Welcome to the first tax article from the firm of Halpern-Kestenbaum. Over the course of this year we will provide you with useful tax information and interesting facts about our tax laws and how tax revenues are used.
Did you ever wonder who really is in the top 1%? According to the 2014 IRS Data Book that provides information for tax year 2013, the top 1% earns approximately $475,000.
To be in the top 2%, 5% and 10% you would have to earn approximately $375,000, $195,000 and $115,000 respectively.
For the tax year 2013, the IRS processed 240 million tax returns of which 147.5 million were from individuals. US individuals and businesses paid a combined $3.1 trillion of taxes. Unfortunately the government spent $3.5 trillion that resulted in a $400B deficit.
The $3.1 trillion of tax collections comes from mostly 3 sources; i) individuals, $1.6T ii) employment taxes, $1.0 T and iii) corporations $.4T. Employment taxes are made up of social security, medicare and unemployment taxes.
1.2 million tax returns from individuals were audited, or .82% of total individual tax returns. This small percentage makes it seem very unlikely that you will be audited. But, digging a little deeper into the numbers reveals that anyone earning more than $1 million will have a 6% chance of being audited. If you earn more than $5 million, you will have a 10% chance of being audited. But, if you earn $50,000, which is the median income in the U.S., then your audit chances will be .50% (or 1/2 of 1%).
For my next article I’ll provide a few more fun facts as well as guidance on everyday tax issues. For a free consultation, including a review of your prior 3 years of tax returns, please contact us per the information below.
Regards for now,
Ivan Halpern, CPA
Halpern – Kestenbaum