As tax day nears, 1040 form turns 100

History of federal income taxation in the U.S.

1862 - President Lincoln signs measure to help pay for Civil War. Creates a commissioner of Internal Revenue and the nation’s first income tax.

1867 - Congress cuts tax rate. From 1868 until 1913, 90 percent of all revenue comes from taxes on liquor, beer, wine and tobacco.

1872 - Income tax repealed.

1894 - The Wilson Tariff Act revives the income tax, creating the Bureau of Internal Revenue.

1895 - Supreme Court rules new income tax unconstitutional on the grounds it was a direct tax not apportioned among states on the basis of population. Income tax division is disbanded.

1909 - President Taft recommends a constitutional amendment giving the government power to tax incomes without apportioning the burden among states in line with population.

1913 - The 16th amendment is ratified, giveing Congress the power to collect taxes. Form 1040 introduced.

1918 - The Revenue Act of 1918 raises greater sums for World War I effort. It codifies existing tax laws and imposes a progressive income-tax rate structure of up to 77 percent.

1942 - The Revenue Act of 1942 increases taxes and the number of Americans subject to the income tax. It also creates deductions for medical and investment expenses.

1943 - Congress passes act requiring employers to withhold taxes from employees’ wages and remit them quarterly.

1944 - Individual Income Tax Act passes. Creates the standard deductions on Form 1040.

1954 - The filing deadline for individual tax returns changes from March 15 to April 15.

1986 - Limited electronic filing begins.

1992 - Taxpayers who owe money allowed to file returns electronically.

Source: Internal Revenue Service

Examine the first Form 1040 up close and view photos of infamous tax evaders in a gallery at MyDaytonDailyNews.com.

Federal tax returns are due two weeks from today and it marks the 100th year Americans have sent form 1040 to the Department of Treasury.  >>History of federal taxes | Photos of infamous tax evaders<<

The 16th Amendment giving Congress the power to collect taxes on income passed in 1913, establishing the grid of lines, boxes and arcane instructions endured since 1914.

While more than 90 percent of returns are now filed electronically, the modern form — even if filled out online or using software — is a very recognizable product of its century-old parent. The first 1040 for the 1913 tax year was due March 1, 1914. It had fewer than 40 lines and a single page of instructions. The current form comes with more than 100 pages of instructions to complete nearly 90 lines. Taxpayers, though, now have until April 15 to complete the form and send due taxes.

Very few Americans paid federal income taxes to the then Bureau of Internal Revenue in 1914, according to Joseph Thorndike, director of the Tax History Project at Tax Analysts.

“In the beginning this is really a rich man’s problem and no one else’s,” Thorndike said. “This tax was paid only by the top 1 or 2 percent of income earners. It was designed to balance out a lot of other existing taxes on the poor and the middle class that were already in the books.”

There’s no particular meaning attached to the number 1040. It likely was simply next sequentially, but the number “unnecessarily communicates complexity,” said Thorndike who would have it renamed Form 1. “It implies the existence of 1,039 other forms at least.”

The cost of World War II had a large role in increasing the number of Americans who paid taxes. After the war, about a fifth of the population paid federal income taxes; now about 57 percent of households do, according to the Tax Policy Center.

More than 146.2 million individual returns were filed for the previous tax year. The median adjusted gross income for 2012 returns was $34,794, according to Internal Revenue Service records.

Rick Prewitt, a tax consultant and financial planner at Bradstreet & Company in Centerville, studied the original 1040 and wrote about it late last year in a blog for the firm’s clients. He said last week many exemptions written into the first tax code remain today.

“You could write off interest that you paid on loans. We still have that today. Now we’re talking about eliminating the mortgage interest deduction, but it’s been around since 1913,” Prewitt said.

Prewitt and Thorndike both said the tax code continually changes to keep up with society.

There’s also been no concrete ruling outlining the filing status of Americans in same-sex marriages until now.

Due to a Supreme Court ruling last year, the IRS is treating same-sex couples legally married in a jurisdiction that recognizes those marriages as married for federal tax purposes regardless of current residence.

“We’ve had a lot of very contentious issues around more old-fashioned versions of marriage for almost the entire history of the income tax,” Thorndike said. “Even as we’re debating what the appropriate treatment of same-sex couples should be, we’re still debating whether there should be a marriage penalty or a marriage preference or basically how should an income tax treat married couples whether they are same-sex or opposite-sex.”

Though the basic outline of the form is relatively unchanged, how your 1040 is processed has changed dramatically during the computer age. The IRS began using computers in 1961. Limited electronic filing began in 1986. Those owing money could begin filing electronically in 1992.

Prewitt said the technological advances have made it more important than ever to keep good records.

“The IRS computers have gotten very good at matching W2s and 1099s to a tax return. The client might have gotten a 1099 and forgot about it or displaced it and it didn’t get on a tax return and a year later you get a letter from the IRS saying the numbers don’t match,” Prewitt said.

Most taxpayers won’t see much change from 2012 returns with the exception of some high income individuals and households. Changes that may affect upper income filers for tax year 2013 include:

* Those filing jointly making more than $450,000 and those making more than $425,000 who are heads of households could see a maximum rate of 39.6 percent.

* Some upper income filers may need to pay new Medicare surtaxes: 3.8 percent on investment income and a 0.9 percent on salaries or self-employed income.

Also new for tax year 2013, the threshold for itemizing medical expenses is now 10 percent of adjusted gross income, up from 7.5 percent. The change does not impact taxpayers who are now 65 and older until 2017.