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INDIVIDUAL INCOME TAX RETURNS

INDIVIDUAL INCOME TAX RETURNS

SUMMARY DATA

For the income year 1948, there are 52,072,006 individual income tax returns. Compared with the number filed for 1947, there is a decrease of 3,027,002, or 5.5 percent. The current year returns include 19,245,300 optional returns, Form 1040A; 20,203,306 shortform returns, Form 1040; and 12,623,400 long-form returns, Form 1040.

On 43,243,079 returns, or 83 percent of all returns filed, the taxpayer elected to use the standard deduction. On 39,448,606 returns, or 75.8 percent of all returns, the tax liability is determined from the optional tax table provided under supplement T of the Internal Revenue Code; however, on 14,129,674 of these returns, the adjusted gross income is such that the amount thereof is without tax in the tax table on account of allowable exemptions.

There are 36,411,248 taxable returns for 1948. This is a decrease of 5,167,276, or 12.4 percent of the number of taxable returns for 1947. The nontaxable returns increased by 2,140,274, or 15.8 percent over the nontaxable returns for the previous year.

Individual returns, taxable and nontaxable, by form of return

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The total adjusted gross income reported is $164,173,861,000. The increase over the previous year is $13,878,586,000, or 9.2 percent. The adjusted gross deficit for 1948 is $657,847,000; this is an increase of $98,654,000, or 17.6 percent over that reported for 1947.

The tax liability of $15,441,529,000 is $2,634,752,000, or 14.6 percent, less than the tax for the previous year. The reduction in tax is due largely to new features provided by the 1948 act, such as, increased percentage reduction of the combined tentative normal tax and surtax, the split-income method of computing tax on joint returns,

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Individual income tax returns included in this report are for the calendar year 1948, a fiscal year ending within the period July 1948 through June 1949, and a part year with the greater part of the accounting period in 1948. The returns include Forms 1040 and 1040A, filed for citizens and resident aliens, and Form 1040B filed by nonresident aliens having a business within the United States. Tentative returns are not included and amended returns are used only if the original returns are excluded.

Form 1040A for 1948 supersedes Form W-2, the withholding statement for wages paid and income tax withheld, previously used as an optional return. Form 1040A is the employee's optional income tax return which may be filed by persons whose total income is less than $5,000 consisting of wages reported on Form W-2 and not more than a total of $100 from other wages, dividends, and interest. The optional return cannot be used as a separate return for community income of husband or wife. The tax liability on Form 1040A is determined by the collector of internal revenue on the basis of the income reported, in accordance with a tax table provided under supplement T of the Internal Revenue Code. The tax in this table makes allowance for exemptions and also for the standard deduction in lieu of nonbusiness deductions and tax credits; the standard deduction is approximately 10 percent of the income. Husband and wife may file a joint return on Form 1040A if their aggregate 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 the combined income, which tax is the liability under the split-income method.

Form 1040, the regular income tax return, which may be either a short-form or a long-form return, is used by persons who, by reason of the size or the source of their income, are not permitted to use the optional return, Form 1040A, and by persons who, though eligible to use Form 1040A, find it to their advantage to use Form 1040.

the source, may elect to file the short-form return on which nonbusiness deductions and tax credits are not reported and on which the tax is determined from the tax table provided under supplement T, by the taxpayer on the basis of the adjusted gross income. If the taxpayer whose adjusted gross income is less than $5,000 wishes to claim nonbusiness deductions in excess of the standard deduction allowed through use of the tax table, he must file the long-form return and compute the tax liability on the basis of net income after allowable exemptions. Persons with adjusted gross income of $5,000 or more must file the long-form return and compute the tax liability. In computing the net income to be taxed, the taxpayer may use, in lieu of nonbusiness deductions, the optional standard deduction which is the smaller of $1,000 or an amount equal to 10 percent of the adjusted gross income, except that in the case of a separate return of a married person, the standard deduction is $500.

A small number of returns, Form 1040B, are filed by nonresident aliens having a place of business within the United States; these returns are edited so that the data thereon conform as nearly as possible to that tabulated from returns, Form 1040, and are included in the statistics whether or not specifically mentioned.

Nontaxable returns with adjusted gross income and returns with adjusted gross deficit included in statistics are filed in compliance with the requirement that a return for 1948 must be filed by every person who had $600 or more gross income (not adjusted gross income), regardless of the allowable deductions and exemptions. Also individual returns showing less than $600 gross income are filed to claim refund of tax paid by reason of the tax withheld on wages or the payments made on a Declaration of Estimated Income Tax, Form 1040-ES.

Statistics are taken from the returns as filed, prior to revisions that may be made as a result of official audit. Facsimiles of individual returns, Forms 1040 and 1040A, are shown on pp. 458-481.

CHANGES IN THE INTERNAL RFVENUE CODE

Under the Revenue Act of 1948, amendatory of the Internal Revenue Code, there are changes affecting the comparability of income and tax data for 1948 with those tabulated for 1947. The major changes are:

(a) An income tax return is required to be filed for every individual (citizen or resident) including minors, having $600 or more (formerly $500) gross income for the taxable year. Individuals whose gross income is less than $600 and from whom tax was withheld should file a return to claim refund of tax.

(b) The per capita exemption for the taxpayer, his spouse, and dependents is increased, from the former $500 exemption, to $600. Supplementing this general increase in per capita exemption, the 1948 act also provides (1) an additional exemption of $600 for the taxpayer if he has attained the age of 65 before the end of the year and another $600 exemption if blind at the end of the year; and (2) if a separate return is made by a taxpayer whose spouse has no income and is not dependent on another, an additional exemption of $600 for

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