Money Advice

Do you know your Tax Day history? (Hint: It hasn't always been in April)

Posted by The Simply Money Team on Apr 12, 2017 3:20:25 PM

We’re just six days away from Tax Day! But how much do you actually know about this day Americans love to hate?

Even though the history of taxes in America goes all the way back to the Civil War, the very first Tax Day as we know it today traces its roots back to the early 20th century – and in those days, Tax Day was in March!

In February 1913, Congress ratified the 16th amendment which authorized the collection of a federal income tax from individuals. Congress then officially named March 1, 1914 as the first Tax Day since the date roughly corresponded to the one-year anniversary of the amendment’s ratification. Initially, the income tax rate was set at one percent if you made more than $3,000 as an individual (that’s about $73,000 in today’s dollars), $4,000 for married couples (about $98,000 today), with a six percent surtax if you made more than $500,000 (about $12 million today).

But the first Tax Day actually sounded pretty painless. The first “Form 1040” (a name that originated from a sequential numbering process) was three pages long, plus one instructional page. Here’s a look at the first page:

1913TaxForm1040.jpg

And get this – no money was collected in the first year! Instead, all someone had to do was complete and return Form 1040 so field agents from the “Bureau of Internal Revenue” could check it for accuracy.

Four years later, The Revenue Act of 1918 moved Tax Day to March 15th for an unknown reason. Then in 1954, inside the nearly 1,000 pages of revisions to the Internal Revenue Code, Congress pushed the date back to April 15th. The reason this time? It varies: Officially, it was to give IRS employees an extra month of time to help spread out their workload. But other speculated reasons for the move included that it would give Americans an extra month to save money for their tax bills, and that it would allow the government to wait longer to issue refunds (AKA, keep your money longer).

The Simply Money Point

Today, Form 1040 is two pages long… with 106 pages of instructions! And in all actuality, April 15th (or, as it is this year, April 18th) shouldn’t even be called Tax Day. Instead, it should probably be called Refund Day since three out of four of you aren’t paying taxes – you’re actually getting money. But remember, if you get a refund, all that means is that you overpaid the government for an entire year. Now you’re just getting your change back.

For help readjusting your withholding so you can keep more of your hard-earned money every paycheck, follow the link for the “W-4 Withholding Calculator” on Simply Money Advisors’ Tools & Resources page

Topics: Taxes

Disclaimer

Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Simply Money Advisors), or any non-investment related content, made reference to directly or indirectly will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, this content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained here serves as the receipt of, or as a substitute for, personalized investment advice from Simply Money Advisors. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Simply Money Advisors is neither a law firm, a certified public accounting firm, nor a tax advisory firm and no portion of the blog content should be construed as legal, accounting, or tax advice. Please consult your own attorney, accountant, and tax advisor for legal, accounting, and tax advice. A copy of the Simply Money Advisors’ current written disclosure statement discussing our advisory services and fees is available for review upon request. Advisory services offered through Simply Money Advisors, a SEC registered investment adviser. Insurance services are offered through Simply Money Insurance Agency, a separate entity from Simply Money Advisors. Simply Money™ and the spiral symbol are trademarks of Simply Money IP Holdings, LLC.