FEDERAL DATA


The 1999 volume of the Utah Statistics of Income series summarizes and analyzes tax return data available from the Internal Revenue Service (IRS) through the federal‑state exchange program.  The data are based on those federal income tax returns which list a Utah address and were processed by the IRS as of late August 2000.


Two different data tapes are available from the IRS.  The first, called the master file, contains very basic information from the 1040 form, such as federal taxes, adjusted gross income (AGI), deductions and the number of exemptions claimed.  The second source contains most of the individual tax form lines, such as detail on deductions and sources of income. The detailed source is not updated to reflect amendments and is not as thoroughly edited for errors as the first source. Thus, the data are not 100 percent correct, but in most cases are reliable for general orders of magnitude and averages.  Since the two sources are not at the same phase in processing when the state tapes are made, totals from the two sources are generally not identical, although usually very close.  Either differences in IRS processing speed or the timeliness of taxpayers in filing returns will cause discrepancies. This may result in slight differences on some tables in items such as AGI, deductions, or the number of taxpayers.


The IRS's tax data always contain information from prior‑year returns that are filed late.  We generally include prior‑year returns since their omission would result in a serious under-reporting of the various income and tax magnitudes.  In a sense, 1999 prior‑year (1998) data is a proxy for returns for 1999 that will be filed late.  Prior‑year returns are included as a separate "county" in the county tables and are not included in either the city or ZIP Code data, since we believe the inclusion of the data at the state level is reliable, but that its allocation to lower level geographic units is questionable.


In addition to state, county, city, and ZIP Code data on adjusted gross income, federal taxes, exemptions, and returns by income level, this volume reports statewide data on itemized deductions, adjustments to income, sources of income, and other important magnitudes from federal tax schedules C through F , as well as for various credits and tax payments.


Users frequently ask for current data on AUtahns= income@ but the only data we have is AGI, which is not the same concept as either the census definition or Apersonal income@. AGI  includes capital gains, which most definitions do not include, and only includes a portion of social security income and pension income. In addition a list of adjustments, such as IRA and Keogh plans, self employed health insurance, moving expenses, alimony paid, etc. are subtracted to arrive at AGI. AGI excludes the imputed income included in personal income measures.


We are subject to the way taxpayers fill out their forms as far as addresses are concerned.  If they use a wrong ZIP Code, we are forced to live with it.  Probably the most important error of this type is in the "city" taxpayers claim.  Some residents of the smaller communities, for example, may list Salt Lake City as a city rather than Sandy, or Murray, for example.  This also happens for residents of unincorporated areas. Some taxpayers will also use their professional address or post office box rather than their actual residence.


To understand what is included in Afederal taxes,@ the reader should consult the attached form 1040. This figure is what is reported on the total tax line, but self-employment taxes are not included, while alternative minimum taxes are included as well as some other small items. Credits have been subtracted, except the earned income tax, which is considered a payment by the IRS.


In addition, average values are only averages for taxpayers using a particular form or line.




This report has several pages on state income taxes in section 2.  We have decided to include the data by county in the “Utah State Income Tax Statistics” volume we produce in the spring .  This will allow more data to be included and will reduce the growing size of this volume,




The data as we receive it from the IRS and state returns is based on returns, but some analysts prefer to think of household income and taxes. We have been publishing for several years an attempt to group returns into households, generally putting children with their parents.  Our methods are far from foolproof and are detailed in our annual Family Based Statistics of Income.  We have included one summary page in the state section of this volume. It looks identical to the regular pages, but it bears the title "household" income in the title line.




Some of the data in this report, as well as data from a growing selection of other Tax Commission reports can be accessed on the Internet using: