Tax Season 2019

The deadline for taxes is fast approaching. Many Americans are working hard to file their income taxes with the Internal Revenue Service (IRS) before the April 15th deadline.

What is the history of taxes?

The first income tax was collected during the Civil War. According to the Library of Congress, "Congress passed the Revenue Act of 1861 to help pay off war expenses, but the tax was repealed ten years later." In 1894, President Grover Cleveland tried to reimplement income taxes, but the government found it to be unconstitutional. In response, the Constitution was amended in 1913 to legally collect taxes. The National Archives recites the 16th amendment; "Congress shall have the power to lay and collect taxes on incomes, from whatever sources derived, without apportionment among the several states and without regard to any census or enumeration." After the passage of the 16th amendment, Tax Day was recognized on March 15th. In 1954, the date was changed to April 15th.

Tax Assistance 2018

The Internal Revenue Service is the agency that handles federal taxes in the United States. Their website offers a multitude of tax information for the public: resources about filing taxes, forms and publications, a tax time guide, withholding calculator, unclaimed tax refunds, tax preparation help, information about the Tax Cuts and Jobs Act, tax records, refund status, etc. Forms and publications are now mostly available from IRS.gov. The IRS offers two versions of the Free File software programs so individuals can file taxes online for free: one option is for incomes below $66,000 and the other option is for incomes above $66,000. Other services available from the IRS include the the Volunteer Income Tax Assistance (VITA) program which provides free tax help to individuals that earn less than $55,000 a year, to those with disabilities, and to those that speak limited English. The IRS also provides Tax Counseling for the Elderly (TCE) to support individuals who are 60+ years with pensions and retirement plans. For additional help, the IRS supplies the Interactive Tax Assistant (ITA), a "tool that provides answers to a number of tax law questions." The ITA covers a wide variety of topics such as, the Affordable Care Act; filing requirements, forms to use, due dates; filing status, dependents and exemptions; retirement: pensions, IRAs, Social Security; other income; deductions; credits; etc.

The USA.gov web page on taxes outlines everything you need to know about the tax filing process. It  includes information on tax information after filing your taxes, help with your taxes, how to file your federal taxes, IRS scams, state and local taxes, tax credits and reductions, tax reforms, and business tax information. And the site outlines the steps to file taxes:

1. Collect all of your paperwork such as, W-2 form; earning and interest statements; health insurance coverage; and receipts.
2. You must choose your filing status which is dependent on your marital status and the percentage of household expenses. 
3. Free tax preparation for those with low income, military service members, seniors, those with disabilities, and individuals with limited English. 
4. Includes utilizing the tax preparation software to determine how you want to file your taxes. 
5. You need to calculate your taxes, deductions, and credits. 
6. Make a tax payment if you owe money. 
7. File your taxes. 

In Oklahoma, the Oklahoma Tax Commission "has the responsibility of the collection and administration of taxes, licenses and fees, and the distribution and apportionment of  revenues to various state funds." The Oklahoma Tax Commission offers forms and publications and free online filing through the OkTAP system. The requirements for OkTAP include the following: must file as a full-year resident return; filed an Oklahoma income tax return the previous year; the Federal Adjusted Gross Income (AGI) and the Oklahoma AGI must be equal, certain credits are allowed, and requirements for Oklahoma withholding.

What changes have been made to tax law?

The Tax Cuts and Jobs Act (TCJA) was passed at the end of 2017. The U.S. Department of Treasury  states that the TCJA "delivers tax cuts to lower-and middle-income families and makes American businesses more competitive." The Department declares that the "TCJA is contributing to an economic renewal in which Americans are benefiting from historically low levels of unemployment and historically high levels of job openings." The Tax Cuts and Jobs Act page outlines information regarding tax cuts for American families, more jobs and bigger paychecks, and fairness and opportunity for hard working Americans.

According to the "more jobs and bigger paychecks" section, the tax reform is set to increase wages, bonuses, hiring, and the amount/quality of benefits. In addition, the reform will raise the average household income by approximately $4,ooo. Furthermore, the reform predicts that business investment will expand and companies will have a more positive outlook towards success. Under the "fairness and opportunity for hard working Americans," the Treasury mentions how the new reform  developed opportunity zones to facilitate economic advancement in areas of poverty. These zones are located in "economically distressed areas" where poverty rates are 32%, almost two-times the average poverty rate of the nation (17%). Capital tax reliefs will also be offered to investors to promote employment and economic development.

The images below from USA.gov highlight a brief snippet of how the tax reform affects the tax cuts for the American family. See USA.gov for an overview of the tax reform with additional details.

~Emily Hancz