How Our Tax System Works

Statistics

FILED TAX RETURNS 2019

101.6 million tax returns out of the 141 million that were filed in 2019 qualified for a refund.

$102million

TAX REFUND PERCENTAGE 2019

According to IRS research, 72% or returns that were submitted in 2019 received a refund.

72%

Refund Percentage 2019

AVERAGE DIRECT DEPOSIT 2019

The average tax refund direct deposit for 2019 was $2,868, which is 2.5% below the 2018 direct deposit average of $2,940.

3%

Refund Average 2018

TAX REFUND ISSUED 2019

During the 2019 fiscal year, the federal government paid $277 billion in refunds to taxpayers, compared to the $285 billion paid in 2018.

$277billion
One major purpose of income taxes in the U.S. is to ensure a redistribution of wealth. As such, federal income taxes, and most state income taxes, are progressive tax systems. This means that those with higher incomes pay more and thus carry a larger share of the tax burden of society. However, there is no consensus nationwide on the distribution of the tax burden and therefore levels vary from state to state. Of the taxpayers who participated in the 2018 Comprehensive Taxpayer Attitude Survey (CTAS), 85 percent said it is not at all acceptable to cheat on their income taxes, and nearly all (95 percent) believe it is a civic duty to pay their fair share of taxes.

Tax Documents Checklist

Employed Documents
1. PERSONAL INFORMATION
  • Picture ID
  • Birthdate for all persons listed on the tax return
  • Social Security card or Individual Tax Identification Number (ITIN) card or letter for all persons listed on the tax return
  • Routing and account numbers for your savings account, checking account, and/or prepaid card
2. YEAR-END INCOME STATEMENTS
  • W-2s for each job
  • 1099 forms for retirement, Social Security, unemployment, interest, dividends, stock sales, and miscellaneous income
  • Year-end amounts for MFIP, SSI, MSA, GA, veterans benefits, workers’ compensation
3. EDUCATION AND CHILD CARE CREDITS
  • Record of educational expenses you paid for your children in grades K-12
  • Tuition expenses paid for you or your child to attend a college or university (Form 1098-T)
  • Student loan interest statement (Form 1098-E)
  • Child care expenses: Provider name, address, and tax ID or Social Security number
4. PROPERTY TAX REFUNDS AND DEDUCTIONS
  • Homeowners: Mortgage interest and real estate taxes paid in 2019 and 2020 Property Tax statement mailed by the county in March
  • Renters: Certificate of Rent Paid (CRP)
  • Mobile home owners: All of the above documents
5. ADDITIONAL DOCUMENTS
  • Previous year’s tax return
  • Verification of health insurance if purchased through MNsure (Form 1095-A)
  • Record of charitable donations
Self-Employed Documents
1. PERSONAL INFORMATION
  • Picture ID
  • Birthdate for all persons listed on the tax return
  • Social Security card or Individual Tax Identification Number (ITIN) card or letter for all persons listed on the tax return
  • Routing and account numbers for your savings account, checking account, and/or prepaid card
2. YEAR-END INCOME STATEMENTS
  • W-2s for each job
  • 1099 forms for retirement, Social Security, unemployment, interest, dividends, stock sales, and miscellaneous income
  • Year-end amounts for MFIP, SSI, MSA, GA, veterans benefits, workers’ compensation
3. SELF EMPLOYMENT AND BUSINESS RECORDS
  • Business expense records (receipts, credit card statements, records of checks you’ve written, etc.)
  • Quarterly estimated tax payment receipts (receipts of installments to your tax bill paid to the IRS during the year)
  • Detailed and itemized mileage records
  • Home office expenses (a record of your home-related expenses, like utilities and mortgage or rent)
4. EDUCATION AND CHILD CARE CREDITS
  • Record of educational expenses you paid for your children in grades K-12
  • Tuition expenses paid for you or your child to attend a college or university (Form 1098-T)
  • Student loan interest statement (Form 1098-E)
  • Child care expenses: Provider name, address, and tax ID or Social Security number
5. PROPERTY TAX REFUNDS AND DEDUCTIONS
  • Homeowners: Mortgage interest and real estate taxes paid in 2019 and 2020 Property Tax statement mailed by the county in March
  • Renters: Certificate of Rent Paid (CRP)
  • Mobile home owners: All of the above documents
6. ADDITIONAL DOCUMENTS
  • Previous year’s tax return
  • Verification of health insurance if purchased through MNsure (Form 1095-A)
  • Record of charitable donations
Full Document Checklist
1. Personal Info
  • Driver's License or Passport
  • Social Security Number – for you, your spouse and dependents
  • Date of Birth – for you, your spouse, and dependents
  • Copy of last year’s tax return
  • Your Electronic Filing PIN used on last year’s tax return
  • Bank account and routing number to direct deposit your refund
INCOME 2. Personal Income
  • Wages, Salary, Tips (W-2 Forms)
  • Unemployment (1099-G)
  • Investment Income
  • Interest – savings account, money market account, mutual funds, etc (1099-INT)
  • Dividends – stocks or mutual funds (1099-DIV)
  • Capital Gains (Loss) – sale of stocks, bonds, mutual funds, real estate, collectibles, etc (1099-B or broker statements)
  • Capital Loss Carryover – (last year’s Schedule D – Capital Gains and Losses)
  • Undistributed Capital Gains – RIC’s or REITs (Form 2439)
3. Retirement Income
  • Social Security benefits (SSC-1099)
  • IRA, 401k, 403b, or pension distribution (1099-R)
  • 2018 Roth IRA Conversion
4. Miscellaneous Income
  • Rental income/expense statement
  • Health Savings Accounts (1099-SA)
  • Gambling winnings
  • Alimony income
  • Jury Duty
  • Business income/sales
  • Farm income
  • Partnerships, S Corps, Estates and Trusts (K-1)
  • State and local tax refund (1099-G)
DEDUCTIONS AND CREDITS 5. Homeowners
  • Mortgage Interest and points you paid (Form 1098)
  • Property Taxes (real estate tax bill)
  • Mortgage Insurance (Form 1098)
  • Moving Expenses
  • Energy-Efficient Improvements
6. Donations
  • Cash Donations (receipt from the charity)
  • Item Donations (receipt from the charity and/or Form 8283)
7. Education
  • Student Loan Interest Paid (deduct up to $2,500)
  • Education Expenses (receipts for tuition, books, and fees)
8. Family Costs
  • Child and Dependent Care Costs (name, address, tax ID/SSN of care provider and amount paid)
  • Adoption Expenses (SSN of child and any legal, medical, and travel expenses)
9. Medical
  • Medical and Dental Expenses (receipts for all medical expenses)
  • Medical Insurance Premiums
  • Health Savings Account Contributions
10. Taxes
  • Personal Property Tax (includes Vehicle Registration fees)
  • Sales Tax (receipt for all big-ticket items like a boat, car, home renovations)
  • Estimated Taxes – if you make estimated tax payments (Form 1040-ES)
  • Foreign Taxes (statement showing foreign taxes paid)
11. Retirement Contributions
  • Traditional and Roth IRA Contributions (check the traditional IRA and Roth limits)
  • 401k, 403b, and Pension Contributions (check the 401k contribution limits)
  • Keogh, SEP, Simple 401k self-employment plan contributions
12. Other Expenses
  • Investment Expenses includes safe deposit box, investment advisor, custodial fees, and transaction costs
  • Job-Related Expenses (travel costs, uniforms, union dues, job hunting costs, education)
  • Teacher/Educator Expenses (receipt for all non-reimbursed supplies for the classroom)
  • Tax Preparation Fees
  • Casualty and Theft (police report, insurance claim, documents showing fair market value of item)
  • Alimony Payments
  • Legal Fees (legal bills)