Individual Income Tax Returns, Preliminary Data, 2006
by Brian Balkovic
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or 2006, taxpayers filed 138.4 million U.S. individual income tax returns, an increase of 2.9 percent from the 134.5 million returns filed for 2005. Adjusted Gross Income (AGI) increased from the previous year by 8.4 percent to $8.0 trillion for 2006. Taxable income increased 9.0 percent to $5.6 trillion; the alternative minimum tax rose 21.3 percent to $19.3 billion; total income tax increased by 10.6 percent to $1.0 trillion; and total tax liability rose by 10.3 percent to $1.1 trillion. Figure A shows that the largest component of AGI, salaries and wages, increased 6.5 percent to $5,578.1 billion for Tax Year 2006, while the next largest component of AGI, net capital gains, rose by 13.4 percent to $685.3 billion. Other income items with notable percentage changes included capital gain distributions (part of net capital gains), which increased from $35.5 billion for 2005 to $62.3 billion for 2006, partnership and S corporation net income, which increased by 10.2 percent to $468.1 billion, and ordinary dividends, which increased 21.0 percent to $186.0 billion. Of this dividend total, about 70 percent were reported as qualified dividends. Qualified dividends, which receive preferential tax rates, were reported on 26.5 million returns and totaled $130.1 billion, an increase of 16.6 percent from 2005. Taxable interest income rose by 37.7 percent to $192.8 billion. For 2006, taxable pensions and annuities, the fourth largest income item, increased 7.6 percent to $460.6 billion. The other items related to retirement, taxable Social Security benefits and IRA distributions, also rose for 2006, by 16.2 percent and 11.9 percent, respectively. Declining income items included unemployment compensation at $26.8 billion (falling by 4.4 percent) and farm net income, which decreased by 9.1 percent from Tax Year 2005. Statutory adjustments to total income increased 5.7 percent to $110.1 billion for Tax Year 2006. The largest statutory adjustment was the deduction for
Brian Balkovic is an economist with the Individual Returns Analysis Section. This data release was prepared under the direction of Jeff Hartzok, Chief, Individual Returns Analysis Section.
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one-half of self-employment tax, representing 20.4 percent of the total. This adjustment to income increased 5.1 percent to $22.5 billion. The self-employment health insurance deduction increased 2.7 percent to $18.5 billion. Payments to self-employed retirement (Keogh) plans rose 4.3 percent to $20.2 billion, while deductible contributions to Individual Retirement Arrangements (IRAs) increased 4.6 percent to $12.8 billion. Tax Year 2006 law changes increased the contribution limits for both Roth and traditional IRAs for those age 50 and over (see Changes in Law section for details). The deduction for student loan interest increased 21.9 percent to $6.2 billion, while the deduction for tuition and fees fell 11.9 percent to $9.6 billion for Tax Year 2006. This was the first decline in this adjustment since its inception in 2002. Over 351,000 taxpayers who made contributions to qualified health savings accounts took an adjustment totaling nearly $0.8 billion. The domestic production activities deduction for Tax Year 2006 benefited nearly 403,000 taxpayers for a total deduction of $3.3 billion (a 54.3-percent increase from 2005). The Katrina Emergency Tax Relief Act of 2005 continued to provide favorable tax legislation for Tax Year 2006 taxpayers. For instance, taxpayers who housed individuals displaced by Hurricane Katrina could claim up to four additional exemptions totaling $2,000 (see Changes in Law section for details). An estimated 27,000 returns reported almost 48,500 exemptions for taxpayers providing housing for these victims. Altogether, the amount deducted for total exemptions increased by 6.3 percent from $842.3 billion for 2005 to $895.7 billion for 2006. This increase is larger than usual because of the change in the law allowing high-income taxpayers who previously were unable to take any exemption deduction to take a $1,100 deduction per exemption for 2006 (see Changes in Law section for details). Total deductions, the sum of the standard deductions and total itemized deductions (after limitation), equaled $1,793.7 billion, an increase of 7.7 percent from Tax Year 2005. The number of returns claiming the standard deduction increased 2.0 percent, accounting for 62.7 percent of all returns filed and 34.1 percent of the total deductions amount.1 Mostly due
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The remaining 1.9 percent of the returns did not need to claim either a standard deduction or itemized deductions because no AGI was reported.
Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
Figure A
Individual Income Tax Returns, Preliminary Data: Selected Income and Tax Items, Tax Years 2005 and 2006
[Money amounts are in thousands of dollars]
Number of returns Item 2005 (1) Number of returns, total Form 1040 returns Form 1040A returns Form 1040EZ returns [1] Electronically-filed returns [2] Adjusted gross income (less deficit) Salaries and wages Taxable interest Tax-exempt interest [3] Ordinary dividends Qualified dividends State income tax refunds Alimony received Business or profession net income Business or profession net loss Net capital gain [4] Capital gain distributions [4] Net capital loss Sales of property other than capital assets, net gain Sales of property other than capital assets, net loss Taxable Individual Retirement Arrangement distributions Taxable pensions and annuities Rent and royalty net income Rent and royalty net loss Partnership and S corporation net income Partnership and S corporation net loss Estate and trust net income Estate and trust net loss Farm net income Farm net loss Unemployment compensation Taxable Social Security benefits Total statutory adjustments Educator expenses Certain business expenses of reservists, performing artists, and fee-basis government officials Payments to an Individual Retirement Arrangement Student loan interest deduction Tuition and fees deduction Health savings account deduction Medical savings account deduction Moving expenses adjustment Self-employment tax deduction Self-employed health insurance deduction Payments to a self-employed retirement (Keogh) plan Penalty on early withdrawal of savings Alimony paid Domestic production activities deduction Other adjustments
Footnotes at end of figure.
Amount Percentage change (3) 2.9 2.9 2.0 4.3 9.0 2.9 2.0 5.3 35.0 1.4 2.8 3.7 -4.5 3.0 2.4 11.4 8.4 -13.8 -1.7 2.3 6.4 3.9 -1.0 1.2 -0.6 2.2 9.3 11.1 -10.6 3.2 -6.1 8.9 1.2 -10.0 16.9 -0.2 6.0 -14.9 65.8 -7.5 -3.6 2.3 -3.6 -1.7 46.7 -0.8 26.7 -46.9 2005 (4) N/A N/A N/A N/A N/A 7,363,648,396 5,236,515,411 140,024,777 54,410,697 153,736,864 111,592,163 20,961,408 7,943,058 300,591,401 43,083,206 604,352,228 35,457,864 22,075,818 11,421,195 7,747,570 111,709,278 428,025,371 74,425,992 48,353,595 424,863,423 61,665,756 15,159,317 756,271 9,237,072 19,842,812 27,995,669 126,409,367 104,151,627 893,327 290,381 12,207,511 5,075,930 10,928,436 488,782 40,398 3,055,362 21,368,314 17,982,362 19,406,380 267,260 8,523,911 2,123,938 1,425,226 2006 (5) N/A N/A N/A N/A N/A 7,982,660,690 5,578,112,649 192,779,487 69,505,527 185,974,188 130,083,446 22,670,071 7,854,640 316,776,424 47,456,970 685,331,194 62,333,008 18,691,022 12,220,069 9,275,159 125,057,748 460,647,534 77,337,722 55,133,308 468,113,804 65,866,290 17,404,639 738,487 8,395,511 22,519,021 26,777,624 146,855,542 110,079,073 816,224 368,850 12,768,170 6,187,425 9,632,076 845,431 29,908 3,157,994 22,451,883 18,469,428 20,243,044 433,716 8,701,183 3,277,003 1,066,677 Percentage change (6) N/A N/A N/A N/A N/A 8.4 6.5 37.7 27.7 21.0 16.6 8.2 -1.1 5.4 10.2 13.4 75.8 -15.3 7.0 19.7 11.9 7.6 3.9 14.0 10.2 6.8 14.8 -2.4 -9.1 13.5 -4.4 16.2 5.7 -8.6 27.0 4.6 21.9 -11.9 73.0 -26.0 3.4 5.1 2.7 4.3 62.3 2.1 54.3 -25.2
2006 (2) 138,420,499 83,518,153 32,250,392 22,651,954 81,536,629 138,420,499 116,832,397 62,500,172 6,036,087 31,538,899 26,527,893 23,117,093 437,222 16,171,389 5,464,904 17,884,072 14,581,370 8,612,023 848,344 828,441 10,064,480 24,467,625 5,607,719 5,203,752 4,516,531 2,305,876 503,385 33,932 564,085 1,400,682 7,457,645 13,946,403 33,832,756 3,205,761 120,005 3,286,760 8,605,148 4,028,959 351,170 17,011 1,087,129 16,892,682 3,537,194 1,176,905 1,172,267 578,779 402,710 136,308
134,462,537 81,144,182 31,607,574 21,710,782 74,813,073 134,462,537 114,595,809 59,326,291 4,469,929 31,089,911 25,797,647 22,281,894 457,751 15,702,731 5,335,832 16,048,768 13,447,772 9,994,323 863,391 810,196 9,462,567 23,549,681 5,664,697 5,140,616 4,543,703 2,256,974 460,575 30,538 631,116 1,356,681 7,943,765 12,808,594 33,421,578 3,562,069 102,683 3,293,501 8,118,415 4,731,924 211,766 18,391 1,127,511 16,507,523 3,670,561 1,197,774 798,900 583,305 317,810 256,855
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Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
Figure A—Continued
Individual Income Tax Returns, Preliminary Data: Selected Income and Tax Items, Tax Years 2005 and 2006—Continued
[Money amounts are in thousands of dollars]
Number of returns Item 2005 (1) Total exemptions Total deductions Total standard deduction Basic standard deduction Additional standard deduction Total itemized deductions (after limitation) Itemized deductions in excess of limitation Medical and dental expenses deduction Taxes paid deduction State and local income taxes [5] Income taxes General sales taxes Interest paid deduction Charitable contributions deduction Taxable income Alternative minimum tax Income tax before credits Total tax credits [6] Child care credit Credit for the elderly or disabled Child tax credit Education tax credits Retirement savings contributions credit Adoption credit Residential energy credits Foreign tax credit General business credit Prior year minimum tax credit Self-employment tax Total earned income credit (EIC) EIC used to offset income tax before credits EIC used to offset other taxes Excess EIC, refundable portion Additional child tax credit Credit for Federal telephone excise tax paid Total income tax Total tax liability 269,699,249 132,762,014 85,109,566 85,109,566 11,131,858 47,652,448 6,322,163 9,871,839 47,267,305 45,935,853 34,744,476 11,191,378 38,884,591 41,381,479 104,511,849 4,045,459 104,520,737 42,426,730 6,549,739 101,227 26,050,925 7,133,854 5,365,195 83,681 N/A 5,373,540 225,238 271,909 16,507,523 23,003,703 2,911,791 4,834,823 20,357,850 15,334,228 N/A 90,659,349 94,346,561 2006 (2) 276,280,206 135,806,268 86,788,384 86,788,384 11,419,381 49,017,884 6,827,652 10,121,720 48,565,862 46,847,080 35,846,674 11,000,405 40,110,187 41,427,765 106,803,674 4,037,074 106,823,754 46,331,299 6,524,616 99,044 25,818,992 7,819,470 5,261,485 90,684 4,452,576 6,392,372 362,918 334,017 16,892,682 23,392,886 2,983,077 4,972,285 20,639,026 15,723,997 97,260,127 92,762,414 96,671,006 Percentage change (3) 2.4 2.3 2.0 2.0 2.6 2.9 8.0 2.5 2.7 2.0 3.2 -1.7 3.2 0.1 2.2 -0.2 2.2 9.2 -0.4 -2.2 -0.9 9.6 -1.9 8.4 N/A 19.0 61.1 22.8 2.3 1.7 2.4 2.8 1.4 2.5 N/A 2.3 2.5 2005 (4) 842,320,994 1,665,601,292 584,209,412 567,428,479 16,780,934 1,081,391,880 42,549,206 66,086,920 390,944,404 237,687,278 220,687,451 16,999,827 390,375,165 172,025,442 5,092,405,537 15,874,227 982,560,689 54,297,474 3,487,785 13,787 32,184,128 6,194,770 962,976 303,397 N/A 8,340,820 658,970 1,080,361 42,728,376 43,091,796 752,954 4,279,188 38,059,653 15,588,969 N/A 928,263,735 970,951,374
Amount 2006 (5) 895,678,748 1,793,667,050 611,274,926 594,041,953 17,232,969 1,182,392,125 33,562,088 69,090,147 423,257,838 258,058,659 239,126,293 18,932,366 450,398,602 173,018,464 5,553,096,928 19,252,710 1,083,780,725 57,450,072 3,519,410 14,847 31,836,114 7,128,447 908,521 334,705 1,023,719 9,430,601 1,114,077 1,012,865 44,895,363 45,364,048 808,517 4,645,878 39,909,653 16,354,979 4,180,071 1,026,331,685 1,071,236,902 Percentage change (6) 6.3 7.7 4.6 4.7 2.7 9.3 -21.1 4.5 8.3 8.6 8.4 11.4 15.4 0.6 9.0 21.3 10.3 5.8 0.9 7.7 -1.1 15.1 -5.7 10.3 N/A 13.1 69.1 -6.2 5.1 5.3 7.4 8.6 4.9 4.9 N/A 10.6 10.3
N/A—Not applicable. [1] For 2006, the total number of returns includes Form 1040EZ -T returns. [2] Included in data for Forms 1040, 1040A, and 1040EZ. [3] Not included in adjusted gross income. [4] Includes capital gain distributions reported on Form 1040 and Schedule D. [5] State and local income taxes are the total of both income taxes and general sales taxes. [6] Includes EIC used to offset income tax before credits, shown separately later in this figure. NOTE: Detail may not add to totals because of rounding.
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Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
to inflation indexing, the average standard deduction (comprised of the basic and additional standard deductions for age and blindness) increased 2.6 percent from $6,864 for 2005 to $7,043 for 2006. Itemized deductions were claimed on 35.4 percent of all returns filed for 2006 and represented 65.9 percent of the total deductions amount. The average total for itemized deductions (after limitation) was $24,122, a 6.3-percent increase from the 2005 average of $22,693. Due to the AGI limitation on itemized deductions, 6.8 million higher-income taxpayers were unable to deduct $33.6 billion in itemized deductions, a decrease of 21.1 percent from 2005. This large decrease was due to a change in the law that reduced this limitation by one-third for 2006 (see Changes in Law section for details). The interest paid deduction was the largest deduction, comprising 37.0 percent of total itemized deductions (before limitation). For 2006, it increased 15.4 percent to $450.4 billion. The Tax Relief and Health Care Act of 2006 extended the election to deduct State and local general sales taxes instead of State and local income taxes. For 2006, an estimated 11.0 million taxpayers took advantage of this, deducting $18.9 billion. Including taxpayers who deducted State and local sales taxes, 2.0 percent more taxpayers took a deduction for State and local income and sales taxes, and the total amount of this deduction increased 8.6 percent from 2005 levels. The total taxes paid deduction accounted for 34.8 percent of all itemized deductions and increased 8.3 percent to $423.3 billion. The deduction for medical and dental expenses went up by 4.5 percent to $69.1 billion, while the charitable contributions deduction increased slightly, 0.6 percent, to $173.0 billion for 2006. Total tax credits used to offset income tax liabilities increased 5.8 percent to $57.5 billion. About 25.8 million taxpayers claimed $31.8 billion in child tax credits, down 1.1 percent from $32.2 billion in 2005. However, the additional child tax credit (a refundable separate credit) increased by 4.9 percent to $16.4 billion in 2006. The combined $48.2 billion of the child tax credit and the additional child tax credit represented a slight, 0.9-percent increase from 2005 and was greater than the $45.4 billion of total EIC (see below). Other notable percentage increases for major tax credits included a 15.1-percent rise in education tax
credits to $7.1 billion (as opposed to the decrease in the deduction for tuition and fees cited above) and a 13.1-percent rise in the foreign tax credit to $9.4 billion. Smaller credits, such as the general business credit and the adoption credit, also had significant increases from 2005, 69.1 percent and 10.3 percent, respectively. The large percentage increase in the general business credit can be partially attributed to the Energy Policy Act of 2005 and the Safe, Accountable, Flexible, Efficient Transportation Act of 2005 (see Changes in Law section for details). In addition, Tax Year 2006 introduced two new credits: the residential energy credit and the credit for Federal telephone excise taxes previously collected erroneously (see Changes in Law section for details). Taxpayers on nearly 4.5 million returns took advantage of the residential energy credits and reduced their taxes by over $1.0 billion, while 97.3 million returns claimed credits of $4.2 billion for the Federal telephone excise tax. The total earned income credit (EIC) increased 5.3 percent to $45.4 billion for Tax Year 2006. The portion of the EIC used to offset income tax before credits increased 7.4 percent to $0.8 billion, and the portion of the EIC used to offset other taxes (such as the self-employment tax) rose 8.6 percent to $4.6 billion. The largest part of the EIC, the refundable portion, was treated as a refund and paid directly to taxpayers who had no tax liability against which to apply the credit. The refundable portion of the EIC increased 4.9 percent to $39.9 billion for 2006. The comparisons of data for Tax Years 2005 and 2006 in this article are based on the preliminary estimates for both years. A few income and tax items tend to be understated in preliminary estimates; therefore, comparisons based on preliminary estimates for one year and final estimates for the previous year could be misleading. Comparisons based entirely on preliminary estimates reduce the likelihood of misinterpretation of the data and afford a more accurate representation of year-to-year changes. Final statistics for Tax Year 2005 are available in the Fall 2006 issue of the Bulletin.
Changes in Law
In general, the definitions used in this article are the same as those in Statistics of Income—2005, Individual Income Tax Returns. The following is a partial list of tax law and Internal Revenue Service admin9
Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
istrative changes that had a major bearing on the Tax Year 2006 preliminary data presented in this article. Additional Child Tax Credits—Modifications were made to the additional child tax credit for 2006. In Tax Year 2005, the credit limit based on earned income was 15 percent of a taxpayers earned income that exceeded $11,000. For 2006, the limit was 15 percent of a taxpayer’s earned income that exceeded $11,300. Alternative Minimum Tax (AMT)—For Tax Year 2006, the minimum exemption rose to $62,550 for a married couple filing a joint return, up from $58,000 in 2005, and to $42,500 for singles and heads of household, up from $40,250, and $31,275 from $29,000 for a married person filing separately. Earned Income Credit—The maximum amount of the earned income credit increased, as did the amounts of earned income and investment income an individual could have and still claim the credit. The maximum amount of investment income (interest, dividends and capital gain income) a taxpayer could have and still claim the credit increased to $2,800 from $2,700. The maximum credit for taxpayers with no qualifying children increased to $412 from $399. For these taxpayers, earned income and AGI had to be less than $12,120 ($14,120 if married filing jointly) to get any EIC. For taxpayers with one qualifying child, the maximum credit increased $85 to $2,747, and, for taxpayers with two or more qualifying children, the maximum credit increased to $4,536 from $4,400. To be eligible for the credit, a taxpayer’s earned income and AGI had to be less than $32,001 ($34,001 for married filing jointly) for one qualifying child, or less than $36,348 ($38,348 for married filing jointly) for two or more qualifying children. Exemption Amount—For Tax Year 2006, the exemption amount increased by $100 to $3,300. Taxpayers could have lost a portion of their exemption benefits if their adjusted gross incomes were above certain amounts ($112,875 married persons filling separately, $150,500 single individuals, $188,150 for heads of household, and $225,750 for married persons filling jointly or qualifying widow(er)s). For 2006, a taxpayer could lose no more than twothirds of the dollar amount of their exemption, so the amount of each exemption could not be reduced to less than $1,100. For 2005 and previous years, exemption amounts could be limited to zero.
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Credit for Federal Telephone Excise Tax—Taxpayers who were billed after February 28, 2003, and before August 1, 2006, for Federal telephone excise tax on long distance or bundled service may have taken credit for those payments on their Tax Year 2006 income tax returns. Individuals were eligible to receive this credit if they had not received a refund from their service providers. They could claim a credit for these telephone excise payments even if they had no income tax liability. Taxpayers could request either a standard amount based on the number of exemptions claimed on their returns (number of exemptions: 0 = $0, 1 = $30, 2 = $40, 3 = $50, 4 or more = $60), or they could claim the actual amounts as shown on their long distance telephone records. Individuals who did not otherwise have to file an income tax return filed a Form 1040EZ-T, Request for Refund of Federal Telephone Excise Tax, in order to obtain their refunds. A total of 739,206 Form 1040EZ-T returns were filed for Tax Year 2006. General Business Credits—The Energy Tax Incentives Act of 2005 and the Safe, Accountable, Flexible, Efficient Transportation Act of 2005 provided tax incentives for energy efficient buildings and appliances, alternative and clean fuel vehicle credits, and other incentives and credits related to energy production and excise taxes. Of these, the new alternative motor vehicle credit had a large effect on the statistics for the general business credit for Tax Year 2006. A total of 145,000 sole proprietorships reported over $291.0 million for the tentative alternative motor vehicle credit. Health Savings Account Deduction—For Tax Year 2006, the maximum HSA deduction increased by $50 to $2,700 ($5,450, if family coverage, up from $5,250). These limits were $700 higher if the taxpayer was age 55 or older. Katrina Emergency Tax Relief Act of 2005—The new law provides an additional exemption of $500 in taxable years 2005 or 2006 for each Hurricane Katrina displaced individual claimed by the taxpayer. The total additional exemption claimed for all years cannot exceed: $2,000 for married taxpayers filing jointly, $1,000 for married taxpayers filing separately, and $2,000 for all other taxpayers. A Hurricane Katrina displaced individual is a person (1) whose main home on August 28, 2005, was in the Hurricane Katrina disaster area, (2) who was displaced from the home, and (3) who was provided housing free of
Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
charge in the taxpayer’s main home for a period of at least 60 consecutive days which ended in the taxable year in which the exemption was claimed. The additional exemption is not subject to the income-based phaseouts applicable to personal exemptions, and is allowed as a deduction in computing alternative minimum taxable income. Kiddie Tax—For Tax Year 2006, the age limit for children who received taxable income and needed to figure tax using their parent’s higher marginal rates increased from 14 to 18. Also, the amount of taxable investment income a child could have before being taxed at their parents’ rate rose to $1,700, up from $1,600. Because of the age change, the number of children filing Form 8615 increased from 142 thousand to 331 thousand. The kiddie tax paid on these returns increased 107.3 percent to $645.2 million for 2006. Indexing—The following items increased due to indexing for inflation: personal exemption amounts, basic standard deduction amounts, tax bracket boundaries, beginning income amounts for limiting certain itemized deductions and for the reduction of personal exemption deductions. The maximum amount of earnings subject to self-employment tax increased based on the percentage change in average covered earnings. Individual Retirement Arrangement Deduction—For 2006, the contribution limit for Roth and traditional IRAs increased to $5,000, up from $4,500 in 2005, for taxpayers age 50 or over. For taxpayers under 50, the limit remained unchanged at $4,000. The $10,000 phaseout range for IRA deductions for those covered by a retirement plan began at income of $75,000 if married filing jointly or a qualifying window(er), up from $70,000 in 2005. It remained at $50,000 for single person or head of household and at $0 for a married person filing a separate return. Military members serving in combat zone localities could use tax free combat pay in figuring how much to contribute to a Roth or traditional IRA. This allowed members of the military with no taxable earned income to make contributions, unlike in previous years. Limit on Itemized Deductions Increased—Taxpayers who had adjusted gross income above
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$150,500 ($75,250 if married filing separately) could have lost part of their deduction for itemized deductions. This was an increase from 2005 amounts of $145,950 ($72,975 if married filling separately). For Tax Year 2006, the amount by which the deduction was reduced was only two-thirds of the amount of the reduction that would have otherwise applied (for 2005 and previous years). Residential Energy Credit—For 2006, a taxpayer could receive a 10 percent credit for buying qualified energy efficiency improvements for their main home. The maximum nonbusiness energy property credit for all tax years is $500, and no more than $200 of the credit can be attributable to expenses for windows. An estimated 45 thousand taxpayers took an additional 30 percent credit for cost related to residential energy efficient property (qualified solar electric costs, solar water heating costs, and fuel cell costs) totaling $44.0 million. Also, the credit for cost related to residential energy-efficient property was not limited to $500. Standard Deduction Amount Increased—The standard deduction for people who did not itemize deductions on Schedule A of Form 1040 was, in most cases, higher for 2006 than it was in 2005. The amount depended on filing status, being 65 or older or blind, and whether an exemption could be claimed for a taxpayer by another person. For 2006, the standard deduction increased to $10,300 for joint filers, up from $10,000 in 2005. For single filers and married filing separately the deduction amount increased to $5,150. For heads of households, the deduction was $7,550.
Data Sources and Limitations
The preliminary statistics in this data release are based on a sample of individual income tax returns (Forms 1040, 1040A, and 1040EZ including electronically filed returns) filed during Calendar Year 2007. Returns in the sample were stratified based on: (1) the larger of positive income or negative income; (2) the size of business and farm receipts; (3) the presence or absence of specific forms or schedules; and (4) the usefulness of returns for Treasury Department tax modeling purposes.2 Returns were then selected at rates ranging from 0.1 percent to
Returns in the sample were stratified based on the presence or absence of one or more of the following forms or schedules: Form 2555, Foreign Earned Income; Form 1116, Foreign Tax Credit (Individual, Fiduciary, or Nonresident Alien Individual); Schedule C, Profit or Loss from Business (Sole Proprietorship); and Schedule F, Profit or Loss from Farming.
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Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
100 percent. The preliminary Tax Year 2006 data are based on a sample of 243,548 returns and an estimated final population of 138,503,310 returns. The corresponding sample and population for the preliminary 2005 data were 231,171 and 134,577,117 returns, respectively. Since the data presented here are estimates based on a sample of returns filed, they are subject to sampling error. To properly use the statistical data provided, the magnitude of the potential sampling error must be known; coefficients of variation (CVs) are used to measure that magnitude. The reliability of estimates based on samples, and the use of coef-
ficients of variation for evaluating the precision of estimates based on samples, are discussed in the appendix to this issue of the Bulletin. While the preliminary estimates are intended to represent a full year of taxpayer reporting, they are actually based on returns processed for tax administration purposes, in the case of 2006 returns, between January and late September of 2007. In general, returns processed during the remainder of each year tend to have somewhat different characteristics compared to returns processed earlier. These characteristics include, for example, disproportionately large amounts of investment income, passive losses, and alternative minimum tax.
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Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
Table 1. Individual Income Tax Returns, Tax Year 2006 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income
[All figures are estimates based on samples—money amounts are in thousands of dollars] Size of adjusted gross income Item All returns $15,000 Under $15,000 [1] (2) 37,614,447 14,582,112 9,906,316 13,126,017 20,317,735 188,623,915 27,988,707 219,570,526 9,398,553 12,304,484 448,064 2,292,581 4,407,519 6,341,798 3,603,463 3,162,063 558,024 523,101 76,799 469,202 4,935,087 33,961,648 1,007,477 15,599,583 1,478,097 10,391,627 775,280 847,073 1,598,634 3,472,291 90,397 1,048,176 126,553 3,981,291 1,423,477 6,221,499 3,829,440 24,269,588 under $30,000 (1) Number of returns, total Form 1040 returns Form 1040A returns Form 1040EZ returns [2] Electronically-filed returns [3] 138,420,499 83,518,153 32,250,392 22,651,954 81,536,629 (3) 29,648,886 12,373,341 11,931,339 5,344,207 18,863,279 655,386,215 25,291,726 532,165,023 8,602,386 14,119,134 421,142 1,871,539 3,556,147 6,689,039 2,852,224 3,498,261 1,453,674 718,430 113,223 1,009,563 2,706,877 33,215,671 809,904 5,728,321 1,240,184 5,684,784 543,387 718,607 969,085 2,062,755 94,484 591,014 85,881 422,228 1,842,487 11,303,977 4,728,589 55,138,473 $30,000 under $50,000 (4) 24,906,995 15,141,911 6,694,879 3,070,207 15,639,751 $50,000 under $100,000 (5) 30,052,882 25,392,622 3,571,505 1,088,755 18,020,528 $100,000 under $200,000 (6) 12,109,523 11,940,400 146,356 22,766 6,834,881 (7) 4,087,767 4,087,767 0 0 1,860,452 $200,000 or more
Adjusted gross income (less deficit) 7,982,660,690 Salaries and wages: Number of returns 116,832,397 Amount 5,578,112,649 Taxable interest: Number of returns 62,500,172 Amount 192,779,487 Tax-exempt interest [4]: Number of returns 6,036,087 Amount 69,505,527 Ordinary dividends: Number of returns 31,538,899 Amount 185,974,188 Qualified dividends: Number of returns 26,527,893 Amount 130,083,446 State income tax refunds: Number of returns 23,117,093 Amount 22,670,071 Alimony received: Number of returns 437,222 Amount 7,854,640 Business or profession net income: Number of returns 16,171,389 Amount 316,776,424 Business or profession net loss: Number of returns 5,464,904 Amount 47,456,970 Net capital gain reported on Schedule D: Number of returns 13,234,954 Amount 676,753,504 Capital gain distributions reported on Form 1040: Number of returns 4,649,118 Amount 8,577,690 Net capital loss: Number of returns 8,612,023 Amount 18,691,022 Sales of property other than capital assets, net gain: Number of returns 848,344 Amount 12,220,069 Sales of property other than capital assets, net loss: Number of returns 828,441 Amount 9,275,159 Taxable Individual Retirement Arrangement distributions: Number of returns 10,064,480 Amount 125,057,748 Taxable pensions and annuities: Number of returns 24,467,625 Amount 460,647,534
Footnotes at end of table.
973,569,175 2,123,893,982 1,610,028,478 2,431,158,925 22,183,773 26,927,990 10,919,775 3,520,432 801,742,594 1,677,698,996 1,213,106,852 1,133,828,658 10,511,262 16,732,081 615,311 3,309,087 4,330,807 9,222,334 3,536,339 5,025,537 3,916,292 2,249,332 113,749 1,489,962 2,376,501 32,464,292 978,345 5,695,514 1,623,365 9,558,503 742,085 1,053,251 1,056,643 2,134,173 107,550 663,544 96,260 467,207 1,771,601 14,286,937 4,596,298 73,632,304 19,722,637 41,636,859 1,662,698 9,636,030 9,524,467 27,672,117 7,906,716 16,890,337 10,204,589 7,644,525 102,865 2,383,400 3,526,978 63,147,507 1,658,693 9,522,642 3,787,531 37,553,097 1,510,198 2,649,260 2,363,620 5,015,656 228,166 1,952,986 178,999 737,206 3,115,328 39,815,789 7,334,198 164,388,444 10,359,139 33,840,034 1,486,817 11,576,836 6,508,529 32,611,674 5,657,809 21,585,258 5,595,597 5,886,385 22,911 1,117,011 1,804,635 62,402,672 745,155 5,043,176 3,052,189 64,964,904 847,662 2,087,711 1,734,632 3,786,854 147,590 2,034,101 143,458 889,728 1,440,935 33,060,219 3,104,743 103,222,185 3,906,193 74,146,896 1,402,058 40,819,457 3,211,432 103,437,225 2,971,341 79,921,990 1,388,919 5,648,298 7,677 1,385,501 821,312 91,584,635 265,331 5,867,735 2,053,589 548,600,585 230,507 1,221,785 889,410 2,219,293 180,157 5,930,251 197,292 2,777,500 470,649 20,369,325 874,355 39,996,539
13
Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
Table 1. Individual Income Tax Returns, Tax Year 2006 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income—Continued
[All figures are estimates based on samples—money amounts are in thousands of dollars] Size of adjusted gross income Item All returns Under $15,000 [1] (2) 725,924 4,482,710 713,691 10,210,169 288,170 3,455,771 398,433 26,188,819 49,424 259,211 6,485 265,926 109,452 778,825 267,426 6,113,665 1,429,953 4,028,738 75,561 290,198 6,547,060 8,611,968 83,980 18,068 $15,000 under $30,000 (1) Rent and royalty net income: Number of returns Amount Rent and royalty net loss: Number of returns Amount Partnership and S corporation net income: Number of returns Amount Partnership and S corporation net loss: Number of returns Amount Estate and trust net income: Number of returns Amount Estate and trust net loss: Number of returns Amount Farm net income: Number of returns Amount Farm net loss: Number of returns Amount Unemployment compensation: Number of returns Amount Taxable Social Security benefits: Number of returns Amount Total statutory adjustments: Number of returns Amount Educator expenses: Number of returns Amount Certain business expenses of reservists, performing artists, and fee-basis government officials: Number of returns Amount Payments to an Individual Retirement Arrangement: Number of returns Amount Student loan interest deduction: Number of returns Amount Tuition and fees deduction: Number of returns Amount Health savings account deduction: Number of returns Amount Medical savings account deduction: Number of returns Amount 5,607,719 77,337,722 5,203,752 55,133,308 4,516,531 468,113,804 2,305,876 65,866,290 503,385 17,404,639 33,932 738,487 564,085 8,395,511 1,400,682 22,519,021 7,457,645 26,777,624 13,946,403 146,855,542 33,832,756 110,079,073 3,205,761 816,224 (3) 719,681 3,824,814 631,171 5,531,704 301,191 3,430,145 207,033 2,247,787 36,484 210,515 4,537 13,161 99,286 979,284 209,619 2,386,289 2,052,217 7,206,757 2,511,932 5,006,852 5,278,518 9,040,544 212,258 49,667 $30,000 under $50,000 (4) 757,176 4,710,615 841,616 7,275,150 467,256 7,255,776 283,490 3,013,156 57,386 341,676 1,748 25,675 106,470 1,135,370 241,489 2,880,151 1,572,763 5,927,645 3,601,008 22,940,476 6,005,506 12,377,704 583,505 139,110 $50,000 under $100,000 (5) 1,594,246 13,617,142 1,719,422 15,405,088 1,142,593 23,042,128 594,637 6,488,869 132,976 1,494,250 5,971 22,817 153,517 2,297,502 424,577 4,995,433 1,846,829 7,103,259 5,139,053 71,339,323 9,425,236 26,381,764 1,404,912 362,069 $100,000 under $200,000 (6) 1,060,025 14,778,200 870,231 7,820,917 1,070,014 43,998,462 457,195 6,601,529 124,515 2,295,795 7,854 76,801 68,575 1,446,075 176,888 2,791,222 477,912 2,077,452 1,892,217 33,219,136 4,861,861 23,789,113 810,570 220,294 (7) 750,673 35,924,239 427,624 8,890,280 1,247,310 386,931,518 365,090 21,326,132 102,600 12,803,195 7,338 334,107 26,785 1,758,456 80,685 3,352,262 77,973 433,774 726,631 14,059,558 1,714,576 29,877,980 110,534 27,020 $200,000 or more
120,005 368,850 3,286,760 12,768,170 8,605,148 6,187,425 4,028,959 9,632,076 351,170 845,431 17,011 29,908
15,317 78,420 178,443 472,522 799,712 497,263 786,010 2,229,087 12,193 25,402 366 363
21,367 54,808 491,755 1,385,278 1,572,827 1,056,644 358,634 832,231 24,594 37,404 1,704 1,959
17,998 65,275 778,811 2,629,202 2,200,386 1,650,012 433,246 989,390 52,053 91,876 4,466 3,888
38,897 99,722 1,129,318 4,476,408 3,141,256 2,427,939 1,116,338 2,418,219 118,650 255,657 4,268 10,342
23,251 58,080 558,773 2,714,408 890,968 555,569 1,334,732 3,163,148 79,831 209,772 3,328 4,745
3,179 12,543 149,661 1,090,352 0 0 0 0 63,846 225,323 2,881 8,613
14
Footnotes at end of table.
Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
Table 1. Individual Income Tax Returns, Tax Year 2006 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income—Continued
[All figures are estimates based on samples—money amounts are in thousands of dollars] Size of adjusted gross income Item All returns Under $15,000 [1] (2) 97,993 230,899 4,847,756 2,539,574 486,051 1,690,861 21,891 114,498 206,265 81,515 37,739 455,843 8,396 1,863 13,915 154,352 35,010,184 219,938,507 33,132,063 192,576,599 33,132,063 187,246,043 3,735,598 5,330,553 1,878,122 27,361,908 0 0 1,198,624 8,605,357 1,786,455 4,810,268 1,573,754 1,133,894 587,785 589,572 985,968 544,322 $15,000 under $30,000 (1) Moving expenses adjustment: Number of returns Amount Self-employment tax deduction: Number of returns Amount Self-employed health insurance deduction: Number of returns Amount Payments to a self-employed retirement (Keogh) plan: Number of returns Amount Penalty on early withdrawal of savings: Number of returns Amount Alimony paid: Number of returns Amount Domestic production activities deduction: Number of returns Amount Other adjustments: Number of returns Amount Total deductions: Number of returns Amount Total standard deduction: Number of returns Amount Basic standard deduction: Number of returns Amount Additional standard deduction: Number of returns Amount Total itemized deductions (after limitation): Number of returns Amount Itemized deductions in excess of limitation: Number of returns Amount Medical and dental expenses deduction: Number of returns Amount Taxes paid deduction: Number of returns Amount State and local income taxes [5]: Number of returns Amount Income taxes: Number of returns Amount General sales taxes: Number of returns Amount
Footnotes at end of table.
$30,000 under $50,000 (4) 217,877 471,685 2,437,181 2,675,869 541,133 2,237,559 82,013 546,245 238,170 69,700 87,032 687,352 35,238 24,893 26,592 82,416 24,902,939 259,106,584 16,008,030 123,100,918 16,008,030 120,131,694 1,952,605 2,969,222 8,894,908 136,005,666 0 0 2,566,113 14,859,988 8,761,972 32,111,521 8,351,937 13,956,090 6,153,913 11,430,636 2,198,024 2,525,455
$50,000 under $100,000 (5) 331,540 1,009,558 3,673,542 5,217,133 835,069 4,120,228 253,636 2,208,683 315,955 117,092 200,109 1,814,032 85,632 89,566 36,289 235,184 30,050,155 469,953,668 10,954,420 101,049,207 10,954,420 97,813,107 2,046,588 3,236,100 19,095,734 368,904,461 102,259 23,548 3,358,984 21,344,251 19,025,427 110,636,971 18,491,140 57,314,601 14,821,496 51,151,106 3,669,644 6,163,495
$100,000 under $200,000 (6) 173,608 790,413 2,004,715 4,358,707 593,492 3,600,987 385,950 5,812,185 159,774 57,481 118,940 1,813,597 95,022 183,254 24,872 232,571 12,108,440 311,346,592 1,442,339 14,618,909 1,442,339 13,841,621 468,724 777,288 10,666,100 296,727,683 2,854,004 1,275,777 814,888 7,580,273 10,653,668 111,275,862 10,470,750 64,276,889 8,711,236 59,692,890 1,759,514 4,583,999
$200,000 or more (7) 46,712 245,294 1,177,744 5,080,625 562,143 4,882,256 397,911 11,428,728 49,957 37,563 83,817 3,524,321 164,075 2,970,693 10,952 289,992 4,087,716 288,623,494 215,740 2,117,831 215,740 1,988,758 78,839 129,072 3,871,976 286,505,663 3,871,390 32,262,764 89,025 2,627,055 3,867,589 151,740,293 3,832,993 117,276,598 3,194,895 113,511,827 638,100 3,764,769
(3) 219,402 410,145 2,751,743 2,579,976 519,305 1,937,536 35,507 132,705 202,145 70,368 51,145 406,037 14,348 6,736 23,691 72,159 29,646,832 244,698,207 25,035,792 177,811,464 25,035,792 173,020,725 3,137,026 4,790,733 4,611,040 66,886,742 0 0 2,094,087 14,073,218 4,470,749 12,682,925 4,126,506 4,100,589 2,377,349 2,750,263 1,749,157 1,350,325
1,087,129 3,157,994 16,892,682 22,451,883 3,537,194 18,469,428 1,176,905 20,243,044 1,172,267 433,716 578,779 8,701,183 402,710 3,277,003 136,308 1,066,677 135,806,268 1,793,667,050 86,788,384 611,274,926 86,788,384 594,041,953 11,419,381 17,232,969 49,017,884 1,182,392,125 6,827,652 33,562,088 10,121,720 69,090,147 48,565,862 423,257,838 46,847,080 258,058,659 35,846,674 239,126,293 11,000,405 18,932,366
15
Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
Table 1. Individual Income Tax Returns, Tax Year 2006 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income—Continued
[All figures are estimates based on samples—money amounts are in thousands of dollars] Size of adjusted gross income Item All returns Under $15,000 [1] (2) 1,206,964 10,574,132 1,179,148 1,619,116 11,344,628 34,742,527 10,023 81,650 11,353,195 3,534,141 2,612,210 392,661 32,606 4,614 56,056 10,406 231,421 26,241 591,175 183,375 302,371 65,226 ** ** 36,272 4,035 330,261 10,500 6,144 1,074 1,463 114 4,847,756 5,076,735 12,396,250 22,920,782 1,086,868 86,583 $15,000 under $30,000 (1) Interest paid deduction: Number of returns Amount Charitable contributions deduction: Number of returns Amount Taxable income: Number of returns Amount Alternative minimum tax: Number of returns Amount Income tax before credits: Number of returns Amount Total tax credits [6]: Number of returns Amount Child care credit: Number of returns Amount Credit for the elderly or disabled: Number of returns Amount Child tax credit: Number of returns Amount Education tax credits: Number of returns Amount Retirement savings contributions credit: Number of returns Amount Adoption credit: Number of returns Amount Residential energy credits: Number of returns Amount Foreign tax credit: Number of returns Amount General business credit: Number of returns Amount Prior year minimum tax credit: Number of returns Amount Self-employment tax: Number of returns Amount Total earned income credit (EIC): Number of returns Amount EIC used to offset income tax before credits: Number of returns Amount 40,110,187 450,398,602 41,427,765 173,018,464 106,803,674 5,553,096,928 4,037,074 19,252,710 106,823,754 1,083,780,725 46,331,299 57,450,072 6,524,616 3,519,410 99,044 14,847 25,818,992 31,836,114 7,819,470 7,128,447 5,261,485 908,521 90,684 334,705 4,452,576 1,023,719 6,392,372 9,430,601 362,918 1,114,077 334,017 1,012,865 16,892,682 44,895,363 23,392,886 45,364,048 2,983,077 808,517 (3) 3,105,372 25,965,861 3,262,742 6,190,357 25,074,747 250,711,104 6,117 19,488 25,074,981 28,876,222 11,035,421 6,314,560 1,158,838 600,325 42,987 4,441 5,532,472 2,935,137 2,097,080 1,590,445 2,455,945 450,252 ** 3,823 ** 2,444 290,575 57,309 419,423 42,768 11,829 9,440 10,253 6,047 2,751,743 5,158,588 8,963,542 21,107,675 1,358,391 605,753 $30,000 under $50,000 (4) 6,888,558 58,215,543 6,926,596 14,706,167 $50,000 under $100,000 (5) 16,367,162 160,618,658 16,486,384 44,069,662 $100,000 under $200,000 (6) 9,332,120 120,314,309 9,891,158 38,178,579 (7) 3,210,013 74,710,104 3,681,738 68,254,587 $200,000 or more
24,330,098 29,883,128 12,089,990 4,081,084 551,385,341 1,409,304,270 1,187,091,681 2,119,862,003 10,697 27,197 24,330,101 71,230,518 10,634,048 11,384,119 1,363,553 803,006 0 0 6,782,577 7,688,856 2,099,279 1,995,076 2,502,518 392,997 22,130 29,250 788,993 164,205 663,904 81,359 40,711 64,217 12,102 17,123 2,437,181 5,350,527 2,033,092 1,335,592 537,820 116,179 219,535 272,525 29,888,144 207,895,254 14,362,114 22,875,797 2,416,598 1,282,657 0 0 10,165,509 16,876,668 2,880,739 3,287,047 651 46 47,532 164,824 1,971,839 439,585 1,804,546 414,109 130,406 263,407 55,565 56,906 3,673,542 10,432,451 0 0 0 0 1,132,178 2,141,751 12,093,831 217,060,887 5,765,181 6,523,387 1,274,787 686,508 0 0 3,105,352 4,307,676 151,196 72,505 0 0 16,298 132,007 1,082,415 272,507 1,704,651 674,590 106,583 170,008 148,009 159,657 2,004,715 8,716,400 0 0 0 0 2,658,522 16,710,101 4,083,501 555,183,703 1,922,326 9,959,547 278,235 142,298 0 0 1,662 1,539 0 0 0 0 901 6,175 282,480 86,078 1,469,584 8,207,274 67,247 605,930 106,627 773,019 1,177,744 10,160,659 0 0 0 0
16
Footnotes at end of table.
Individual Income Tax Returns, Preliminary Data, 2006
Statistics of Income Bulletin | Spring 2008
Table 1. Individual Income Tax Returns, Tax Year 2006 Preliminary Data: Selected Income and Tax Items, by Size of Adjusted Gross Income—Continued
[All figures are estimates based on samples—money amounts are in thousands of dollars] Size of adjusted gross income Item All returns Under $15,000 [1] (2) 3,247,574 2,724,744 10,804,666 20,109,454 2,753,186 1,266,585 18,193,693 723,444 9,902,429 3,141,480 12,396,501 5,670,230 $15,000 under $30,000 (1) EIC used to offset other taxes: Number of returns Amount Excess EIC, refundable portion: Number of returns Amount Additional child tax credit: Number of returns Amount Credit for Federal telephone excise tax paid: Number of returns Amount Total income tax: Number of returns Amount Total tax liability: Number of returns Amount 4,972,285 4,645,878 20,639,026 39,909,653 15,723,997 16,354,979 97,260,127 4,180,071 92,762,414 1,026,331,685 96,671,006 1,071,236,902 (3) 1,400,473 1,750,799 8,346,920 18,751,122 8,286,213 8,671,525 20,015,816 824,876 17,305,918 22,561,661 18,035,187 25,846,422 $30,000 under $50,000 (4) 324,238 170,336 1,487,439 1,049,077 3,674,218 5,075,484 18,932,562 783,685 20,519,800 59,846,400 21,004,343 65,043,172 $50,000 under $100,000 (5) 0 0 0 0 989,158 1,307,461 25,344,153 1,134,889 28,883,062 185,019,469 29,074,807 196,955,952 $100,000 under $200,000 (6) 0 0 0 0 21,224 33,924 10,956,847 524,961 12,071,006 210,537,500 12,078,369 220,670,589 (7) 0 0 0 0 0 0 3,817,058 188,219 4,080,197 545,225,176 4,081,801 557,050,537 $200,000 or more
** Data combined to prevent disclosure of specific taxpayer information. [1] Includes returns with adjusted gross deficit. [2] For 2006, the total number of Form 1040EZ returns includes 739,206 Form 1040EZ-T returns. [3] Included in data for Forms 1040, 1040A, and 1040EZ. [4] Not included in adjusted gross income. [5] State and local income taxes are the total of both income taxes and general sales taxes. [6] Includes EIC used to offset income tax before credits, shown separately later in this table. NOTE: Detail may not add to totals because of rounding.
17