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9 fun tax facts on Tax Day to help ease the pain

tax dayAs last-minute filers rush to get their returns (or extensions) in by the due date, tax is the topic of conversation today. But who wants to talk about line 21 or Modified Accelerated Cost Recovery System depreciation all day? To take you easily from the water cooler to cocktail hour, here are nine fun tax facts for April 15:
  1. The federal form 1040 was introduced in 1913 and was required of US citizens and residents with a net income of $3,000 or over for the taxable year; nonresident aliens with income were also required to file. It looked a lot different from the form 1040 we know today -- just three pages long (plus instructions). You can check it out here.
  2. The Social Security Act was signed into law by President Franklin D. Roosevelt in 1935, and Social Security numbers were made available the next year, 1936. However, taxpayers weren't required to use their Social Security number as a means of tax form identification until 1961.
  3. The IRS reported receiving 131,543,000 individual income tax returns in 2009. If each return were processed at the rate of one per minute (and that's fast!), it would take more than 250 years for one person to do the job.
  4. The cost of war has often driven the push for taxes. The first United States income tax was imposed in July 1861 to help pay for the Civil War; the rate was just 3% of income over $800. That tax was eventually repealed and replaced by a tiered income tax in 1862. The income tax system we use today was made law in 1913, just before the start of World War I.
  5. Federal income tax withholding as we know it today was made permanent in 1943 as part of the Current Tax Payment Act. The move was seen as a means of making tax payments and filings more convenient for taxpayers. At the time, US Treasury official Randolph Paul reported to Congress that "[t]he tax has been broadened to reach many millions of additional taxpayers with small incomes and little experience in planning their finances to meet large bills at infrequent intervals ... A suitable pay-as-you-go method will be of great assistance to millions of persons."
  6. The "Presidential Campaign Fund" check-box was created in the 1970s in order to fund presidential elections. Since the inception of the check-off, over a billion dollars has been distributed to about a hundred primary election presidential candidates. Since 1976, almost 90% of candidates have accepted funds for the primary election (then-Governor George Bush opted out in 2000) and all major party nominees -- except one -- accepted public funds in the general election. That exception? Barack Obama.
  7. There are at least 480 forms on the IRS Web site. Together with instructions and schedules, you can download 1,132 tax-form related files from irs.gov. Instructions range from form to form, with the instructions for the form 1040 taking up a whopping 101 pages (plus index).
  8. In 2007, the IRS reported that 99,316,995 taxpayers were assisted by writing, calling, or walking into an IRS office. Statistically, that works out to one in three Americans -- or nearly three times the population of California.
  9. Regarded by some as the smartest man who ever lived, even Albert Einstein was no fan of figuring out his taxes, once remarking, "The hardest thing in the world to understand is the income tax."

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The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

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A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

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