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Federal Income Tax Fun Facts

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Let Us Assess Your Crack! Routt County Federal Income Tax Fun Facts

By Scott L. Ford

April is the beginning of Mud Season in Routt County. April is also Tax Filing Season. Without question, the IRS keeps exceptionally good track of us. All sorts of information is captured from our federal tax returns. This cornucopia of data is subsequently used by a host of federal agencies ranging from the Department of Health and Human Services to the Census Bureau. The IRS makes this information on an aggregate basis available to the public. This month I will take a deep dive into the IRS Master File and see what it reveals about Routt County federal income tax filers.

The year of 2020 was a vastly different year. The pandemic fouled a lot of things up and the IRS Master File is no exception. For example, the tax filing deadline for 2019 taxes was extended from April 15th to July 15th. The tax data from 2019 tax is not yet summarized. Therefore, I will be using 2018 tax data for this deep dive.

Using the IRS Master File, the table below is a look back over the past eight years of income tax filings. What this data shows is that over the past eight years the number of returns increased by 10.5%, the aggregate adjusted gross income (AGI) increased by 66% and the average AGI per return increased by about 50%. This data is tangible evidence that supports the statement that Routt County is rapidly growing more affluent.

This next table highlights how the personal income landscape in Routt County is changing. The fastest rate of growth is occurring with returns that are reporting an AGI of $100K or more. Most of that growth is associated with returns that report an AGI more than $200K which has more than doubled over the past eight years.

As a note of explanation, there are some returns that report little to no taxable income. These low-income returns are often associated with seniors who likely are fully or mostly dependent upon Social Security for their income. In 2020 if an individual filer's income from all sources including Social Security was $25,000 or less, Social Security benefits are exempt from taxes. The income limit for joint filers is $32,000.

When it comes to filing our taxes collectively, we can best be described as a bunch of procrastinators. Slightly over 20% of us wait until the last two weeks before taxes are due before filing. In addition, abut 12% request an extension to the deadline and file on the very last possible date of October 15th.

Taking a very deep dive into the data also identifies the sources of our income.

Classifying wages/salary, self-employment, and S-Corp distributions as labor source income of the $1.4 Billion in total AGI in 2018, about 61% of it came from our working efforts. The sources of this labor income come from a diverse spectrum of industries. This perhaps will be the topic of next month’s column.

Routt County Sources of Taxable Income in 2008 UnemploymentRoutt County Sources of Taxable Income in 2008 State Tax Refunds Unemployment Social Security State Tax Refunds 2.2% Interest Social Security 2.9% 2.2% Self Employment Interest 3.9% 2.9% IRAs, Pensions, Annuities Self Employment 7.4% 3.9% S-Corp Distributions IRAs, Pensions, Annuities 9.5% 7.4% Dividends S-Corp Distributions 10.2% 9.5% Net Capital Gains Dividends 15.9% 10.2% Wages/ Salary 47.5%Net Capital Gains Wages/ Salary 15.9% 47.5%Percent Of 2018 Tax Returns Filed by Week 1-Feb 8-Feb 15-Feb 22-Feb 1-Mar 8-Mar 15-Mar 22-Mar 29-Mar 5-Apr 12-Apr 19-Apr 10% 8% 7% 7% Routt County6% 5% 5% 5% 6% 7% 10% 11% 2011 2012 2013 2014 2015 2016 2017 2018 Routt County

Number of Returns Adjusted Gross Income Number of Returns

Average AGI per Return ($000 omitted) Adjusted Gross Income ($000 omitted)

Average AGI per Return

12,222 12,300 12,630 12,840 12,940 13,170 13,410 13,5102011 2012 2013 2014 2015 2016 2017 2018 $848,410 $990,715 $898,073 $1,027,562 $1,100,121 $1,170,202 $1,262,248 $1,410,431 12,222 12,300 12,630 12,840 12,940 13,170 13,410 13,510 $69,417 $80,546 $71,106 $80,028 $85,017 $88,854 $94,127 $104,399 $848,410 $990,715 $898,073 $1,027,562 $1,100,121 $1,170,202 $1,262,248 $1,410,431 $69,417 $80,546 $71,106 $80,028 $85,017 $88,854 $94,127 $104,399

Routt County - Distribution of Tax Returns by Adjusted Gross Income (AGI) 2011 2012 2013 2014 2015 2016 2017 2018 Routt County - Distribution of Tax Returns by Adjusted Gross Income (AGI)

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Under $1 472 420 400 320 330 320 300 340 2011 2012 2013 2014 2015 2016 2017 2018 $1 under $10,000 Under $1 2,444 1,650 1,730 1,620 1,540 1,590 1,510 1,460 472 420 400 320 330 320 300 340 $10,000 under $25,000 $1 under $10,000 1,759 2,420 2,470 2,550 2,410 2,350 2,230 2,090 2,444 1,650 1,730 1,620 1,540 1,590 1,510 1,460 $25,000 under $50,000 $10,000 under $25,000 2,943 2,990 3,030 3,130 3,200 3,220 3,300 3,270 1,759 2,420 2,470 2,550 2,410 2,350 2,230 2,090 $50,000 under $75,000 $25,000 under $50,000 1,674 1,640 1,650 1,640 1,640 1,680 1,780 1,850 2,943 2,990 3,030 3,130 3,200 3,220 3,300 3,270 $75,000 under $100,000 $50,000 under $75,000 1,069 1,090 1,140 1,170 1,200 1,160 1,240 1,160 1,674 1,640 1,650 1,640 1,640 1,680 1,780 1,850 $100,000 under $200,000 $75,000 under $100,000 1,311 1,420 1,510 1,630 1,760 1,890 1,960 2,140 1,069 1,090 1,140 1,170 1,200 1,160 1,240 1,160 $200,000 or more 550 670 700 780 860 960 1,090 1,200$100,000 under $200,000 1,311 1,420 1,510 1,630 1,760 1,890 1,960 2,140 TOTAL $200,000 or more 12,222 12,300 12,630 12,840 12,940 13,170 13,410 13,510 550 670 700 780 860 960 1,090 1,200 TOTAL 12,222 12,300 12,630 12,840 12,940 13,170 13,410 13,510