Interesting Tidbits On Income Tax and Free Stuff for Accountants

Since it is Friday and Friday's are meant for fun, the Rules of Thumb blog from MoneyThumb decided it would be a good day to share some interesting tidbits about income tax we have discovered. For instance, did you know that income tax returns weren't always due in April?

This article from Money magazine reveals that back in 1914, the first year of the From 1040, taxpayers were informed that 1913’s tax returns were due “in the hands of the Collector of Internal Revenue on or before March 1." Why? One common explanation is that March 1, 1914, was a year and some change after the institution of the 16th Amendment, which cemented Congress’s power to collect income tax upon its ratification in February 1913. But the 16th Amendment didn’t institute income tax itself — that was the job of the Revenue Act of 1913, which was signed into law in October of that year.

Tax Day was moved to March 15 in 1918. It remained that way until the 1950s, when the deadline was shifted again, this time to April 15. By 1954, many more people were filing taxes than they were 50 years prior.

Pretty interesting, right? Well if you think that tax tidbit was a bit fascinating, wait till you read this one. This article, also courtesy of Money magazine, titled, How a 27-Year-Old Math Whiz (and His Uber Driver) Found a Big Flaw in an IRS Tax Formula, states that Sam Ferguson spent one January Uber ride diving into tax math—and unearthed a big problem for many Obamacare customers.

Here is a short explanation from the in-depth Money article. "Ferguson, 27, a math Ph.D. student at New York University, was on a trip to Iowa when he got to talking with his Uber driver about their jobs. The driver told Ferguson that he had trouble calculating the premium assistance he was eligible for under the Affordable Care Act, also known as Obamacare. People without job-based coverage making up to $48,560 are eligible for government help paying their monthly health insurance bill.

Ferguson promised the Uber driver that he would research the issue. What he stumbled onto was a known, but only obliquely acknowledged, problem with the IRS subsidy-calculation methodology. It affects an estimated 100,000 households, or up to 500,000 Americans, according to Ferguson’s estimates, forcing them to pay more than they should for health insurance.

When Ferguson contacted the IRS, they admitted they were aware of the problem, although nothing had been done about it. Ferguson is now approaching academic journals to publish his findings. With the help of a former roommate who now works as an engineer at Google, he has also created a preliminary calculator that people can use to ballpark their premium subsidy, to help determine whether they’re in one of the problematic income bands—and he’s working on a free app that will go even further, telling people of any income what premium subsidy they’re eligible for."

Just goes to show that having a conversation with your Uber or other taxi drivers can often be illuminating, even life-changing, for either or both.

The Rules of Thumb blog from MoneyThumb stated in the title of this post that we had some free stuff we found that we wanted to share with our readers who are accountants. So without further ado, here they are:

FREE CPE CREDITS--AccountingCred.Org offers free, tech-focused continuing education (and up to 5 free CPE credits).

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