4 surprising tax facts — and what they mean for your wallet

Let’s be real: Filing taxes isn’t the most fun task. But since you’ve got to do it, why not keep yourself entertained — and prepare yourself better while you’re at it — by learning about some history and quirks of the American tax system?

Here are four surprising facts about U.S. taxes — and how they impact your pocketbook.

[See: Answers to 7 Burning Tax Questions.]

1. April 15 wasn’t always Tax Day. We’re all too familiar with the deadline to file tax returns. But we’re probably less familiar with why it lands in the middle of April.

It turns out that this wasn’t always the case. On Feb. 3, 1913, Congress ratified the 16th Amendment, which gave it the power to collect income tax. Congress initially selected March 1 as Tax Day — just over a year later. In 1918, Congress changed Tax Day to March 15. In 1954, it was changed to April 15.

According to one source, moving the date back helped “spread out the peak workload.” According to another, it gave the government more time to issue tax refunds and therefore hold onto Americans’ money.

Whatever the reason, moving Tax Day from March to April might provide another key perk to taxpayers: an extra month to recover from Christmas expenses.

This year, because April 15 is a Saturday, and residents of the District of Columbia observe Emancipation Day on April 17, Tax Day lands on April 18.

Despite having an extra few days to file this year, you may not want to wait until the last minute to look into your taxes. By getting an early start on your taxes, you should have more time to catch any potential mistakes or complications before you file.

If you’ve prepared your return ahead of the deadline, filing it earlier can also mean that you receive your refund earlier. The IRS says that it generally issues most refunds within 21 days of receiving a return.

2. The average federal tax refund in 2016 was $2,860. Last year, the IRS issued more than 111 million refunds, with the average refund under $3,000.

Although you might have the urge to splurge if you receive a tax refund, try to be responsible with how you use it. After all, it’s not a gift from the IRS. It’s just money that the agency owes you.

You could use your refund to pay off a student loan, for instance, or to create or add to your emergency fund. Receiving a tax refund is a great opportunity to work on your financial situation and possibly make your life easier for the future.

[See: 10 Smart Ways to Spend Your Tax Refund.]

3. The federal tax code is around 4 million words long. According to the National Taxpayers Union Foundation, most estimates place the tax code at 4 million words long.

The tax code’s length makes one thing clear: The American tax system can be incredibly complex. The tax code is full of nuances, confusing instructions and changes each year. Understandably, many tax filers make errors when they file.

You might want to consider efiling over paper filing: The error rate for filing a paper return is 21 percent while the efile return error rate is less than 1 percent, according to the IRS.

By using an efile tax software that does calculations for you, flags common errors and prompts you if you’ve left out information, you may be less likely to make mistakes.

If you choose to paper file, the IRS recommends making sure that you mail your return to the right address (as obvious as it may sound), ensuring that you use the right tax table for your filing status and double-checking your math.

[See: 7 Most-Missed Tax Deductions and Credits.]

4. The U.S. is the only industrialized country to generally tax its citizens who live abroad. According to Time Magazine, Americans — both citizens and resident aliens — generally still have to pay taxes to the U.S. government, even if they earn income in a foreign country and never return to the United States.

This means that if you’re living overseas, you could end up paying taxes both to your country of residence and to the U.S. government. In fact, some Americans have even gone so far as to renounce their American citizenship to avoid having to pay double taxation.

If you’re planning to live abroad, it may be wise to have a look at the IRS regulations for taxpayers living abroad or consult with a tax planner to advise on your specific situation.

More from U.S. News

8 Ways You Can Prepare Now for Next Year’s Taxes

9 Red Flags That Could Trigger a Tax Audit

7 Most-Missed Tax Deductions and Credits

4 Surprising Tax Facts — And What They Mean for Your Wallet originally appeared on usnews.com

Federal News Network Logo
Log in to your WTOP account for notifications and alerts customized for you.

Sign up