Taxing Facts


As the filing deadline for federal income taxes grows near, you might want to consider a few facts as you fill out your tax forms:

• The Internal Revenue Service estimates that it will take the average person nine hours and five minutes to complete and file a 1040. Most experts, however, believe that the IRS estimate is too low.

• In 1988, the IRS answered taxpayers' questions incorrectly 38 percent of the time, according to a General Accounting Office study. Taxpayers were still liable for errors caused by incorrect advice from the IRS. This year, thanks to a new taxpayers' bill of rights, you can't be penalized for errors caused by written advice from the IRS. But you may still be penalized for an error caused by wrong advice from the IRS's telephone hotline.

• About half of all households will use professional tax preparers. The cost of this service ranges from about $30 to over $1,000.

• Individuals have to pay income tax on their social security taxes, which aren't deductible like state and local taxes. If a hypothetical married worker making $30,000 paid $2,580 in 1988 income tax, $338 of this was tax on her payroll taxes.

• In fiscal year 1989, interest on the national debt is expected to total $220 billion, or about 53 percent of all individual income tax revenues.

• Wyoming has the highest tax rates in the nation. On average, residents pay $175.29 in state and local taxes for every $1,000 in income. Alaska, New York, Hawaii, and Wisconsin round out the top five. New Hampshire has the nation's lowest tax rate, only $89.86 for every $1,000.

• The average state gas tax per gallon is 15 cents—up from 8.6 cents in 1980. Also, drivers pay a federal tax of 9 cents per gallon for gasoline and 15 cents for diesel fuel. In addition, 10 states add a sales tax.

• May 5 will be Tax Freedom Day this year. Over one-third of the average worker's salary is eaten up by various taxes. On May 5, the average worker has earned enough to pay his taxes and begins working for himself.