Measuring Income at IRS

1
Measuring Income at IRS

• Charles Day
• Statistics of Income(SOI) Division,
• Internal Revenue Service
• Email Charles.D.Day_at_irs.gov

2
Introductory Remarks

• Primary Use of Tax Data is Tax Administration
• Adjusted Gross Income (AGI) is IRSs primary
  measure of income.
  
• AGI Definition Changes When the Tax Code Changes
• Dont worry, were from IRS and were here to
  help.
  
• SIS Office [phone]

3
How Statistics of Income (SOI) Data Are Collected

• Population of interest is everyone who should
  file a tax return
  
• Stratified Bernoulli sample of Individual Tax
  Returnsadditional item content and data
  cleaning
  

4
IRSs Definition of Adjusted Gross Income(AGI)

• AGI Total income Statutory adjustments

5
What Does AGI Include?

• Wages, salaries, and tips
• Taxable interest
• Dividends and Capital Gains
• State and Local Income Tax Refunds

6
What Does AGI Include?

• Alimony received
• Business, professional, or farm income
• Gains on sale of capital assets
• Taxable portions of annuities, pensions, IRAs
  and Tier II Railroad Retirement

7
What Does AGI Include?

• Rents and Royalties
• Income from pass-through entities like
  partnerships and S-corporations
  
• Taxable amounts of Social Security and Tier I
  Railroad Retirement
  

8
Other Income

• Prizes, awards, and gambling winnings
• Bartering income
• Found property
• Stolen property
• Illegal income
• Et Cetera

9
Whats Not in AGI?

• The cost basis of pension, annuity, or IRA
  payment or distribution
  
• Tax exempt interest
• Limited exclusion of Social Security benefits and
  railroad retirement benefits
  
• Postponed gain from the sale of principal
  residence
  
• 401 (k)
• Flexible spending accounts

10
Those Pesky Statutory Adjustments

• Teachers out-of-pocket expenses (up to 250)
• Certain student loan interest (up to 2,500,
  depending on income)
  
• Tuition and fees deduction (up to 4,000)

11
Those Pesky Statutory Adjustments

• Archer medical savings accounts (employees of
  small businesses)
  
• Moving expenses associated with work
• One-half of self-employment tax

12
Those Pesky Statutory Adjustments

• Penalties on premature savings withdrawals
• Alimony paid
• Reforestation expenses (timber property)

13
Those Pesky Statutory Adjustments

• Cost of housing for those working overseas
• Jury duty pay
• Clean-fuel vehicle deduction (up to 2,000)

14
Income Concepts at BLS

• Info on income obtained from the Consumer
  Expenditure Survey (CES)
  
• Quarterly interview survey
• Includes all consumer unit members

15
Income Concepts at Census

• Info on income obtained from a questionnaire from
  the Current Population Survey (CPS)
  
• Monthly interview survey
• Household level
• Not discussing alternative concepts

16
Wages and Salaries SOI vs. Census BLS
17
Self-Employment SOI vs. Census BLS
18
Social Security and Pensions SOI vs. Census
BLS
19
Interest and Dividend Income SOI vs. Census
BLS
20
Public Assistance and Regular Contributions SOI
vs. Census BLS
21
Other Types of Income SOI vs. Census BLS
22
(No Transcript)
23
(No Transcript)