but some feel it's the way to go. What do you think? Check out What is Fair?
Do you attend a public school? Ever wonder who pays for your education? Taxpayers! Tax money is used for a variety of public goods and services-all available for use by the public (that includes you and your friends). Some examples of public goods are national defense, street lights, and roads and highways. Public services include welfare programs, sanitation, law enforcement, and education.


The government can designate an area as a redevelopment or enterprise zone, meaning that the area is in desperate need of some serious improvements. No, your room probably wouldn't make the cut-you'll have to do that restoration on your own. A neighborhood in complete disarray (burned out buildings, broken sidewalks, potholes in the street, etc.), on the other hand, could qualify as such an area and taxpayer money could help fund the restoration process.
When your employer deducts too much money from your paycheck, the government owes you that money back. When they pay it, it's called a refund.
This is the tax that takes a smaller percentage from those with high income than from those with lower income. Is this fair? What do you think?

You gotta have that new CD, but do you have enough cash? Don't forget to add the sales tax to the price. Depending on the state you live in, you pay an extra percentage of sales tax for items purchased.
Your class schedule essentially organizes your day, right? Taxpayers have to be organized too. They use certain schedules (or forms) to itemize specific sources of income or specific expenses they claim should be deducted from their taxes. It can pay to be organized!
Social Security is America's government-run retirement plan. One day, when you're your grandparents' age, you'll get the money back.
Some taxpayers choose to take a standard amount instead of itemizing all of their deductions. This is a fixed amount that is generally based on a person's filing status.
There are all kinds of taxes which are used to pay for all sorts of things. Some of our money goes to the Federal government, which pays for services like Interstate highways, the armed forces, the FBI, and a lot more. Your state also needs money for schools, roads, state troopers-to name just a few. At the end of the tax year, you will need to send one form to the Federal government, and another to your state government.

TARIFF DUTY (Customs Duty or Import Duty)
Ever travel abroad and do a little duty-free shopping at the airport? You're buying tax-free products. When you buy that same product at your corner store (assuming it's not a duty-free shop), you're paying a tariff duty or tax on the product.
The amount of money that tax payers can deduct directly from their taxes.
The amount that a person or business can subtract from their taxable income. The more you can deduct, the less you pay.
Pretty excited when you're exempt from gym class? Taxpayers are pretty happy when they see there's a part of their total income on which no tax is imposed. That's a tax exemption.
TAX LIABILITY (or total tax bill)
There's no getting out of it- tax liability is the total amount of tax that a person must pay. Taxpayers pay this through withholdings, estimated tax payments, and payments attached to their yearly tax forms.
This is software created specifically with the IRS in mind. It's designed to help you prepare your taxes on a computer. The software works with the e-filing system to let you file quickly and accurately. Check the Digital Daily for software recommended by the IRS.
One lucky person or group is able to shift a tax that they're supposed to pay to someone else.
There's a portion that your employer takes from your (and other employees) paycheck to pay part or all of your taxes. Check out It's Payday!
Everything you earn that can be taxed.
Taxes are required payments of money to the government. This money is used to make your life better. You might not even realize it, but tax money provides public goods and services for the community as a whole (think roads, schools, law enforcement, public libraries, etc.). Show a little gratitude, pay your fair share.
The IRS knows that lots of people don't have access to a home computer. Most people do have a touch-tone phone, though. TeleFile lets you use your phone to send tax information to the IRS computer. The IRS must send you the booklet. Check out IRS Telefile

Here's a tip on receiving tips: If you earn more than $20 a month in tips, you must report the amount to your employer. To keep track of your tips keep a daily "tips-earned log" where you write down the exact amount of tips you earn each day. Share the monthly total with your employer who will make certain federal, state, and local taxes are paid. Remember, it still pays to be nice . . . so don't forget to smile. Check out It's Payday!
Publication 1244 contains forms for daily record keeping of tips and for reporting tips to your employer. The freely available Adobe Acrobat Reader is required to view this publication.
The sale of all goods and services have transaction taxes. These taxes can be a set percentage of a sales value or a set amount of a physical quantity. What's that all about? Let's say you buy a CD-you pay a set amount in sales tax, but when you fill up your tank with gas, you pay a tax per gallon.


Who said all taxpayers are created equal? Vertical equity states that people in different income groups should pay different rates of taxes. Our current tax system is one of vertical equity.
Your mom might order you to clean up your room. Well, the IRS doesn't have time to tell every single taxpayer to file taxes correctly and on time . . . there are millions of taxpayers in this country after all. This system relies on citizens to report their income, calculate tax liability and file tax returns on time. Everyone's gotta grow up sometime. Check out It's Payday!
Available in most communities are Volunteer Income Tax Assistance (VITA) sites to help with tax return preparation. People volunteer their time to help their neighbors. The service is free to those with limited or moderate income people, non-English speaking, the elderly and the disabled. Some VITA sites even offer free electronic filing. If you want to know more about a VITA site in your community or volunteering your time, call your local District Taxpayer Education Coordinator. Check out IRS e-file


If you need help preparing your taxes visit the Voluntary Income Tax Assistance (VITA) office nearest you. Many VITA offices have IRS representatives who can help you fill out your forms and then transmit the information on your forms electronically.

WITHHOLDING ("Pay-as-you-earn" taxation)
Your employer takes out a certain amount from your check for the government. You are credited for these taxes when you file your return. This money is used to pay for your federal income taxes, federal social security, and Medicare taxes, and state and local income taxes. Check out It's Payday!

When you fill out the Form W-4 your employer can figure out the total amount in taxes to deduct from your paycheck. Your withholding allowance is the total number of allowances, or exemptions you claim. The employer also uses your total amount of income earned and marital status to figure out these allowances and exactly how much income tax to withhold from wages.

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Washington DC
November 17,1800 to Present

[1] Texas Governor Rick Perry, for example, promoting himself as a potential Republican nominee for President, maintained on Jon Stewart’s Daily Show that "Wilson and the Progressive movement started the 16th Amendment. If you want to know when Washington really got off the track, the 16th Amendment, giving them the opportunity to take your money with a personal income tax." (The Daily Show with Jon Stewart.  Comedy Central.  November 8, 2010.)
[2] U.S. Senate 92 members: Republican - 60 (majority), Democratic - 32; House of Representatives 391 members: Republican - 219 (majority) Democratic - 172, William Howard Taft, U.S. President
[3] The National Minimum Drinking Age Act of 1984 (23 U.S.C. § 158) is just one among thousands of examples in which states have been coerced to enact federal laws.  This act was passed on July 17, 1984, mandating that all states be required to legislate the age of 21 years as a minimum age for purchasing and publicly possessing alcoholic beverages. Any state that did not comply with the federal law would be subjected to a ten percent decrease in its annual federal highway apportionment.  Although the majority of Americans may view the Drinking Age Act in a positive light, it can nevertheless be seen as a clear infringement of states’ rights.
[4] Lee H. Hamilton, “Congress and the Power of the Purse,” Center on Congress, 2000 - 2004. congress.indiana.ed.; Hamilton, a U.S. Representative from Indiana's Ninth District from 1965 to 1999, is the director of the Center on Congress.
[5] For further discussion of the Sixteenth Amendment, see my book, Economic Home Runs (PUB info, date), Chapter I, “It’s the Real Estate, Louis Alexander,” considers a change in the income tax law designed to solve the ongoing national real estate depression. 

 The Congressional Evolution of the United States of America 

Continental Congress of the United Colonies Presidents 
Sept. 5, 1774 to July 1, 1776

September 5, 1774
October 22, 1774
October 22, 1774
October 26, 1774
May 20, 1775
May 24, 1775
May 25, 1775
July 1, 1776

Commander-in-Chief United Colonies & States of America

George Washington: June 15, 1775 - December 23, 1783

Continental Congress of the United States Presidents 
July 2, 1776 to February 28, 1781

July 2, 1776
October 29, 1777
November 1, 1777
December 9, 1778
December 10, 1778
September 28, 1779
September 29, 1779
February 28, 1781

Presidents of the United States in Congress Assembled
March 1, 1781 to March 3, 1789

March 1, 1781
July 6, 1781
July 10, 1781
Declined Office
July 10, 1781
November 4, 1781
November 5, 1781
November 3, 1782
November 4, 1782
November 2, 1783
November 3, 1783
June 3, 1784
November 30, 1784
November 22, 1785
November 23, 1785
June 5, 1786
June 6, 1786
February 1, 1787
February 2, 1787
January 21, 1788
January 22, 1788
January 21, 1789

Presidents of the United States of America

D-Democratic Party, F-Federalist Party, I-Independent, R-Republican Party, R* Republican Party of Jefferson & W-Whig Party 

 (1881 - 1881)
*Confederate States  of America

Chart Comparing Presidential Powers Click Here

United Colonies and States First Ladies

United Colonies Continental Congress
18th Century Term
09/05/74 – 10/22/74
Mary Williams Middleton (1741- 1761) Deceased
Henry Middleton
05/20/ 75 - 05/24/75
05/25/75 – 07/01/76
United States Continental Congress
07/02/76 – 10/29/77
Eleanor Ball Laurens (1731- 1770) Deceased
Henry Laurens
11/01/77 – 12/09/78
Sarah Livingston Jay (1756-1802)
12/ 10/78 – 09/28/78
Martha Huntington (1738/39–1794)
09/29/79 – 02/28/81
United States in Congress Assembled
Martha Huntington (1738/39–1794)
03/01/81 – 07/06/81
07/10/81 – 11/04/81
Jane Contee Hanson (1726-1812)
11/05/81 - 11/03/82
11/03/82 - 11/02/83
Sarah Morris Mifflin (1747-1790)
11/03/83 - 11/02/84
11/20/84 - 11/19/85
11/23/85 – 06/06/86
Rebecca Call Gorham (1744-1812)
06/06/86 - 02/01/87
02/02/87 - 01/21/88
01/22/88 - 01/29/89

Constitution of 1787
First Ladies
April 30, 1789 – March 4, 1797
March 4, 1797 – March 4, 1801
Martha Wayles Jefferson Deceased
September 6, 1782  (Aged 33)
March 4, 1809 – March 4, 1817
March 4, 1817 – March 4, 1825
March 4, 1825 – March 4, 1829
December 22, 1828 (aged 61)
February 5, 1819 (aged 35)
March 4, 1841 – April 4, 1841
April 4, 1841 – September 10, 1842
June 26, 1844 – March 4, 1845
March 4, 1845 – March 4, 1849
March 4, 1849 – July 9, 1850
July 9, 1850 – March 4, 1853
March 4, 1853 – March 4, 1857
March 4, 1861 – April 15, 1865
February 22, 1862 – May 10, 1865
April 15, 1865 – March 4, 1869
March 4, 1869 – March 4, 1877
March 4, 1877 – March 4, 1881
March 4, 1881 – September 19, 1881
January 12, 1880 (Aged 43)
June 2, 1886 – March 4, 1889
March 4, 1889 – October 25, 1892
June 2, 1886 – March 4, 1889
March 4, 1897 – September 14, 1901
September 14, 1901 – March 4, 1909
March 4, 1909 – March 4, 1913
March 4, 1913 – August 6, 1914
December 18, 1915 – March 4, 1921
March 4, 1921 – August 2, 1923
August 2, 1923 – March 4, 1929
March 4, 1929 – March 4, 1933
March 4, 1933 – April 12, 1945
April 12, 1945 – January 20, 1953
January 20, 1953 – January 20, 1961
January 20, 1961 – November 22, 1963
November 22, 1963 – January 20, 1969
January 20, 1969 – August 9, 1974
August 9, 1974 – January 20, 1977
January 20, 1977 – January 20, 1981
January 20, 1981 – January 20, 1989
January 20, 1989 – January 20, 1993
January 20, 1993 – January 20, 2001
January 20, 2001 – January 20, 2009
January 20, 2009 to date

Capitals of the United Colonies and States of America

Sept. 5, 1774 to Oct. 24, 1774
May 10, 1775 to Dec. 12, 1776
Dec. 20, 1776 to Feb. 27, 1777
March 4, 1777 to Sept. 18, 1777
September 27, 1777
Sept. 30, 1777 to June 27, 1778
July 2, 1778 to June 21, 1783
June 30, 1783 to Nov. 4, 1783
Nov. 26, 1783 to Aug. 19, 1784
Nov. 1, 1784 to Dec. 24, 1784
New York City
Jan. 11, 1785 to Nov. 13, 1788
New York City
October 6, 1788 to March 3,1789
New York City
March 3,1789 to August 12, 1790
Dec. 6,1790 to May 14, 1800       
Washington DC
November 17,1800 to Present

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The United Colonies of North America Continental Congress Presidents (1774-1776)
The United States of America Continental Congress Presidents (1776-1781)
The United States of America in Congress Assembled Presidents (1781-1789)
The United States of America Presidents and Commanders-in-Chiefs (1789-Present)