Individual income tax returns, 2002

Statistics of Income Bulletin, Fall, 2004 by Michael Parisi, Scott Hollenbeck

Notes and References

[1] Tax Year 2001 included an additional 216,632 Tax Year 2000 returns filed late because of the tragic events of September 11,2001. However, of these late filers, 787 high-income returns were not included in the SOI statistics for Tax Year 2001, as they were moved to Tax Year 2000.

[2] From the Federal Reserve Board, selected interest rates, the annual Federal funds rate for 1958 was 1.57, and, for 2002, the rate was 1.67. http://www.federalreserve.gov/releases/h15/ data/a/fedfund.txt.

[3] U.S. Department of Labor, Bureau of Labor Statistics, Labor Force Statistics for the Current Population Survey, seasonally adjusted unemployment rates (1993 rate was 6.5) http:// data.bls.gov/servlet/SurveyOutputServlet?data_ tool=latest_numbers&series_id=LNS14000000.

[4] For purposes of this article, total negative income is a compilation of all income items on individual income tax returns (Forms 1040, 1040A, 1040EZ, and electronically-filed returns) for which a net loss for an income category was reported by the taxpayer. The Form 1040 income tax return entry for Schedule E, Supplemental Income and Loss (From rental real estate, royalties, partnerships, S corporations, estates, trusts, REMICs, etc.), was separated into the following components: rent and royalty net loss, partnership and S corporation net loss, and estate and trust net loss. When any of these components was negative on a return, the corresponding loss (rather than the netted total amount from Schedule E) was included in the statistics for total net loss. For example, if a return showed estate and trust net income of $20,000 and rent and royalty net loss of $12,000, total net loss would include the $12,000 of rent and royalty net loss, rather than the $8,000 netted total of both sources of supplemental income.

[5] Net operating loss is a carryover of the loss from a business when taxable income for a prior year was less than zero. The loss could be applied to the AGI for the current year and carried forward up to 15 years. Net operating loss is included in other income on individual tax returns but edited separately for Statistics of Income purposes.

[6] No more than $3,000 per return of net capital loss is allowed. For married filing separate returns, this loss is limited to $1,500. Any excess is carried forward to future years.

[7] The remaining 1.4 percent of the returns did not need to claim either a standard deduction or itemized deductions because no AGI was reported.

[8] Average AGI is defined as the amount of AGI divided by the number of returns filed. Average taxable income is defined as the amount of taxable income divided by the number of returns with taxable income. Average total income tax is defined as the amount of total income tax divided by the number of taxable returns. Taxable returns are defined as returns with "total income tax" (the sum of income tax after credits, tax on Form 4970, Tax on Accumulation Distribution of Trusts, less EIC used to offset other taxes) present. Tax on Form 4970 (not in the statistical tables) was $2.1 million for 2002. This tax, previously part of income tax after credits, was included in "other taxes" for 2002.