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This report contains statistical data for the income year 1951, prepared from individual income tax returns, Forms 1040 and 1040A, from taxable fiduciary income tax returns, Form 1041, and from gift tax returns, Form 709. It presents data on income, deductions, exemptions, gifts, and other valuable information reported on these returns, by various classifications of taxpayers, by types of income or kinds of gifts, and other relevant classifications.
The first section of this report pertains to the individual income tax returns, Forms 1040 and 1040A. Although the two forms are different, it is possible to correlate the data reported on the employee's optional returns, Form 1040A, with that reported on the regular income tax return, Form 1040, whether long- or short-form. In tabulating data, no distinction is made and data from both forms are combined. In addition to the current year tabulations, there are included several tables of historical data.
The second section of this report presents data reported on the taxable fiduciary income tax returns, Form 1041. Data inherent to fiduciary returns differ somewhat from that on individual returns, but, so far as possible, data for taxable fiduciary returns are classified and presented in the same manner as the data for individual returns, so that these data may be associated. The tabulations of current year data are followed by two tables showing historical data.
The third section of this report contains information reported on gift tax returns, Form 709, filed by individuals who transferred property by gift during 1951. A brief historical summary is included at the end of this section.
The fourth section gives a synopsis of recent Federal tax laws relating to income tax and gift tax, showing the important provisions affecting the comparability of historical data.
Facsimiles of the 1951 individual income tax returns, Forms 1040 and 1040A, and the fiduciary income tax returns, Form 1041, are inserted at the close of the report.
A preliminary report, containing significant tables prepared from individual returns and taxable fiduciary returns, was published in June 1954.
INDIVIDUAL INCOME TAX RETURNS FOR 1951
The total number of individual returns filed for the year 1951 is 55,447,009, the greatest number filed for any year. There is an increase of 2,386,911, or 4.5 percent, over the number of returns for 1950. The returns include 14,260,472 employee's optional returns, Form 1040A; 23,149,996 short-form returns, Form 1040; and 18,036,541 long-form returns, Form 1040.
The adjusted gross income reported amounts to $203,097,033,000, the largest amount yet reported. The increase is $23,222,555,000, or 12.9 percent, over the income reported last year. The adjusted gross deficit of $760,548,000, reported on 404,412 returns, has increased by $34,346,000, or 4.7 percent, over the deficit for the previous year.
There are 42,648,610 taxable returns for 1951; this is 4,461,928, or 11.7 percent, more taxable returns than were filed last year. Self-employment tax, paid for the first time on 1951 returns, is reported on 4,073,811 of these returns, 1,054,388 of which have no income tax liability. Nontaxable returns number 12,798,399 which is a decrease of 2,075,017 as compared with last year. Total tax liability is $24,439,073,000. The newly imposed self-employment tax of $211,293,000 is included in the total tax liability for 1951. The income tax liability of $24,227,780,000 is the largest income tax ever reported. This is $5,852,858,000, or 31.9 percent, more income tax than the previous all-time high for 1950.
The optional tax table was used to determine the income tax liability on the 37,410,468 returns, Form 1040A and short-form 1040; however, on 11,429,525 of these returns, the adjusted gross income and allowable
exemptions are such that the tax table specifies the income to be nontaxable. Thus the income tax liability was determined from the tax table on 67.5 percent of all returns filed but this is the smallest percentage of returns to show use of the optional tax since its introduction in 1944 for adjusted gross income under $5,000.
The standard deduction was elected by the taxpayer on 43,865,313 returns which is 79.1 percent of all returns. Among these returns there are 6,454,845 returns with adjusted gross income of $5,000 or more.
INDIVIDUAL RETURNS INCLUDED
Data for individual returns are compiled from Forms 1040 and 1040A, filed by citizens and resident aliens. These returns include returns for the calendar year 1951, a fiscal year ending within the period July 1951 through June 1952, and a part year with the greater portion of the period in 1951. The vast majority of returns are for the calendar year 1951. Tentative returns are not used and amended returns are used only if the original returns are excluded.
A return is required of every individual, adult or child, who had $600 or more of gross income for the taxable year, except that every self-employed individual must file Form 1040 if he has at least $400 of net earnings from self-employment for 1951. Also, many returns not otherwise required are filed solely to claim refund of tax overpaid through tax withheld on wages or payments on declaration of estimated tax.
Form 1040A is the employee's optional return which may be filed by persons whose total income is less than $5,000 consisting of wages reported on the Withholding Statement, Form W-2, and not more than a total of $100 of other wages, dividends, and interest. The tax liability on Form 1040A is determined by the collector of internal revenue on the basis of the income reported, in accordance with the tax table provided under supplement T of the Internal Revenue Code of 1939. The tax in this table makes allowance for the standard deduction in lieu of nonbusiness deductions and for tax credits and also allows for exemptions. The standard deduction is approximately 10 percent of the income. The optional return cannot be used by a husband or wife whose spouse itemizes deductions; neither can it be used to report divided community income of husband and wife. A joint return of husband and wife may be filed on Form 1040A if their combined income meets the requirements for use of this form. On a joint return, the tax liability, determined from the tax table by the collector, is the lower of two amounts: an aggregate of the two taxes on the separate incomes of husband and wife or a tax on their combined income, the latter being the liability under the split-income method.