IRS Analyzes 2013 Income Tax Data

The Internal Revenue Service has released the spring 2015 issue of the Statistics of Income Bulletin, which features preliminary data for individual income tax returns filed for tax year 2013, indicating that taxpayers were earning more income and relying less on unemployment insurance as the economy recovered from recession.

Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers. The issue includes an article on preliminary data on individual income tax returns filed for tax year 2013. The preliminary data indicates that taxpayers filed nearly 148 million U.S. individual income tax returns for tax year 2013. While both adjusted gross income and taxable income increased less than 1 percent from the previous year, total income tax rose 3.6 percent to $1.2 trillion and total tax liability increased 4.5 percent to $1.3 trillion.

More than two-thirds of all taxpayers claimed the standard deduction, which accounted for 43 percent of total deductions. Total taxes and interest paid made up about 70 percent of all itemized deductions for the year.

A number of key components contributed to the growth in total adjusted gross income between 2012 and 2013, the IRS found. “The largest component of AGI, salaries and wages, increased 2.6 percent to $6,627.0 billion,” wrote Michael Parisi of the IRS. “The second largest component of AGI, taxable pensions and annuities, increased 4.6 percent to $651.9 billion. Another item related to retirement that increased was taxable Social Security benefits, which rose 9.2 percent to $245.4 billion. In contrast, taxable individual retirement arrangement (IRA) distributions decreased 6.8 percent to $213.6 billion.”

Several other components of AGI also decreased, particularly unemployment compensation, which dropped 27.0 percent to $52.2 billion. The IRS believes this was largely due to the decrease in the number of tax returns reporting taxable unemployment compensation, which decreased 18.0 percent to 9.4 million returns.

In addition, ordinary dividends dropped 19.6 percent to $190.7 billion, while net capital gains dropped 12.5 percent to $436.3 billion. However, capital gain distributions, a component of net capital gains, rose 156.8 percent to $45.2 billion. “Part of this large increase was attributable to distributions from U.S. mutual funds, which are required to distribute net realized capital gains, dividends, and interest earned to fund investors (taxpayers) in each year,” the IRS pointed out. “These year-end distributions were some of the largest since 2008.”

The SOI Bulletin also includes an article on individual income tax shares in 2012. The IRS found that taxpayers filed 136.1 million individual income tax returns, excluding returns filed by dependents, for 2012. Adjusted gross income for taxable returns was $9.04 trillion, up nearly 9 percent from the prior year. Total income tax was more than $1 trillion. To be included in the top 1 percent of returns for 2012 required an AGI of $434,682 or more; the top 0.001 percent required an AGI of $62,068,187 or more. Returns in the top 10 percent (returns with AGI of $125,195 or more) accounted for nearly half of AGI and paid more than two-thirds of all individual income tax for the year.

In another article, on individual noncash contributions for 2012, the IRS found that individual taxpayers who itemized deductions reported almost $43 billion in noncash charitable contributions using Form 8283. Almost half of all noncash donations reported went to foundations ($11 billion) and large charitable organizations ($10.1 billion). Corporate stock accounted for the largest total amount and percentage of noncash charitable contributions, followed by clothing and household items. Taxpayers ages 65 or over accounted for more than a third of all noncash charitable contributions reported on Form 8283 for the year, even though they filed less than 16 percent of individual tax returns filed with a Form 8283.

In an article on nonprofit charitable organizations filings for 2011, the IRS found that tax-exempt public charities (501(c)(3) organizations) filed nearly 275,000 Forms 990 and 990-EZ and reported $3.0 trillion in assets for tax year 2011, nearly unchanged from the previous year. These organizations reported $1.6 trillion in both total expenses and total revenue. Nearly three-quarters ($1.2 trillion) of the charitable revenue came from program services.

The SOI Bulletin articles are available for download at IRS.gov/taxstats.