As the deadline looms to file our tax returns, we could probably all use a little diversion. If you're stuck for conversation while waiting in line at the post office, try passing on one of these little-known facts about our least favorite civic duty.
1. No need to dread April 15
If more of the folks around you waiting to mail in their 1040s look cheerier than usual, they may have good reason to smile. The Tax Policy Center reports that roughly 47% of Americans will pay no federal income tax for the tax year 2009. Recent tax cuts for both wealthy and non-wealthy Americans in recent years have helped reduce the number of checks owed to Uncle Sam. (If you're in this camp, know that you still need to file your return, especially if you expect any money back.)
2. A free ride for big corporations
Surprsingly, many huge American companies pay no taxes to the U.S. government. In 2008, General Electric (NYSE: GE) owed no U.S. taxes, despite ringing up $10.3 billion in pre-tax income. (The complicated explanation involves the huge losses its GE Capital division posted in the U.S., which offset the gobs of money the company made elsewhere.) Meanwhile, ExxonMobil (NYSE: XOM) reported a negative figure for U.S. income taxes in its 2009 10-K annual report. However, the company still paid $15 billion in total taxes worldwide, and says that it did pay income tax in 2009, despite the accounting figures.
Many big U.S. companies with foreign operations can shield their income from U.S. taxation in exchange for paying taxes abroad. The government is looking into tightening these loopholes. But in some cases, as with Ford Motor (NYSE: F) and Citigroup (NYSE: C), companies' big losses in past years can allow them to reduce taxes in future years.
3. The tax so nice, you pay it twice
Many taxpayers don't realize that investors in dividend stocks experience double taxation. Sure, AT&T (NYSE: T) and Altria (NYSE: MO) may tempt investors with hefty dividend yields above 6%. But the companies have already paid tax on the earnings that they use to pay their dividends -- after which you pay taxes on that same dividend when it gets handed over to you.
4. And only half as interesting
At more than 7 million words, our tax code is now more than four times as long as Leo Tolstoy's epic novel War and Peace. The IRS's official taxpayer advocate, Nina Olson, has estimated that we taxpayers spend nearly $200 billion annually complying with income tax requirements.
5. Rich people say, "Tax us more!"
More than 700 wealthy Americans support the Obama administration's plan to roll back tax cuts they received over the past decade, in order to reduce our deficit. These folks have pledged to donate the tax breaks they enjoy in 2010, while pushing for the breaks to be removed in 2011. Their project, Responsible Wealth, is supported by folks like Bill Gates, Sr. -- you know, the father of that guy who co-founded a little company called Microsoft.
Whether you share these tidbits with your fellow 1040 filers, or keep them to yourself, congratulations -- you're now a more informed taxpayer. And for more surprising and occasionally fascinating tidbits, and a bunch of money-saving tips, drop by our Foolish Tax Center.
Dan Caplinger reports on six things every investor should know about taxes.
