Happy Monday, everyone! 🙂
Thought it’d be fun to share some tax trivia — some true facts 😇, and some false facts 😈 — since we’re nearing the end of a super-long filing season here in the U.S. (Public service announcement: Taxes for 2019 are due THIS WEDNESDAY! That’s July 15, 2020.)
I’ve dug up (and made up) these weird tax facts for a little game of True or False.
But first, a quick story…
I was born and raised as a city boy. So when I visited Montana for the first time in 2011, it was my first taste of the “country.” It was remote and beautiful.
But something really surprised me about Montana … Every little town I visited had about 20 businesses in it, and of those 20 businesses, about five of them had signs hanging out the front that said “taxidermy.”
I’d never heard that word before. Taxidermy … Sounds a lot like “tax attorney,” so I just assumed it was local slang for the tax office.
I thought to myself, “Why do they have so many tax offices in Montana? People out here don’t know how to file their own tax returns? What idiots!”
As it turns out, I am the idiot. Many years passed before I found out that taxidermy has nothing to do with taxes. My in-laws who live in Montana had a good laugh when they schooled me about what taxidermy is.
True story. And now whenever I see a stuffed animal, I think about taxes. I’m a weirdo!
OK, onto the game …
These are all True or False questions/statements. The answers are posted at the bottom. No peeking! Some of them are no brainers — I’m sure all of you will pass with flying colors.
Taxes: True or False?
- The United States has the highest national income tax rate in the world. Second-highest is the Netherlands, and Finland is third-highest.
- In Kansas, untethered hot air balloon rides are exempt from sales tax because they are considered a legitimate form of air transportation.
- There are 7 U.S. states that levy no personal income tax. They are: Texas, Nevada, Florida, Washington, Alaska, South Dakota, and Wyoming.
- If you’re over the age of 100 and live in New Mexico, you don’t have to pay state income tax. In fact, you don’t even have to file with the state if you’re that old.
- It’s smart to have your employer withhold as much tax as possible during the year, so that when you file your return, you get a bigger refund check!
- Professional strippers in Las Vegas are allowed to deduct the cost of breast implants or enhancements in their annual tax filings.
- Billionaire Mark Cuban once filed his tax return using paper forms instead of electronically. It took a small team of accountants 23 days to fill out and double-check all the paper forms. They eventually shipped four large filing boxes full of papers to the IRS. Cuban did this as a protest against paying such high taxes.
- If you file your taxes early in the year, you have a higher chance of getting audited. If you file later in the year, the IRS is so overwhelmed that it doesn’t have the bandwidth to check everyone’s return in detail, so you have less of a chance of getting audited.
- Every U.S. president starting from Richard Nixon (1969) onward has provided his tax returns to the public for review.
- In the UK, residents must pay a “television tax.” This is an annual fee to watch TV, and it covers watching shows on your TV, laptops, and cellphones.
- The IRS is trying to be more progressive to keep up with various technology platforms. If it decides to audit someone in the millennial or Gen Z age bracket, it will begin by notifying the taxpayer through his or her TikTok or Instagram account.
- The word “TAX” is an acronym for the original Latin phrase “Taeter Amor Xenium,” which roughly translates to “love donation for the king.”
- If you have a side hustle, you don’t need to pay tax if you didn’t earn more than $3,000 (or $6,000 for those married filing jointly) in income from that specific side hustle.
- In Texas, if you hire someone to paint holiday images on your windows at home, you do not owe tax on the painter’s fee.
- In New York, there is a “sliced bagel tax” that costs you an additional 8 cents if your bagel is sliced or schmeared with cream cheese.
- The average tax refund check for 2018 was about $1,200. This is how the government came up with a “fair amount” to give people as a covid-19 stimulus payment in 2020.
- If you get audited or screw up on your tax return, your credit score will drop a few points. The people most at risk are ones with credit scores below 720.
- Chuck Norris didn’t even file his taxes in 2019 … but the IRS sent him a refund check anyway.
- FALSE! The U.S. is far from the highest taxed nation … the Netherlands has the highest national tax rate, at 52%!!! Then about 20 other countries are higher than the USA.
- TRUE! As long as the hot air balloon is “untethered,” there is no sales tax. Woohoo! Plus, hot air balloons are way more fun when they’re not tied to anything 🙂
- TRUE. I wish California were on the tax-free state list, but unfortunately I live in the state with the highest personal income tax. Booooo.
- TRUE! This rule came into place in tax year 2002. People 100 years of age or more who are not dependents of other taxpayers are exempt from filing and paying New Mexico personal income tax.
- FALSE. I hope you got this one right! Overpaying through the year just to get a bigger return is like giving the government an interest-free loan! The most ideal tax planning is to have $0 owed or refunded at the end of the year. 🙂
- TRUE! Well, kind of. A famous court case in 1994 was won by “Chesty Love,” who enlarged her “assets” to a size 56FF, then even bigger to 56N! She claimed the surgeries were necessary to increase her professional income and therefore should be tax-deductible.
- FALSE. The Mark Cuban story is made up. I always wonder how multi-millionaires file their massive tax returns and how many accountants it takes.
- FALSE. No matter when you file your return, your chances of being audited are the same. Accuracy is the most important thing when filing, not timing!
- FALSE. Donald Trump and Gerald Ford never provided their returns to the public. But the first two pages of Trump’s 2005 tax return were leaked to MSNBC a few years back. $152.7M in income… wowzer! (All other presidents and some presidential candidate filings can be seen here.)
- TRUE. Television tax is how the BBC is mostly funded. The UK government brings in about £4 billion annually from this TV tax, charging each home and business £157.50 a year (or just £53 for black-and-white TV sets … as if anyone still has one of those!).
- FALSE. Beware of scams! The IRS will never initiate contact with taxpayers by email, text message or social media to request personal or financial information. They will send you a letter in the mail if you are lucky enough to be audited 🙁
- FALSE. The word “tax” first appeared in the English language in the 14th century. It derives from the Latin taxare which means “to assess.” I just made up “taeter amor xenium”… It really means “foul love gift.”
- FALSE! Side hustle income is taxable! Don’t hide any income from the IRS, even if you earned only a tiny amount from your sexy side hustle.
- TRUE. Texas window painters (for Christmas cheer) will not charge tax, so long as you provide the paint! If the painter provides the paint, you’ll be taxed. What a weird set of rules, right!?
- TRUE. New York has different taxes for standard foods (a bagel) and a “prepared meal” (a sliced bagel). There’s even a whole section in the NY tax code that explains what classifies as a sandwich. 🤦♀️
- FALSE. The average tax refund in 2018 was about $2,869. And this has nothing to do with the 2020 stimulus check amount!
- FALSE. The IRS does *not* report anything to credit agencies about your filing, extension dates, taxes owed, etc. But if you take out a loan to pay your taxes and then default on that loan, your credit will definitely be affected!
- TRUE! But most years Chuck Norris just sends the IRS blank forms and includes a picture of himself, crouching and ready to attack. No IRS employee has ever dared to audit him.
Sooooo. How’d you do!?
Have you filed already, or are you getting an extension? Any unexpected or mammoth bills/returns you want to share with the group? 🙂
*Pic up top by Rachaelvoorhees on Flickr!
Joel is a 35 y/o Aussie living in Los Angeles and the guy behind 5amjoel.com. He loves waking up early, finding ways to be more efficient with time and money, and sharing what he learns with others. Rise Early | Retire Early!