High Income Earners Tax Liability Report

High-Income Tax Returns for 2008
by Justin Bryan
he Tax Reform Act of 1976 requires annual publication of data on individual income tax returns reporting income of $200,000 or more, including the number of such returns reporting no income tax liability and the importance of various tax provisions in making these returns nontaxable.1 This article presents detailed data for the almost 4.4 million high-income returns for 2008, as well as summary data for the period 1977 to 2007. Detailed data for the years 1974 through 2007 have been published previously (see Reference section for more details). In this article, two income concepts are used to classify tax returns as high income: the statutory concept of adjusted gross income (AGI) and the expanded income concept.2 Expanded income uses items reported on tax returns to obtain a more comprehensive measure of income than AGI. Specically, expanded income is AGI plus tax-exempt interest, nontaxable Social Security benets, the foreign-earned income exclusion, and items of tax preference for alternative minimum tax purposes; less unreimbursed employee business expenses, moving expenses, investment interest expense to the extent it does not exceed investment income, and miscellaneous itemized deductions not subject to the 2-percent-of-AGI oor.3, 4, 5 Note that, although expanded income is a more comprehensive measure of income than AGI, for some taxpayers, the subtractions from AGI to arrive at expanded income exceed the additions, with the result that expanded income is less than AGI.
Number of High-Income Returns

Figure A and Table 1 show that, for 2008, there were 4,375,660 individual income tax returns reporting AGI of $200,000 or more, and 4,416,986 returns
Justin Bryan is an economist with the Individual Returns Analysis Section. This article was prepared under the direction of Jeff Hartzok, Chief.
1 2
with expanded income of $200,000 or more. These returns represented 3.072 percent and 3.101 percent, respectively, of all returns for 2008. From 1977 to 2000, the numbers of returns reporting incomes of $200,000 or more increased each year, and each year those high-income returns were a larger share of all tax returns. However, for 2001 and 2002, both the number of high-income returns and their percentage of all returns decreased. For 2003, both the numbers of high-income returns and their share of all returns increased, but, by all measures, were still lower than in 2001. With a slightly larger increase than that in 2003, the number of returns and their percentage of all returns for 2004 rose above the previous high set in 2000. This trend continued through 2007, by having large increases in both number of returns and percentage of all returns. For 2008, both the number of returns and the percentage of all returns decreased, although both were still higher than in any year except 2007. Tax Year 2008 was the rst year since 2002, and only the third year, that both of these decreased. The difference in the number of high-income returns between the two income concepts signicantly decreased beginning with 1987, when AGI began to include 100 percent of long-term capital gains. That change in the denition of AGI made AGI and expanded-income concepts more comparable. In addition, as a result of the inclusion of tax-exempt interest in expanded income starting with 1987, expanded income for years after 1986 is not strictly comparable to expanded income for years before 1987. In the top panel of Figure A, the $200,000 threshold for high-income returns is measured in current-year (nominal) dollars. As a result of ination, the real (constant) dollar level of the threshold has fallen over time, and many returns are classied as high income that would not have been classied as high income for earlier years. To maintain the comparability of the real threshold over time, the nominal $200,000 should be adjusted for ination since 1976.
The statutory requirement is contained in section 2123 of the Tax Reform Act of 1976 (90 Stat. at 1915). The 1976 Act specied four income concepts for classifying tax returns: adjusted gross income (AGI), expanded income, AGI plus excluded tax preference items, and AGI less investment interest expense not in excess of investment income. Section 441 of the Decit Reduction Act of 1984 (98 Stat. at 815) eliminated the requirement to use the last two income concepts. 3 The de nition of adjustments to AGI to obtain the expanded income given in the text is for the current year. See Appendix A for a discussion of AGI and expanded income and a list of adjustments covering all years since 1977. 4 See Notes to Appendix A, Note A4. 5 Tax-exempt interest had to be reported on the individual income tax return starting with Tax Year 1987 and is included in expanded income starting with that year. Beginning with Tax Year 1991, tax-exempt interest was incorporated into the criteria used for sampling returns for Statistics of Income, thus increasing the reliability of the estimates of expanded income.

Statistics of Income Bulletin | Spring 2011
Figure A
All Returns and Returns with Income of $200,000 or More Measured in Current Dollars and in 1976 Constant Dollars, by Income Concept, Tax Years 19772008
$200,000 income threshold measured in current dollars Tax year All returns Number of returns by income concept Adjusted gross income (1) 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Footnotes at end of figure.
Percentage of all returns by income concept Adjusted gross income (4) 0.062 0.076 0.101 0.125 0.145 0.178 0.206 0.245 0.292 0.363 0.505 0.661 0.701 0.734 0.738 0.840 0.867 0.957 1.076 1.266 1.477 1.671 1.912 2.142 1.971 1.856 1.945 2.285 2.654 2.937 3.172 3.072 Expanded income (5) 0.078 0.095 0.132 0.160 0.184 0.217 0.259 0.312 0.364 0.514 0.521 0.672 0.726 0.757 0.778 0.871 0.910 0.995 1.116 1.306 1.514 1.709 1.951 2.170 2.000 1.895 1.973 2.320 2.667 2.959 3.201 3.101
Expanded income (3) 67,580 85,137 122,231 149,826 175,092 207,291 249,319 310,042 370,340 529,460 557,848 737,659 814,152 860,940 892,178 989,522 1,043,213 1,153,829 1,319,382 1,572,114 1,854,031 2,132,301 2,479,556 2,807,804 2,605,021 2,464,515 2,573,133 3,067,602 3,584,012 4,094,953 4,576,315 4,416,986
(2) 53,403 68,506 93,731 117,250 138,136 169,367 198,608 243,760 296,507 374,363 539,967 725,345 786,063 834,957 846,707 954,747 993,326 1,109,498 1,272,508 1,523,407 1,807,900 2,085,211 2,429,942 2,771,577 2,567,220 2,414,128 2,536,439 3,021,435 3,566,125 4,064,883 4,535,623 4,375,660
86,634,640 89,771,551 92,694,302 93,902,459 95,396,123 95,337,432 96,321,310 99,438,708 101,660,287 103,045,170 106,996,270 109,708,280 112,135,673 113,717,138 114,730,123 113,604,503 114,601,819 115,943,131 118,218,327 120,351,208 122,421,991 124,770,662 127,075,145 129,373,500 130,255,237 130,076,443 130,423,626 132,226,042 134,372,678 138,394,754 142,978,806 142,450,569
The bottom panel of Figure A shows the results of using a threshold of $200,000 in constant 1976 dollars for all years.6 When measured in 1976 constant dollars, under the expanded-income concept, the total number of high-income returns for 2008 was only 8.4 times the number for 1977, whereas the number of highincome returns for 2008 measured in current-year
dollars was 65.4 times as large as for 1977. For 2008, the share of high expanded-income returns in constant dollars decreased to 0.350 percent from 0.432 percent the previous year. Thus, when the threshold for considering a tax return to be high income is adjusted for ination, the percentage of high-income returns in the population of all returns is about 89 percent lower than when the nominal threshold is used. Figure B shows
Ination-adjusted constant dollars are based on the Consumer Price Index (CPI-U) computed and reported by the U.S. Department of Labor, Bureau of Labor Statistics, Monthly Labor Review. The consumer price index approximates buying patterns of typical urban consumers. The annual index is the average of the monthly indices.

Figure AContinued
All Returns and Returns with Income of $200,000 or More Measured in Current Dollars and in 1976 Constant Dollars, by Income Concept, Tax Years 19772008Continued
Current dollar income threshold equal to $2000,000 in 1976 constant dollars (whole dollars) (6) 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 213,005 229,174 255,184 289,631 319,508 339,192 350,088 365,202 378,207 385,237 399,297 415,817 435,852 459,400 478,735 493,146 507,909 520,914 535,677 551,494 564,148 572,934 585,589 605,272 622,495 632,337 646,749 663,972 686,467 708,612 728,794 756,777 $200,000 income threshold measured in 1976 constant dollars [1] Number of returns by income concept Adjusted gross income (7) 45,931 49,388 55,542 52,512 50,880 59,411 67,310 80,800 95,740 119,550 161,408 235,051 217,685 216,716 183,442 213,783 201,236 204,532 237,770 278,342 335,040 385,183 436,118 482,396 391,901 345,892 356,727 436,583 519,216 569,893 606,026 487,656 Expanded income (8) 58,991 62,556 76,479 71,704 71,146 81,297 93,977 116,389 134,715 191,596 169,942 241,201 228,530 228,659 195,743 227,354 212,853 214,673 248,077 288,194 345,869 396,207 446,583 492,589 400,906 356,402 367,012 445,934 527,126 581,199 618,154 498,470 Percentage of all returns by income concept Adjusted gross income (9) 0.053 0.055 0.060 0.056 0.053 0.062 0.070 0.081 0.094 0.116 0.151 0.214 0.194 0.191 0.160 0.188 0.176 0.176 0.201 0.231 0.274 0.309 0.343 0.373 0.301 0.266 0.274 0.330 0.386 0.412 0.424 0.342 Expanded income (10) 0.068 0.070 0.083 0.076 0.075 0.085 0.098 0.117 0.133 0.186 0.159 0.220 0.204 0.201 0.171 0.200 0.186 0.185 0.210 0.239 0.283 0.318 0.351 0.381 0.308 0.274 0.281 0.337 0.392 0.420 0.432 0.350
Tax year
[1] 1976 constant dollars were calculated using the U.S. Bureau of Labor Statistics' consumer price index for urban consumers. See footnote 6 of this article for further details.
the difference between the constant and current dollar shares of high expanded-income returns. Based on AGI, the number of high-income returns for 2008 measured in current-year dollars was 81.9 times as large as for 1977, whereas measured in 1976 constant dollars, the number of returns for 2008 was only 10.6 times the number for 1977. For Tax Year 2008, the share of high AGI-income returns in constant dollars decreased to 0.342 percent from 0.424 percent in 2007.
Nontaxable High-Income Returns

In this article, two tax concepts are used to classify tax returns as taxable or nontaxable. The rst concept, U.S. income tax, is total Federal income tax liability (including the alternative minimum tax (AMT)), less all credits against income tax. Since the U.S. income tax applies to worldwide income and since a credit (subject to certain limits) is allowed against U.S. income tax for income taxes paid to foreign governments, a return could be classied
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Figure B
Returns with Expanded Income of $200,000 or More: Percentage of All Returns Measured in Current and 1976 Constant Dollars, Tax Years 19772008
Percentage of returns 3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Tax year Current Dollars 1976 Constant Dollars [1]
[1] 1976 constant dollars were calculated using the U.S. Bureau of Labor Statistics' consumer price index for urban consumers. See footnote 6 of this article for further details.
as nontaxable under this rst concept even though income taxes had been paid to a foreign government. The second tax concept, worldwide income tax, addresses this circumstance by adding to U.S. income tax the allowed foreign tax credit and foreign taxes paid on excluded foreign-earned income.7, 8 The sum of these two items is believed to be a reasonable proxy for foreign taxes actually paid. For 2008, of the 4,375,660 income tax returns with AGI of $200,000 or more, 18,783 (0.429 per7
cent) showed no U.S. income tax liability; and 10,824 (0.247 percent) showed no worldwide income tax liability (the top panel of Figure C). For 2007, of the 4,535,623 returns with AGI of $200,000 or more, 10,465 returns (0.231 percent) had no U.S. income tax liability, and 4,841 returns (0.107 percent) had no worldwide income tax liability. For 2008, of the 4,416,986 tax returns with expanded income of $200,000 or more, 27,399 (0.620 percent) had no U.S. income tax liability; 15,308
See Appendix B for a discussion of the tax concepts. In data published for years prior to 1989, either in articles presented in the Statistics of Income Bulletin or in chapters in Statistics of Income-Individual Income Tax Returns (see Reference Section), the U.S. income tax concept was described as total income tax, and the worldwide income tax concept was described as modied total income tax. 8 The inclusion of foreign taxes paid on excluded foreign-earned income, beginning with Tax Year 1990, represents an improvement in the worldwide income tax concept. It does, however, represent a slight break in the year-to-year comparability of data for worldwide income tax. However, the number of returns with foreign taxes paid on excluded foreign-earned income is extremely small compared to the number of returns with the foreign tax credit.

(0.347 percent) had no worldwide income tax liability. For 2007, of the 4,576,315 returns with expanded income of $200,000 or more, there were 13,142 (0.287 percent) with no U.S. income tax liability and 4,354 (0.095 percent) with no worldwide income tax liability. The proportion of nontaxable, high-income returns increased appreciably by all of the four measures cited above between 2007 and 2008. In fact, returns with AGI of $200,000 or more with no U.S.
income tax liability was the only measure that did not at least double in proportion. The items, which had the largest effect in reducing taxes for high expanded-income returns with no worldwide tax, thus contributing to this increase in nontaxability, were total miscellaneous deductions (including casualty theft losses from income-producing property), the taxes paid deduction, partnership and S corporation losses, and tax-exempt interest. Between 2007 and 2008, these items increased by 1,241.7 percent (447
Figure C
Nontaxable Returns with Income of $200,000 or More Measured in Current Dollars and in 1976 Constant Dollars, by Tax and Income Concept, Tax Years 19772008
$200,000 income threshold measured in current dollars Number of nontaxable returns with income of $200,000 or more Tax year Returns with no U.S. income tax, by income concept Adjusted gross income (1) 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Footnotes at end of figure.
Percentage of all returns with income of $200,000 or more Returns with no U.S. income tax, by income concept Adjusted gross income (5) 0.112 0.143 0.075 0.122 0.164 0.155 0.225 0.218 0.206 0.176 0.159 0.113 0.138 0.146 0.148 0.095 0.103 0.102 0.078 0.069 0.066 0.070 0.066 0.084 0.132 0.123 0.111 0.094 0.207 0.203 0.231 0.429 Expanded income (6) 0.126 0.123 0.093 0.132 0.174 0.144 0.232 0.105 0.166 0.112 0.085 0.054 0.096 0.137 0.217 0.192 0.229 0.223 0.203 0.116 0.098 0.104 0.102 0.099 0.188 0.229 0.227 0.164 0.298 0.269 0.287 0.620 Returns with no worldwide income tax, by income concept Adjusted gross income (7) 0.069 0.088 0.030 0.048 0.057 0.064 0.162 0.193 0.149 0.117 0.137 0.101 0.126 0.133 0.134 0.086 0.094 0.096 0.070 0.062 0.058 0.062 0.058 0.073 0.112 0.106 0.095 0.080 0.118 0.101 0.107 0.247 Expanded income (8) 0.095 0.079 0.052 0.076 0.065 0.074 0.175 0.087 0.123 0.072 0.065 0.042 0.085 0.126 0.195 0.182 0.187 0.187 0.132 0.106 0.084 0.090 0.088 0.083 0.158 0.200 0.192 0.134 0.151 0.106 0.095 0.347
Returns with no worldwide income tax, by income concept Adjusted gross income (3) 37 60 28 56 79 109 321 471 442 437 740 731 987 1,114 1,131 823 932 1,061 896 950 1,048 1,283 1,398 2,022 2,875 2,551 2,416 2,420 4,224 4,123 4,841 10,824 Expanded income (4) 64 67 64 114 114 153 437 271 454 379 364 309 691 1,087 1,740 1,799 1,950 2,161 1,746 1,660 1,562 1,914 2,174 2,320 4,119 4,922 4,934 4,101 5,420 4,322 4,354 15,308
Expanded income (2) 85 105 114 198 304 299 579 325 613 595 472 397 779 1,183 1,933 1,896 2,392 2,574 2,676 1,820 1,814 2,224 2,525 2,766 4,910 5,650 5,839 5,028 10,680 11,014 13,142 27,399
60 98 70 143 226 262 447 532 612 659 857 822 1,081 1,219 1,253 909 1,022 1,137 998 1,044 1,189 1,467 1,605 2,328 3,385 2,959 2,824 2,833 7,389 8,252 10,465 18,783

Figure CContinued
Nontaxable Returns with Income of $200,000 or More Measured in Current Dollars and in 1976 Constant Dollars, by Tax and Income Concept, Tax Years 19772008Continued
$200,000 income threshold measured in 1976 constant dollars [1] Number of nontaxable returns with income of $200,000 or more Tax year Returns with no U.S. income tax, by income concept Adjusted gross income (9) 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 54 62 38 56 53 58 138 170 190 201 312 277 293 339 301 171 180 227 202 236 256 290 351 464 694 520 407 350 1,166 1,257 1,524 2,655 Expanded income (10) 75 70 71 71 87 68 135 78 155 189 126 141 128 169 305 288 323 345 281 275 247 289 343 365 648 616 567 396 1,236 1,111 1,359 2,431 Returns with no worldwide income tax, by income concept Adjusted gross income (11) 32 31 15 22 21 27 113 160 137 138 271 251 269 307 273 148 160 209 174 213 222 251 296 390 567 437 339 301 625 512 565 1,357 Expanded income (12) 56 39 39 39 55 36 108 66 99 120 85 116 106 137 277 264 300 329 252 254 214 253 293 290 519 530 485 344 624 306 303 1,004 Percentage of all returns with income of $200,000 or more Returns with no U.S. income tax, by income concept Adjusted gross income (13) 0.118 0.126 0.068 0.107 0.104 0.098 0.205 0.210 0.198 0.168 0.193 0.118 0.135 0.156 0.164 0.080 0.089 0.111 0.085 0.085 0.076 0.075 0.080 0.096 0.177 0.150 0.114 0.080 0.225 0.221 0.251 0.544 Expanded income (14) 0.127 0.112 0.093 0.099 0.122 0.084 0.144 0.067 0.115 0.099 0.074 0.058 0.056 0.074 0.156 0.127 0.152 0.161 0.113 0.095 0.071 0.073 0.077 0.074 0.162 0.173 0.154 0.089 0.234 0.191 0.220 0.488 Returns with no worldwide income tax, by income concept Adjusted gross income (15) 0.070 0.063 0.027 0.042 0.041 0.045 0.168 0.198 0.143 0.115 0.168 0.107 0.124 0.142 0.149 0.069 0.080 0.102 0.073 0.077 0.066 0.065 0.068 0.081 0.145 0.126 0.095 0.069 0.120 0.090 0.093 0.278 Expanded income (16) 0.095 0.062 0.051 0.054 0.077 0.044 0.115 0.057 0.073 0.063 0.050 0.048 0.046 0.060 0.142 0.116 0.141 0.153 0.102 0.088 0.062 0.064 0.066 0.059 0.129 0.149 0.132 0.077 0.118 0.053 0.049 0.201
[1] 1976 constant dollars were calculated using the U.S. Bureau of Labor Statistics' consumer price index for urban consumers. See footnote 6 of this article for further details. NOTE: See Figure H for the derivation of U.S. income tax and worldwide income tax.
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returns), 771.2 percent (933 returns), 364.1 percent (1,216 returns), and 295.9 percent (5,929 returns), respectively (see Table 8 for more details). Regardless of the income measure (AGI or expanded income) or the tax concept (U.S. income tax or worldwide income tax) used, the percentages of 2008 nontaxable, high-income returns are not substantially different whether measured in constant or current dollars. Of returns with AGI of $200,000 or more in current dollars, 0.429 percent reported
no U.S. income tax for 2008; 0.247 percent had no worldwide income tax. For returns in 1976 constant dollars, the percentage without U.S. income tax liability was 0.544; the percentage without worldwide income tax liability was 0.278 (see the lower panel of Figure C). Of returns with expanded income of $200,000 or more in current dollars, 0.620 percent reported no U.S. income tax for 2008, and 0.347 percent had no worldwide income tax. When looking at these

Figure D
Number and Percentage of Returns with No Worldwide Income Tax and with Expanded Income of $200,000 or More Measured in Current Dollars and in 1976 Constant Dollars, Tax Years 19772008
Number of returns 16,000 Percentage of returns 0.40
14,000
0.35
12,000
0.30
10,000
0.25
8,000
0.20
6,000
0.15
4,000
0.10
2,000
0.05
0 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
0.00
Tax year Number of returns (current dollars) Percentage of returns (current dollars) Number of returns (1976 constant dollars) [1] Percentage of returns (1976 constant dollars) [1]
[1] 1976 constant dollars were calculated using the U.S. Bureau of Labor Statistics' consumer price index for urban consumers. See footnote 6 of this article for further details. NOTE: See Figure H for the derivation of worldwide income tax.
returns using 1976 constant dollars, the percentage without U.S. income tax liability was 0.488; the percentage without worldwide income tax liability was 0.201. Figure D shows the number of returns with expanded income of $200,000 or more with no worldwide income tax and their proportion of all high expanded-income returns for 1977 through 2008. These data are shown in both current-year and 1976
constant dollars. In this gure, the spread between the two percentage lines was small for the late 1970s, showed an increase for the early 1980s, and then narrowed before widening again after 1988. The spread generally narrowed after 1993 but has increased or stayed fairly consistent since 2002. Note that, because the number of nontaxable returns with expanded income of $200,000 or more is based on samples, year-to-year differences in the
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numbers and percentages of nontaxable returns with expanded income of $200,000 or more may represent sampling variability, in addition to actual changes in the numbers of such returns. Beginning with Tax Year 1991, nontaxable returns with expanded income of $200,000 or more were sampled at higher rates for Statistics of Income, which reduced the sampling variability of these returns, and therefore, provided improved estimates. Thus, the data for returns prior to 1991 are not entirely comparable with data for more recent years.
Tables 1, 3, 5, 7, 9, and 11 use the U.S. income tax concept to classify returns as taxable or nontaxable, whereas Tables 2, 4, 6, 8, 10, and 12 use the worldwide income tax concept.
Size of Income
Tables 1 and 2 show the number of all returns, taxable returns, and nontaxable returns, cross-classied by broad AGI and expanded income-size classes. The tables show that most returns fall in the same broad income-size class under both income concepts, but that the number of nontaxable returns is generally greater in each income class greater than $50,000 when income is measured by economic income rather than by AGI. Table 1 shows that 18,783 returns with no U.S. income tax had an AGI of $200,000 or more; 27,399 returns with no U.S. income tax had an expanded income of $200,000 or more; and 13,128 returns with no U.S. income tax had both AGI and expanded income of $200,000 or more. Table 2 shows that 10,824 returns with no worldwide income tax had an AGI of $200,000 or more; 15,308 returns with no worldwide income tax had expanded income of $200,000 or more; and 5,327 returns with no worldwide income tax had both AGI and expanded income of $200,000 or more.
Detailed Data for 2008

Tables 1 through 12 present data based on income tax returns for 2008, mainly those with income of $200,000 or more (measured in current-year dollars) of AGI or expanded income. Most of the data are shown for taxable and nontaxable returns, both separately and combined. In summary, the tables show:
The numbers of returns under the two tax concepts, cross-classied by broad AGI and expanded income-size classes (Tables 1 and 2); The distributions of taxable income as a percentage of AGI and expanded income (Tables 3 and 4); The frequencies and amounts of various sources of income, exclusions, deductions, taxes, and tax credits, as well as the relationship between the two income concepts (Tables 5 and 6); The frequencies with which various deductions and tax credits are the most important and second most important items in reducing (or eliminating) income tax (Tables 7 and 8); The frequencies with which various itemized deductions, tax credits, and tax preference items occur as certain percentages of income (Tables 9 and 10); and The distributions of effective tax rates, i.e., income tax under each denition as a percentage of income, by broad income-size classes (Tables 11 and 12).
Distribution of Tax Levels
Tables 3 and 4 show the distributions of high-income returns by the ratios of adjusted taxable income to AGI or expanded income. Taxable income has been adjusted for these tables by subtracting from taxable income the deduction equivalents of tax credits and other items.9 Thus, the tables show the extent to which AGI or expanded income, respectively, are reduced before taxes are imposed on the remaining income. The tables also illustrate three important facts about high-income tax returns. (The examples in the paragraphs below are drawn from the expanded income columns in Table 4 for worldwide tax.)
As already described, only a small portion of high-income taxpayers were able to escape all income taxes (0.3 percent). Another group of high-income taxpayerssmall, but larger than the nontaxable groupwas able
12
See Appendix B for a description of how the deduction equivalent of credits was computed.

to offset a very substantial fraction of its income before being subject to tax. This type of highincome taxpayer pays income tax equal to only a small share of his or her income. Such taxpayers may be called nearly nontaxables. Around 0.9 percent of high expanded-income taxpayers who reported at least some worldwide tax liability were able to reduce their adjustable taxable income to less than 25 percent of their expanded income.
By comparing the columns for nontaxable returns with those for taxable returns, some of the different characteristics of nontaxable returns can be deduced. For example, nontaxable returns under the expandedincome concept were much more likely to have tax-exempt interest than were taxable returns, and, when they did have it, the average amount was much higher. Similarly, nontaxable returns were much less likely to have any income from salaries and wages.
Reasons for Nontaxability

Overall, most high-income taxpayers were subject to tax on a large share of their income and, consequently, reported very substantial amounts of tax. (61.6 percent of high- expanded income taxpayers had adjusted taxable income equal to 80 percent or more of expanded income; and 95 percent had adjusted taxable income equal to 50 percent or more of expanded income.) It is possible for certain itemized deductions and certain exclusions from income, by themselves, to cause nontaxability, but high-income returns are more often nontaxable as a result of a combination of reasons, none of which, by itself, would result in nontaxability. Moreover, some items, which singly or in combination may eliminate regular tax liability, i.e., income tax excluding the alternative minimum tax (AMT), cannot eliminate an AMT liability, since these items give rise to adjustments or preferences for AMT purposes. Because they do not generate AMT adjustments or preferences, tax-exempt bond interest, itemized deductions for interest expense, miscellaneous itemized deductions not subject to the 2-percent-of-AGI oor, casualty or theft losses, and medical expenses (exceeding 10 percent of AGI) could, by themselves, produce nontaxability. Due to the AMT exemption of $69,950 on joint returns ($46,200 on single and head-of-household returns and $34,975 on returns of married taxpayers ling separately), a return could have been nontaxable, even though it included some items that produced AMT adjustments or preferences.10 Further, since the starting point for alternative minimum taxable income was taxable income for regular tax purposes, a taxpayer could have adjustments and preferences exceeding the AMT exclusion without incurring AMT liability. This situation could occur if taxable income for regular tax purposes was sufciently negative, due to itemized deductions and personal exemptions exceeding AGI, that the taxpayers AMT adjustments and preferences are less than the sum of the AMT exclusion and the amount by which regular taxable income is less than zero. Note that,
Tables 11 and 12 show the distributions of tax returns in another way: by tax burden. These two tables classify all tax returns by both size of income and effective tax rate, i.e., income tax as a percentage of either adjusted gross income or expanded income. These tables show that, on average, high-income taxpayers did have higher effective tax rates. The tables also illustrate the wide dispersion of effective tax rates for high-income returns. For example, Table 12 shows that, while 3.0 percent of returns with adjusted gross income of $200,000 or more had either no worldwide income tax or worldwide income tax of less than 10 percent of adjusted gross income, 20.7 percent had effective tax rates of 25 percent or more. In addition, 31.2 percent had effective tax rates between 20 and 25 percent. In contrast, only 3.2 percent of taxpayers with AGI between $100,000 and $200,000 had effective tax rates of 20 percent or more, including 0.2 percent with effective tax rates of 25 percent or more.
Characteristics of Tax Returns

Tables 5 and 6 show, in the aggregate, the frequencies and amounts of the types of income, the items of tax preference, and the various deductions, credits, and income taxes shown on high-income returns.
10
The AMT exclusion phases out above certain levels of alternative minimum taxable income, based on ling status, but since taxpayers will have some AMT liability in the phaseout range, the phaseout income is not relevant for nontaxable, high-income returns.
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because of the AMT, taxpayers may have found it benecial to report additional deduction items on their tax returns, even if the items did not produce a benet for regular tax purposes. Tables 7 and 8 classify tax returns by the items that had the largest and second largest effects in reducing or eliminating income tax. For returns on which each of the largest effects was identied, the tables show each of the second largest effects.11 For example, Table 7 shows that, on taxable returns with some U.S. income tax and expanded income of $200,000 or more, the taxes paid deduction was the most important item 50.4 percent of the time. Where this was the primary item, the interest paid deduction was the second most important item 58.4 percent of the time, and the charitable contributions deduction was the second most important item 24.6 percent of the time. Table 8 shows that, on returns without any worldwide tax and expanded income of $200,000 or more, the most important item in eliminating tax, on 51.8 percent of returns, was the exclusion for State and local government interest (tax-exempt interest). For these returns, the itemized deduction for taxes paid was the second most important item 28.2 percent of the time, and the deduction for medical and dental expenses was the second most important reason 14.5 percent of the time. Table 8 also shows that the four categories with the largest effect in reducing taxes on high adjustedgross-income returns with no worldwide income tax were the total miscellaneous deductions (4,061 returns, or 37.7 percent of the 10,782 tabulated returns with AGI of $200,000 or more and with no worldwide tax liability); partnership and S corporation net losses (1,465 returns, or 13.6 percent); investment interest expense deduction (1,213 returns, or 11.3 percent); and medical and dental expense deduction (1,077 returns, or 10.0 percent). These effects are also shown graphically in Figure E. For high expanded-income returns with no worldwide income tax, the four categories that most frequently had the largest effect in reducing taxes were tax-exempt interest (7,933 returns, or 51.8 percent of the 15,303 tabulated returns with expanded income of $200,000 or more and with no worldwide
tax liability); medical and dental expense deductions (1,754 returns, or 11.5 percent); partnership and S corporation net losses (1,550 returns, or 10.1 percent); and taxes paid deduction (1,054 returns, or 6.9 percent). These effects are also shown graphically in Figure F. Table 8 also shows that the items that most frequently had the second largest effect in reducing regular tax liability for high expanded-income returns with no worldwide tax were the deduction for taxes paid (3,713 returns, or 24.3 percent) and tax-exempt interest (2,342 returns, or 15.3 percent). Tables 9 and 10 present another way of illustrating the importance of various tax provisions in reducing or eliminating income tax. Unlike Tables 7 and 8, these tables cover only nontaxable returns, i.e., returns showing no income tax liability. Tables 9 and 10 show the number of times that various items reduced income by different percentages of income. The items shown include the various categories of itemized deductions, the deduction equivalents of two different types of tax credits, and total tax preferences excluded from income. For example, for high expanded-income returns with no worldwide income tax (Table 10), the itemized deduction for casualty or theft losses exceeded 100 percent of expanded income on 413 of the 15,308 returns, but there was no casualty or theft loss deduction on 14,513 returns.
References
Lerman, Allen H., High-Income Tax Returns: 1974 and 1975, A Report on High-Income Taxpayers Emphasizing Tax Returns with Little or No Tax Liability, U.S. Department of Treasury, Ofce of Tax Analysis, March 1977, and HighIncome Tax Returns: 1975 and 1976, A Report Emphasizing Nontaxable and Nearly Nontaxable Income Tax Returns, U.S. Department of Treasury, Ofce of Tax Analysis, August 1978. U.S. Department of Treasury, Internal Revenue Service, Statistics of IncomeIndividual Income Tax Returns for 1977 through 1982 and 1985 through 1988. (For 1977 and 1978, only the number of nontaxable, high-AGI returns was published.)
11
14
Tax-exempt interest and the foreign-earned income exclusion were not included in Tables 7 and 8 as possible tax effects before Tax Year 1994. Thus, caution should be exercised in making comparisons between data prior to 1994 and after 1993.

Figure E
Returns with No Worldwide Income Tax and with Adjusted Gross Income of $200,000 or More: Primary Reasons for No Income Tax Liabilities, Tax Year 2008
Partnership and S Corporation net losses 13.5%
Other [1] 6.5%
Investment interest expense deduction 11.2%
Medical and dental expense deduction 10.0%
Taxes paid deduction 6.1% 10,824
Net casualty or theft loss deduction 6.0%
Charitable contributions deduction 9.2%
Total miscellaneous deductions 37.5%
[1] Includes 42 returns where primary reason for nontaxability was not identified by the data items selected for this report. NOTE: Detail may not add to 100 percent because of rounding.
Lerman, Allen H., High-Income Tax Returns, 1983, Statistics of Income Bulletin, Spring 1986, Volume 5, Number 4, pp. 31-61; HighIncome Tax Returns, 1984, Statistics of Income Bulletin, Spring 1987, Volume 6, Number 4, pp. 1-29; High-Income Tax Returns for 1989, Statistics of Income Bulletin, Spring 1993, Volume 12, Number 4, pp. 23-50; High-Income Tax Returns for 1990, Statistics of Income Bulletin, Winter 1993-1994, Volume 13, Number 3, pp. 104-132; High-Income Tax Returns for 1991, Statistics of Income Bulletin, Winter 1994-1995, Volume 14, Number 3, pp. 96-130; and High-Income Tax Returns for 1992, Statistics of Income Bulletin, Winter 1995-1996, Volume 15, Number 3, pp. 46-82;
Latzy, John, High-Income Tax Returns for 1993, Statistics of Income Bulletin, Winter 1996-1997, Volume 16, Number 3, pp. 64-101; and HighIncome Tax Returns, 1994, Statistics of Income Bulletin, Winter 1997-1998, Volume 17, Number 3, pp. 31-69; Cruciano, Therese, High-Income Tax Returns for 1995, Statistics of Income Bulletin, Summer 1998, Volume 18, Number 1, pp 69-108; HighIncome Tax Returns for 1996, Statistics of Income Bulletin, Winter 1998-1999, Volume 18, Number 3, pp. 7-59. Parisi, Michael, High-Income Tax Returns for 1997, Statistics of Income Bulletin, Winter 1999-2000, Volume 19, Number 3, pp 6-58.
15

Figure F
Returns with No Worldwide Income Tax and with Expanded Income of $200,000 or More: Primary Reasons for No Income Tax Liabilities, Tax Year 2008
Other [1] 8.7% Charitable contributions deduction 6.7%
Taxes paid deduction 6.9% Net casualty or theft loss deduction 4.3%
15,308
Tax-exempt interest 51.8%
Medical and dental expense deduction 11.5%
Partnership and S Corporation net losses 10.1%
[1] Includes 5 returns where primary reason for nontaxability was not identified by the data items selected for this report. NOTE: Detail may not add to 100 percent because of rounding.
16
Balkovic, Brian, High-Income Tax Returns for 1998, Statistics of Income Bulletin, Winter 2000-2001, Volume 20, Number 3, pp 5-57; High-Income Tax Returns for 1999, Statistics of Income Bulletin, Spring 2002, Volume 21, Number 4, pp 7-58; High-Income Tax Returns for 2000, Statistics of Income Bulletin, Spring 2003, Volume 22, Number 4, pp 10-62; High-Income Tax Returns for 2001, Statistics of Income Bulletin, Summer 2004, Volume 24, Number 1, pp 65-117, High-Income Tax Returns for 2002, Statistics of Income Bulletin, Spring 2005, Volume 24, Number 4, pp 6-58, High-Income Tax Returns for 2003, Statistics of Income Bulletin, Spring 2006, Volume 25, Number 4, pp 8-57 , High-Income Tax Re-
turns for 2004, Statistics of Income Bulletin, Spring 2007, Volume 26, Number 4, pp 7-57, High-Income Tax Returns for 2005, Statistics of Income Bulletin, Spring 2008, Volume 27, Number 4, pp 16-67. Bryan, Justin, High-Income Tax Returns for 2006, Statistics of Income Bulletin, Spring 2009, Volume 28, Number 4, pp 5-53; High-Income Tax Returns for 2007, Statistics of Income Bulletin, Spring 2010, Volume 29, Number 4, pp 3-51.
Appendix A: Income Concepts

Congress wanted data on high-income taxpayers classied by an income concept that was more comprehensive than adjusted gross income (AGI), but

that was based entirely on items already reported on income tax returns. In order to derive such an income concept, it was necessary to begin with a broad, inclusive concept of income. AGI must then be compared to this broad income concept, and the differences (both additions and subtractions) that can be determined from items reported on tax returns identied. This appendix begins by dening Haig-Simons income, a very broad concept of income used by economists and others as a standard. AGI is then compared to Haig-Simons income, and the major differences between the two income concepts are listed. The nal section denes expanded income, a more comprehensive income measure than AGI, based entirely on tax return data.
Haig-Simons Income
The broadest measure of annual income generally used by economists and others is dened as the value of a households consumption plus the change, if any, in its net worth. This income concept is referred to as Haig-Simons income, or H-S income, after the two economists who wrote extensively about it [A1]. The H-S income of a household that consumed $25,000 and saved $2,000 in a year would be $27,000. Alternatively, the H-S income of a household that consumed $25,000 and had no additions to savings, but had assets that declined in value by $1,000 in a year, would be $24,000. H-S income consists of three broad components: labor income, capital income (income from assets), and income from transfer payments. The major elements of each of these three components are as follows: Labor incomeThis includes all forms of employee compensation (including wages and salaries), employee fringe benets (such as employer-provided health insurance and accrued pension benets or contributions), and the employer share of payroll taxes (such as Social Security taxes). Labor income also includes the labor share of self-employment income. Expenses of earning labor income would be deducted in arriving at H-S income. Deferred labor income (such as pension benets) would be counted in the year it was earned, rather than in the year it was received. Capital incomeThis includes all income from assets, including interest, dividends, rents, royalties, accrued capital gains (whether or not realized), the
capital income share of self-employment income, and the rental value of consumer durables (most importantly, the rental value of owner-occupied housing). Capital income is measured in real (ination-adjusted) terms and is net of real, economic depreciation and all other expenses (which could exceed capital income). Transfer paymentsThese include payments in cash (such as Social Security benets, workers compensation, unemployment benets, Aid to Families with Dependent Children (AFDC), and noncash benets (such as Medicare, Medicaid, and food stamps). For purposes of tax analysis, H-S income should be measured on a pre-tax basis, the amount that would be earned if there were no Federal income tax in place. Most items of income are unaffected, or little affected, by the income tax and so are reported on a pre-tax basis. However, certain income items from tax-preferred sources may be reduced because of their preferential treatment. An example is interest from tax-exempt State and local Government bonds. The interest rate on tax-exempt bonds is generally lower than the interest rate on taxable bonds of the same maturity and risk, with the difference approximately equal to the tax rate of the typical investor in tax-exempt bonds. Thus, investors in tax-exempt bonds are effectively paying a tax, referred to as an implicit tax, and tax-exempt interest as reported is measured on an after-tax, rather than a pre-tax, basis. Income from all tax-preferred sources should be grossed up by implicit taxes to properly measure H-S income.
Adjusted Gross Income

AGI is the statutory denition of income for Federal income tax purposes. AGI differs from H-S income by excluding some components of H-S income and by allowing accelerated business deductions and deductions unrelated to income, but also by disallowing or limiting certain expenses of earning income and certain losses. In addition, AGI is not grossed up for implicit taxes. The components of H-S income excluded from AGI include most employee fringe benets, the employer share of payroll taxes, accrued but deferred employee compensation, accrued but unrealized real capital gains, the rental value of consumer durables, most Social Security benets, most other cash transfers, all noncash transfers, and the real income of borrowers due to ination [A2].
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Depreciation and certain other expenses allowed in determining AGI may be accelerated (relative to economic depreciation and other costs) in the early years of an investment, thus understating investment income. In later years, however, investment income in AGI will be overstated because depreciation and other accelerated expenses will then be understated. AGI also excludes some expenses not related to earning income, such as contributions to self employed retirement (Keogh) plans, deductible contributions to Individual Retirement Arrangements (IRAs), the portion of social security contributions for selfemployed workers that is analogous to the employer share of such contributions for employees, and contributions to medical savings accounts. AGI generally exceeds H-S income to the extent that expenses of earning income and losses are limited or disallowed. Most of the expenses of earning income are deductible from AGI in calculating taxable income, but only if the taxpayer itemizes deductions and then, in some cases, only to the extent that the sum of all such items exceeds 2 percent of AGI. Expenses incurred in the production of income that are itemized deductions include certain expenses of employees (such as union dues; expenditures for items used on the job but not reimbursed by the employer; and the employees travel, meal, and entertainment expenses); and expenses attributable to a taxpayers (passive) investments (as opposed to active participation in a trade or business, for example), including, but not limited to, interest expense incurred in connection with investments in securities [A3]. Note that there are limits on certain types of deductible expenses. In particular, deductible meal and entertainment expenses are limited to 50 percent of total meal and entertainment expenses. Although net capital losses reduce economic income, only the rst $3,000 of net realized capital losses may be deducted in computing AGI. Any additional realized losses must be carried forward to future years. In a somewhat similar manner, passive losses (from investments in a trade or business in which the taxpayer does not materially participate) can also reduce economic income, but, in computing AGI, they can only be deducted from passive income from other, similar investments (although a larger amount may be deducted when the losses are from rental real estate activities).
18
AGI can also exceed H-S income because of differences in the timing of income between the two concepts. For example, a taxpayer may realize more capital gains in a year than he or she accrues in capital gains. Since AGI includes only realizations of capital gains, whereas H-S income includes only accruals, AGI in this circumstance would exceed H-S income. Finally, just as AGI understates the income of borrowers due to ination, it overstates the income of lenders, who include bond owners and owners of bank deposits.
Expanded Income
Expanded income is meant to be a measure of income that is conceptually closer to H-S income than AGI, but which is derived entirely from items already reported on income tax returns. Figure G shows the adjustments made to AGI to arrive at expanded income. Since the denition of AGI was changed by legislation several times since 1977, and certain reporting requirements also changed, the adjustments differ over the years, as indicated for each item [A4]. Most of these adjustments are relatively straightforward, but the adjustment for investment requires some explanation.
Investment Interest
In measuring H-S income, it generally would be appropriate to deduct all expenses incurred in the production of income, including those related to any income-producing investments, without limit. Investment expenses in excess of investment income would then represent net economic losses. However, such a liberal deduction for investment-related expenses is not necessarily correct when not all income items have been included currently. (Investment income includes interest, dividends, and capital gains.) If all income has not been included currently, full deduction of investment expenses might represent a mismatching of receipts and expenses and might result in understating income. For example, if a taxpayer borrowed funds to purchase securities, net income would be understated if the taxpayer deducted all interest payments on the loan, but did not include as income any accrued gains on the securities. A similar mismatching of income and expenses would occur if investment expenses that should properly be

Figure G
Derivation of Expanded Income from Adjusted Gross Income, Tax Years 19772008
Adjusted gross income (AGI) PLUS: o Excluded capital gains (tax years prior to 1987) o Tax-exempt interest (1987 and later tax years) o Nontaxable Social Security benefits (1987 and later tax years) o Tax preferences for alternative minimum tax purposes [A5] o Foreign-earned income exclusion (1990 and later tax years) MINUS: o Unreimbursed employee business expenses [A4] o Nondeductible rental losses (Tax Year 1987) o Moving expense deduction (Tax Years 1987 through 1993) [A4] o Investment interest expense deduction to the extent it does not exceed investment income o Miscellaneous itemized deductions not subject to the 2-percent-of-AGI floor (1989 and later tax years) EQUALS: o Expanded income
NOTE: Footnotes to this figure are included with the footnotes to Appendix A.
capitalized were deducted when paid. In these instances, a more accurate measure of income might be obtained by postponing the deduction of the expense until such time as the income were recognized for tax purposes. Additional problems are created when a person with a loan has both income-producing assets, such as securities, and non-income-producing assets, such as a vacation home or yacht. It is not possible to determine what portion of the interest expense should be attributed to taxable income-producing assets and, therefore, ought to be deductible against the gross receipts from such taxable assets. As a result of these problems, it has been necessary to set arbitrary limits on the amount of investment expenses that are deductible in calculating expanded income. Investment expenses that have not been deducted in determining AGI generally can appear on a Federal individual income tax return in two places. Investment interest expense is taken into account in the calculation of the itemized deduction for interest paid. Deductible investment interest expense is a separate part of the total interest deduction. Other investment
expenses, such as management fees, are included in the miscellaneous category of itemized deductions [A5]. Beginning with 1987, most types of incomeproducing expenses included as miscellaneous itemized deductions are only deductible to the extent that their total exceeds 2 percent of AGI. To determine expenses that should be deductible in calculating an approximation of H-S income, investment expenses have been dened as deductible investment interest expense. Other investment expenses could not be separated from the remainder of miscellaneous deductions. Hence, they have not been used in the adjustment for investment expenses. To the extent that interest expenses do not exceed investment income, they are generally allowed as a deduction in the computation of deductible investment interest expense and thus expanded income. Investment interest expenses that do exceed investment income are not deductible in calculating expanded income. One consequence of this denition is that investment expenses can never turn positive investment income into investment losses. Generally, allowing investment expenses to offset all investment income is generous and tends to understate broadlymeasured income. However, in some instances, limiting investment expenses to investment income may overstate income by disallowing genuine investment losses.
Notes to Appendix A
[A1] Haig, Robert M. (ed.), The Federal Income Tax, Columbia University Press, 1921, and Simons, Henry C., Personal Income Taxation, University of Chicago Press, 1938. [A2] Borrowers receive income due to ination because the real value of debt is reduced by ination. Even though ination may be anticipated and reected in interest rates, tax deductions for nominal interest payments overstate interest costs because part of these payments represent a return of principal to the lender, rather than interest. [A3] See references and footnote A4. [A4] For 1977, 50 percent of net long-term capital gains were included in AGI. During 1978, the inclusion ratio was changed to 40 percent. This inclusion ratio remained unchanged through 1986. Beginning with 1987, there
19

was no exclusion allowed for capital gains in computing AGI, and, thus, this adjustment was not made in computing expanded income for returns for years after 1986. Beginning in 1987, taxpayers were required to report on their Federal income tax returns the amount of their tax-exempt interest income from State and local Government bonds. Since 1987, tax-exempt interest has been included in expanded income. Taxpayers are also required to report Social Security benets. Since 1988, nontaxable Social Security benets have been included in expanded income. However, if none of a particular taxpayers Social Security benets are taxable, then gross Social Security benets are not required to be shown on the income tax return. In such instances, which generally only affect lower- and middle-income taxpayers, Social Security benets are not included in expanded income. The subtraction of unreimbursed employee business expense and the moving expense deduction is to make the concept of expanded income comparable to years prior to 1987. All current-year moving expenses beginning with Tax Year 1994 were deducted in the calculation of AGI as a statutory adjustment. Due to subtracting non-limited miscellaneous deductions and not subtracting the nondeductible rental loss for 1989, the expanded income concept for 1989 is not strictly comparable to expanded income for 1988. Nor is the expanded income concept for 1990 strictly comparable to expanded income for 1989 because of the addition of the foreign-earned income exclusion. Specic details on the denition of expanded income for any given year are available in the reports and publications found under the Reference Section. [A5] Some income deferrals and accelerated expense deductions may also be involved in income or losses from rental property, from royalties, from partnerships, and from S Corporations, only the net amounts of which are included in adjusted gross income.
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Appendix B: Tax Concepts

This appendix provides a brief summary of the U.S. taxation of worldwide income and the foreign tax credit. The two tax concepts used in this article are then dened. The following section explains the computation of the deduction equivalent of credits and other items. A nal section discusses the possible implications of the use of unaudited tax return data for this article.
U.S. Taxation of Worldwide Income and the Foreign Tax Credit

Citizens and residents of the United States, regardless of where they physically reside, must generally include in income for Federal income tax purposes income from all geographic sources. Thus, for example, dividends and interest received from a foreign corporation or income earned working abroad is subject to Federal income tax in the same manner as income received from sources inside the United States [B1]. Income from sources outside the United States may also be subject to tax by foreign governments. To reduce, if not eliminate, the possibility of double taxation of the foreign-source income of U.S. citizens and residents, the Federal income tax allows a credit for income taxes paid to foreign governments. This foreign tax credit is generally limited to the amount of (pre-credit) U.S. tax liability attributable to foreign-source income. This limit prevents the foreign tax credit from offsetting the U.S. tax on U.S.-source income. As a result of taxing citizens and residents on a worldwide basis but allowing a foreign tax credit, some Federal income tax returns may report substantial income but little or no U.S. tax liability after credits. This may occur, for example, if a taxpayer has income only from foreign sources (the taxpayer may live abroad the entire year and have no incomeproducing assets in the United States), or if a taxpayer has foreign-source income that exceeds a net loss from U.S. sources and pays income taxes to a foreign government that are comparable to the U.S. tax [B2]. For taxpayers with income from foreign sources, these procedures understate the taxpayers true worldwide income tax liabilities and effective income tax rates. For such taxpayers, it does not seem appropriate to classify U.S. income tax credits for

foreign tax payments as reducing tax liabilities. This is particularly true for tax lers who appear to be nontaxable because they do not have any U.S. tax liability, but who have paid foreign income taxes. A more accurate measure of overall income tax burden, as well as the numbers of nontaxable returns, can be obtained by considering all income taxesU.S. as well as foreign. Thus, a second tax concept, worldwide income tax, has been used in addition to the traditional U.S. income tax.
Figure H
Derivation of "U.S. Income Tax" and "Worldwide Income Tax," Tax Year 2008
Tax at regular rates (tax generated) PLUS: Additional taxes (such as tax on accumulation distributions from qualified retirement plans, Form 4972) Alternative minimum tax (Form 6251) Income tax before credits Tax credits U.S. income tax Foreign tax credit Foreign taxes paid on excluded foreign-earned income (Form 1116) Worldwide income tax
PLUS: EQUALS: MINUS: EQUALS: PLUS: PLUS: EQUALS:
Two Tax Concepts

In this article, two tax concepts are used to classify tax returns as taxable (i.e., returns showing an income tax liability) or nontaxable (i.e., returns showing no income tax liability) and to measure the tax burdens on taxable returns: U.S. income tax and worldwide income tax. Worldwide income tax is dened for purposes of this article as U.S. income tax plus the foreign tax credits reported on the U.S. income tax return and foreign taxes paid on excluded foreign-earned income (obtained from Form 1116, Foreign Tax Credit). The amount of the foreign tax credits and foreign taxes paid on excluded foreignearned income is used as a proxy for foreign tax liabilities [B3]. The relationship of U.S. income tax to tax items reported on individual income tax returns, and to worldwide income tax, is shown in Figure H.
Comparing Exclusions, Deductions, Tax Credits, and Special Tax Computations

In order to compare the importance of various exclusions, deductions, tax credits, and special tax computations (such as the alternative minimum tax on tax preferences), the different types of items must be placed on the same basis. One way of doing so is to calculate the size of the deduction that would reduce (or increase) income tax by the same amount as a tax credit or special computation. This amount is called the deduction equivalent of the tax credit or special computation. The deduction equivalent of a tax credit or a special tax computation is the difference between the taxable income that, using the ordinary tax rate schedules, would yield the actual tax before the provision in question is considered and the actual tax after the provision. For example, the deduction equivalent of all tax credits is equal to the difference between taxable income that would yield income
tax before credits and taxable income that would yield income tax after credits. Using this method of equating the value of deductions, exclusions, credits, and special tax computations, the order in which the various credits and special tax computations are calculated may affect the value of their deduction equivalents. Because the tax rate schedules are progressive, with successive increments to income taxed at successively higher tax rates, the deduction equivalent of the credit converted last to a deduction equivalent will be larger (for the same amount of a credit) than the item converted rst, unless all relevant taxable income amounts are within a single tax-rate bracket. The deduction equivalents of tax credits shown in Tables 9 and 10 were computed by assuming that deductions and exclusions reduce taxes before credits. As a result, the deduction equivalent of tax credits may be overstated.
Unaudited Data
Tax return data used for Statistics of Income have been tabulated as they were reported on tax returns led with the Internal Revenue Service (IRS). Certain obvious arithmetic errors have been corrected and certain adjustments have been made to achieve consistent statistical denitions. Otherwise, the data have not been altered. In particular, the data do not reect any changes that may have been or could be made as a result of IRS audits. While this is true of
21

data throughout the entire Statistics of Income program, it is particularly relevant for high-income tax returns. Because of the greater complexity of these returns, there is a higher probability of error and more scope for disagreement about the proper interpretation of tax laws. The fact that the data have been drawn from unaudited returns is of even greater importance for those high-income returns that are nontaxable. Almost any audit changes would make such returns taxable. Even where the tax consequences are minor, such returns could be reclassied from nontaxable to taxable, thereby changing the counts of nontaxable returns.
this article include such excluded income in expanded income. Foreign taxes paid on such income are reected in worldwide income tax, as discussed later. [B2] Although the foreign tax credit is an item of tax preference for AMT purposes, taxpayers below the AMT exclusion thresholds, or with preferences or deductions not subject to AMT, could completely offset pre-credit U.S. income tax liability with foreign tax credits. [B3] Where foreign tax rates exceed U.S. rates, foreign tax credits will be less than foreign tax liabilities. In such cases, using foreign tax credits as a proxy for foreign tax liabilities understates worldwide income tax liability. In other cases, when foreign tax credits are for taxes paid on income from previous years, use of foreign tax credits as a proxy may overstate or understate worldwide taxes on current-year income.
Notes to Appendix B
[B1] An exception is that certain income earned abroad may be excluded from AGI. Any foreign taxes paid on such income are not creditable against U.S. income tax. The tables in
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Table 1. Returns With and Without U.S. Income Tax: Number of Returns, by Size of Income Under Alternative Concepts, Tax Year 2008
[All figures are estimates based on samples]
Returns by size of adjusted gross income Returns by tax status, size of expanded income All returns (1) All returns Total Under $50,000 [1] $50,000 under $100,000 $100,000 under $200,000 $200,000 or more Returns with U.S. income tax Total Under $50,000 [1] $50,000 under $100,000 $100,000 under $200,000 $200,000 or more Returns without U.S. income tax Total Under $50,000 [1] $50,000 under $100,000 $100,000 under $200,000 $200,000 or more
[1] Includes returns with adjusted gross deficit or with negative expanded income. NOTE: Detail may not add to totals because of rounding.
Under $50,000 [1] (2) 93,297,623 90,960,734 2,275,366 57,931 3,593 47,569,564 45,647,400 1,892,228 29,069 867 45,728,059 45,313,335 383,137 28,862 2,725
$50,000 under $100,000 (3) 30,925,946 849,718 29,687,858 379,603 8,767 29,501,088 703,611 28,438,127 353,740 5,611 1,424,858 146,107 1,249,732 25,863 3,157
$100,000 under $200,000 (4) 13,851,341 7,632 476,645 13,246,329 120,735 13,761,183 4,055 468,810 13,175,973 112,345 90,158 3,577 7,835 70,356 8,390
$200,000 or more (5) 4,375,660 6,364 4,878 80,526 4,283,891 4,356,877 2,707 4,204 79,202 4,270,764 18,783 3,657 674 1,324 13,128
142,450,569 91,824,448 32,444,747 13,764,389 4,416,986 95,188,712 46,357,772 30,803,369 13,637,984 4,389,587 47,261,857 45,466,675 1,641,378 126,405 27,399
Table 2. Returns With and Without Worldwide Income Tax: Number of Returns, by Size of Income Under Alternative Concepts, Tax Year 2008
Returns by size of adjusted gross income Returns by tax status, size of expanded income All returns (1) All returns Total Under $50,000 [1] $50,000 under $100,000 $100,000 under $200,000 $200,000 or more Returns with worldwide income tax Total Under $50,000 [1] $50,000 under $100,000 $100,000 under $200,000 $200,000 or more Returns without worldwide income tax Total Under $50,000 [1] $50,000 under $100,000 $100,000 under $200,000 $200,000 or more
[1] Includes returns with adjusted gross deficit or with negative expanded income. NOTE: Detail may not add to totals because of rounding.
Under $50,000 [1] (2) 93,297,623 90,960,734 2,275,366 57,931 3,593 47,733,827 45,791,485 1,902,836 38,205 1,301 45,563,796 45,169,250 372,529 19,725 2,292
$50,000 under $100,000 (3) 30,925,946 849,718 29,687,858 379,603 8,767 29,556,492 703,614 28,485,457 361,289 6,132 1,369,454 146,104 1,202,401 18,313 2,635
$100,000 under $200,000 (4) 13,851,341 7,632 476,645 13,246,329 120,735 13,777,551 4,061 469,655 13,188,154 115,681 73,789 3,571 6,990 58,175 5,054
$200,000 or more (5) 4,375,660 6,364 4,878 80,526 4,283,891 4,364,836 2,721 4,231 79,319 4,278,564 10,824 3,643 647 1,207 5,327
142,450,569 91,824,448 32,444,747 13,764,389 4,416,986 95,432,706 46,501,880 30,862,179 13,666,968 4,401,678 47,017,863 45,322,567 1,582,567 97,421 15,308
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Table 3. Returns With and Without U.S. Income Tax and With Income of $200,000 or More Under Alternative Concepts: Distribution of Returns by Ratio of Adjusted Taxable Income to Income Per Concept, Tax Year 2008
Adjusted gross income concept Tax status, ratio of adjusted taxable income to income per concept Number of returns (1) Total Returns without U.S. income tax Returns with U.S. income tax: Total Ratio of adjusted taxable income to income per concept: Over 0 under 5 percent 5 under 10 percent 10 under 15 percent 15 under 20 percent 20 under 25 percent 25 under 30 percent 30 under 35 percent 35 under 40 percent 40 under 45 percent 45 under 50 percent 50 under 60 percent 60 under 70 percent 70 under 80 percent 80 percent or more
N/ANot applicable. NOTE: Detail may not add to totals because of rounding.
Expanded income concept Number of returns (4) 100.0 0.4 N/A 0.2 0.4 0.7 0.9 1.1 1.5 1.9 2.4 3.5 4.8 9.2 17.3 38.6 99.6 4,416,986 27,399 4,389,587 14,544 13,125 11,665 15,604 13,825 18,470 21,142 30,141 49,856 71,444 208,168 366,567 931,047 2,623,988 Percentage of total (5) 100.0 0.6 99.4 0.3 0.3 0.3 0.4 0.3 0.4 0.5 0.7 1.1 1.6 4.7 8.3 21.1 59.4 Cumulative percentage of total (6) 100.0 0.6 N/A 0.3 0.6 0.9 1.2 1.6 2.0 2.5 3.1 4.3 5.9 10.6 18.9 40.0 99.4
Percentage of total (2) 100.0 0.4 99.6 0.2 0.2 0.3 0.2 0.2 0.3 0.4 0.5 1.0 1.4 4.3 8.2 21.2 61.0
Cumulative percentage of total (3)
4,375,660 18,783 4,356,877 10,542 8,240 11,953 9,568 9,692 14,582 18,116 23,221 45,394 60,168 189,856 356,886 928,646 2,670,014
Table 4. Returns With and Without Worldwide Income Tax and With Income of $200,000 or More Under Alternative Concepts: Distribution of Returns by Ratio of Adjusted Taxable Income to Income Per Concept, Tax Year 2008
Adjusted gross income concept Tax status, ratio of adjusted taxable income to income per concept Number of returns (1) Total Returns without worldwide income tax Returns with worldwide income tax: Total Ratio of adjusted taxable income to income per concept: Over 0 under 5 percent 5 under 10 percent 10 under 15 percent 15 under 20 percent 20 under 25 percent 25 under 30 percent 30 under 35 percent 35 under 40 percent 40 under 45 percent 45 under 50 percent 50 under 60 percent 60 under 70 percent 70 under 80 percent 80 percent or more
N/ANot applicable. NOTE: Detail may not add to totals because of rounding.
Expanded income concept Number of returns (4) 100.0 0.2 N/A 0.1 0.2 0.4 0.5 0.6 0.9 1.2 1.6 2.5 3.9 8.0 15.9 36.7 99.8 4,416,986 15,308 4,401,678 6,691 7,180 7,163 11,007 8,671 12,838 17,362 23,037 44,045 66,948 194,853 357,939 922,583 2,721,360 Percentage of total (5) 100.0 0.3 99.7 0.2 0.2 0.2 0.2 0.2 0.3 0.4 0.5 1.0 1.5 4.4 8.1 20.9 61.6 Cumulative percentage of total (6) 100.0 0.3 N/A 0.2 0.3 0.5 0.7 0.9 1.2 1.6 2.1 3.1 4.6 9.1 17.2 38.0 99.7
Percentage of total (2) 100.0 0.2 99.8 0.1 0.1 0.2 0.1 0.1 0.2 0.3 0.4 0.9 1.3 4.1 7.9 20.9 63.0
Cumulative percentage of total (3)
4,375,660 10,824 4,364,836 5,129 4,236 7,174 6,011 5,838 10,458 15,247 17,742 39,152 57,674 179,442 345,850 913,326 2,757,557
24

Table 5. Returns With and Without U.S. Income Tax and With Income of $200,000 or More Under Alternative Concepts: Income, Deductions, Credits, and Tax, by Tax Status, Tax Year 2008
[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Adjusted Gross Income Concept Salaries and wages Business or profession: Net income Net loss Farm: Net income Net loss Partnership and S Corporation net income after Section 179 property deduction [1]: Net income Net loss Sales of capital assets: Net gain Net loss Sales of property other than capital assets: Net gain Net loss Taxable interest received Tax-exempt interest Dividends Qualified dividends Pensions and annuities in adjusted gross income Rent: Net income Net loss, total (deductible and nondeductible) Nondeductible rental loss Royalty: Net income Net loss Estate or trust: Net income Net loss State income tax refunds Alimony received Social Security benefits in adjusted gross income Social Security benefits (nontaxable) Unemployment compensation Other income Other loss Foreign-earned income exclusion Total income Statutory adjustments, total Payments to Individual Retirement Arrangements Payments to self-employed retirement (Keogh) plans Moving expenses adjustment Adjusted gross income
Footnotes at end of table.
Total Amount (2)
Returns with U.S. income tax Number of returns (3) Amount (4)
Returns without U.S. income tax Number of returns (5) Amount (6)
3,841,459 1,206,006,303 834,512 279,978 32,353 86,873 97,942,679 8,190,538 2,932,892 4,404,124
3,829,560 1,201,787,787 831,328 278,152 32,218 86,390 97,474,813 7,933,967 2,922,899 4,339,274
11,899 3,184 1,826 135 483
4,218,516 467,865 256,572 9,993 64,850
1,336,738 434,780 1,399,950 1,642,796 156,133 248,585 4,110,421 1,445,881 3,297,067 3,026,504 891,095 481,111 559,640 422,649 318,523 7,774 110,108 12,663 1,492,468 7,644 680,321 680,403 108,633 624,099 46,300 45,574 1,854,824 117,082 406,698 46,228
446,954,372 49,185,125 417,476,734 4,325,089 7,277,531 5,094,788 94,867,127 45,329,526 125,088,989 97,500,545 43,619,043 24,461,499 12,942,218 8,313,039 17,579,870 114,808 16,042,417 1,529,563 8,820,109 1,201,551 14,264,249 2,520,221 597,295 17,669,751 1,994,956 3,744,720 37,514,618 998,769 12,978,980 281,084
1,333,033 428,888 1,393,604 1,634,961 154,852 246,320 4,093,864 1,438,395 3,283,203 3,014,080 887,729 478,948 556,388 420,389 315,420 7,596 109,261 12,267 1,488,421 7,615 675,780 675,836 108,508 620,151 44,785 41,153 1,848,434 116,664 406,207 46,090
445,800,473 45,812,100 414,043,515 4,303,002 7,203,404 4,787,444 91,893,504 44,327,710 122,514,065 95,627,970 43,439,520 24,323,900 12,732,906 8,216,897 17,432,198 113,302 15,937,821 1,348,948 8,681,615 1,198,790 14,167,763 2,502,761 596,232 17,453,649 1,917,677 3,341,906 37,398,754 995,479 12,959,338 279,826
3,705 5,892 6,346 7,835 1,280 2,266 16,557 7,486 13,864 12,425 3,366 2,163 3,252 2,260 3,103 178 847 396 4,047 29 4,541 4,567 125 3,948 1,515 4,421 18,783 6,391 418 491 138 18,783
1,153,899 3,373,024 3,433,218 22,087 74,127 307,344 2,973,623 1,001,816 2,574,924 1,872,575 179,523 137,600 209,313 96,142 147,672 1,506 104,596 180,615 138,495 2,761 96,486 17,460 1,063 216,102 77,279 402,814 12,587,774 115,864 3,291 19,642 1,257 12,471,910
4,375,660 2,499,522,581
4,356,877 2,486,934,808
4,375,660 2,462,007,963
4,356,877 2,449,536,054
25

Table 5. Returns With and Without U.S. Income Tax and With Income of $200,000 or More Under Alternative Concepts: Income, Deductions, Credits, and Tax, by Tax Status, Tax Year 2008 Continued
[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Adjusted Gross Income ConceptContinued Investment interest expense deduction Total tax preferences excluded from adjusted gross income Total alternative minimum tax preference items (excluding tax-exempt interest from private activity bonds) Passive activity loss (alternative minimum tax adjustment) Expanded income Exemption amount Itemized deductions: Total per adjusted gross income concept Charitable contributions deduction Interest paid deduction: Total per adjusted gross income concept Total home mortgage interest Medical and dental expense deduction Net casualty or theft loss deduction Taxes paid deduction Net limited miscellaneous deductions per adjusted gross income concept Non-limited miscellaneous deductions Excess of exemptions and deductions over adjusted gross income Taxable income Tax at regular rates Alternative minimum tax (Form 6251) Income tax before credits Tax credits: Total Child care credit Minimum tax credit Foreign tax credit General business credit U.S. total income tax Taxable income which would yield: Income tax before credits Income tax after credits U.S. total income tax Reconciliation of adjusted gross income and expanded income: Adjusted gross income plus: Total tax preferences excluded from adjusted gross income [2] Social Security benefits (nontaxable) Foreign-earned income exclusion minus: Investment interest expense deduction Non-limited miscellaneous deductions Unreimbursed employee business expenses Equals: Expanded income
Total Amount (2)
695,753 1,454,760 24,871 551,917 4,372,974 4,173,847 3,912,225 3,520,438 3,354,260 102,673 32,608 4,168,792 634,207 259,850 15,805 4,353,474 2,858,226 4,365,534 1,921,307 327,071 119,707 1,556,643 113,959 4,356,877
19,654,175 46,621,550 1,298,174 997,523 37,026,245 373,873,386 72,336,640 96,224,697 76,354,559 3,165,083 1,676,947 180,661,315 16,274,704 20,102,508 12,180,224 531,282,387 23,188,650 554,471,220 16,989,698 172,953 619,159 14,827,080 1,240,459 537,481,728
688,638 1,447,266 24,459 548,879 4,354,230 4,158,226 3,899,488 3,507,590 3,343,821 100,452 31,843 4,153,990 628,193 253,793 7,637 4,344,884 2,857,994 4,356,877 1,912,650 326,930 118,991 1,548,686 113,456 4,356,877
17,958,039 45,615,008 1,292,663 1,005,655 36,892,968 358,984,131 71,425,777 94,112,325 75,940,241 2,874,675 940,222 179,023,930 15,366,389 11,738,466 4,019,269 529,834,098 23,185,984 553,020,264 15,538,742 172,890 600,107 13,402,949 1,233,685 537,481,728
7,116 7,494 412 3,037 18,626 18,744 15,621 12,737 12,848 10,439 2,221 765 14,802 6,014 6,057 8,168 10,560 8,590 232 8,657 8,657 141 716 7,958 503 0 8,657 0 0 18,783 7,494 4,567 4,421 7,116 6,057 1,213 18,626
1,696,136 1,006,543 5,511 -8,132 3,824,098 133,276 14,889,255 910,863 2,112,372 414,318 290,408 736,725 1,637,386 908,315 8,364,043 8,160,955 5,568,310 1,448,290 2,667 1,450,956 1,450,956 63 19,052 1,424,131 6,774 0 4,691,229 0 0 12,471,910 1,006,543 17,460 402,814 1,696,136 8,364,043 14,450 3,824,098
4,375,503 2,468,922,075
4,356,877 2,465,097,977
4,359,794 2,060,968,496
4,349,234 2,055,400,186
4,365,534 1,892,750,588 4,356,876 1,841,952,570 4,356,877 1,841,953,159 4,375,660 2,462,007,963 1,454,760 680,403 45,574 695,753 259,850 833,017 46,621,550 2,520,221 3,744,720 19,654,175 20,102,508 6,215,696
4,356,877 1,888,059,359 4,356,876 1,841,952,570 4,356,877 1,841,953,159 4,356,877 2,449,536,054 1,447,266 675,836 41,153 688,638 253,793 831,804 45,615,008 2,502,761 3,341,906 17,958,039 11,738,466 6,201,246
4,375,503 2,468,922,075
4,356,877 2,465,097,977
26

[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Expanded Income Concept Salaries and wages Business or profession: Net income Net loss Farm: Net income Net loss Partnership and S Corporation net income after Section 179 property deduction [1]: Net income Net loss Sales of capital assets: Net gain Net loss Sales of property other than capital assets: Net gain Net loss Taxable interest received Tax-exempt interest Dividends Qualified dividends Pensions and annuities in adjusted gross income Rent: Net income Net loss, total (deductible and nondeductible) Nondeductible rental loss Royalty: Net income Net loss Estate or trust: Net income Net loss State income tax refunds Alimony received Social Security benefits in adjusted gross income Social Security benefits (nontaxable) Unemployment compensation Other income Other loss Foreign-earned income exclusion Total income Statutory adjustments, total Payments to Individual Retirement Arrangements Payments to self-employed retirement (Keogh) plans Moving expenses adjustment Adjusted gross income
Total Amount (2)
3,830,564 1,201,368,030 840,819 275,481 32,603 88,318 98,587,318 8,127,258 2,944,387 4,406,786
3,815,056 1,196,554,611 837,304 273,443 32,452 87,747 98,140,290 7,900,060 2,934,784 4,337,704
15,508 3,515 2,037 151 571
4,813,419 447,028 227,198 9,603 69,082
1,351,269 444,238 1,428,850 1,681,414 158,735 252,216 4,158,531 1,534,394 3,366,908 3,094,105 927,025 496,173 555,636 417,630 332,103 8,194 115,440 13,170 1,481,897 7,155 741,388 741,490 103,755 631,101 54,149 69,606 1,867,183 118,425 413,205 45,759
446,925,736 48,755,457 416,311,399 4,440,973 7,307,248 4,978,219 94,151,140 54,426,667 128,456,728 100,113,299 45,538,426 24,772,453 12,649,648 8,122,056 17,744,890 117,443 16,141,175 1,483,895 8,793,824 1,199,334 15,599,939 2,756,627 574,038 17,546,210 2,120,432 5,982,507 37,769,262 1,012,167 13,149,947 283,320
1,347,171 436,533 1,421,076 1,667,148 157,186 249,522 4,133,750 1,518,627 3,344,635 3,073,848 921,717 493,557 551,630 415,034 327,901 7,938 114,258 12,732 1,476,942 7,134 732,856 732,916 103,656 625,876 51,635 61,220 1,859,610 117,825 412,694 45,574
446,103,210 45,787,714 413,855,862 4,400,481 7,235,891 4,719,129 91,930,549 50,749,370 125,599,664 98,000,015 45,346,172 24,650,622 12,458,722 8,034,498 17,618,330 113,432 16,071,123 1,341,417 8,672,970 1,197,797 15,423,254 2,724,406 572,997 17,348,940 2,032,386 5,141,806 37,653,863 1,007,631 13,133,280 281,906
4,098 7,705 7,773 14,266 1,549 2,694 24,781 15,766 22,272 20,257 5,308 2,616 4,005 2,597 4,202 256 1,182 438 4,955 21 8,531 8,573 99 5,225 2,515 8,386 27,397 7,573 599 511 185 27,398
822,526 2,967,743 2,455,537 40,492 71,357 259,090 2,220,591 3,677,296 2,857,064 2,113,284 192,254 121,831 190,926 87,558 126,559 4,012 70,052 142,477 120,854 1,537 176,685 32,221 1,041 197,269 88,046 840,701 10,032,342 115,399 4,536 16,667 1,414 9,916,944
4,416,984 2,495,083,362
4,389,587 2,485,051,020
4,416,985 2,457,314,100
4,389,587 2,447,397,157
27

[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Expanded Income ConceptContinued Investment interest expense deduction Total tax preferences excluded from adjusted gross income Total alternative minimum tax preference items (excluding tax-exempt interest from private activity bonds) Passive activity loss (alternative minimum tax adjustment) Expanded income Exemption amount Itemized deductions: Total per adjusted gross income concept Total per expanded income concept Charitable contributions deduction Interest paid deduction: Total per adjusted gross income concept Total per expanded income concept Total home mortgage interest Medical and dental expense deduction Net casualty or theft loss deduction Taxes paid deduction Net limited miscellaneous deductions per adjusted gross income concept Non-limited miscellaneous deductions Excess of exemptions and deductions over adjusted gross income Taxable income Tax at regular rates Alternative minimum tax (Form 6251) Income tax before credits Tax credits: Total Child care credit Minimum tax credit Foreign tax credit General business credit U.S. total income tax Taxable income which would yield: Income tax before credits Income tax after credits U.S. total income tax Reconciliation of adjusted gross income and expanded income: Adjusted gross income plus: Total tax preferences excluded from adjusted gross income [2] Social Security benefits (nontaxable) Foreign-earned income exclusion minus: Investment interest expense deduction Non-limited miscellaneous deductions Unreimbursed employee business expenses Equals: Expanded income 4,416,985 2,457,314,100 1,544,113 741,490 69,606 696,821 239,253 779,123 55,838,347 2,756,627 5,982,507 16,568,820 7,685,253 5,248,262 4,389,587 2,447,397,157 1,528,337 732,916 61,220 689,763 235,909 777,550 52,152,450 2,724,406 5,141,806 15,932,639 7,458,864 5,236,930 27,398 15,776 8,573 8,386 7,058 3,344 1,573 27,399 9,916,944 3,685,897 32,221 840,701 636,181 226,389 11,331 13,581,494 4,402,563 1,896,918,373 4,389,586 1,844,450,379 4,389,587 1,844,450,969 4,389,587 1,891,703,138 4,389,586 1,844,450,379 4,389,587 1,844,450,969 12,976 0 0 5,215,234 0 0 1,973,573 321,998 126,514 1,611,372 115,037 4,389,587 17,396,988 170,111 625,194 15,230,003 1,240,376 537,989,413 1,960,596 321,781 125,498 1,599,288 114,499 4,389,587 15,830,407 170,024 605,773 13,690,508 1,233,886 537,989,413 12,976 217 1,016 12,084 538 0 1,566,581 87 19,421 1,539,495 6,490 0 3,492,146 3,326,684 3,320,249 124,511 32,351 4,183,437 612,868 239,253 18,956 4,387,395 2,851,659 4,402,563 92,132,121 75,563,301 75,357,677 3,671,139 1,641,046 181,328,663 15,890,085 7,685,253 6,655,547 532,189,776 23,191,552 555,386,195 3,477,648 3,315,208 3,308,822 117,089 31,525 4,163,511 601,201 235,909 8,971 4,374,525 2,851,364 4,389,587 91,075,325 75,142,686 74,938,887 3,128,676 904,031 179,576,078 14,967,728 7,458,864 4,138,910 530,625,861 23,188,886 553,819,614 14,498 11,477 11,427 7,422 826 19,925 11,667 3,344 9,985 17,373 12,870 295 12,976 1,056,796 420,615 418,790 542,463 737,015 1,752,585 922,357 226,389 2,516,637 6,045,949 1,563,915 2,666 1,566,581 4,188,788 4,188,328 3,926,492 358,677,845 347,954,469 72,826,976 4,167,770 4,167,354 3,908,740 352,570,993 342,672,920 71,911,390 21,018 20,974 17,752 6,106,852 5,281,548 915,586 696,821 1,544,113 26,661 568,177 4,414,005 16,568,820 55,838,347 1,418,150 1,020,259 37,153,129 689,763 1,528,337 26,188 564,206 4,386,639 15,932,639 52,152,450 1,408,524 1,028,532 36,945,229 7,058 15,776 473 3,971 27,399 27,366 636,181 3,685,897 9,626 -8,273 13,581,494 207,900 Total Amount (2) Returns with U.S. income tax Number of returns (3) Amount (4) Returns without U.S. income tax Number of returns (5) Amount (6)
4,416,986 2,492,366,777
4,389,587 2,478,785,284
4,397,983 2,065,540,864
4,380,610 2,059,494,915
4,416,986 2,492,366,777
4,389,587 2,478,785,284
28
[1] Section 179 of the Internal Revenue Code permits certain taxpayers to elect to deduct all or part of the cost of certain qualifying property in the year they place it in service, instead of taking depreciation deductions over a specified recovery period. [2] Includes tax-exempt interest and tax preference items subject to alternative minimum tax. NOTE: Detail may not add to totals because of rounding.

Table 6. Returns With and Without Worldwide Income Tax and With Income of $200,000 or More Under Alternative Concepts: Income, Deductions, Credits, and Tax, by Tax Status, Tax Year 2008
[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Adjusted Gross Income Concept Salaries and wages Business or profession: Net income Net loss Farm: Net income Net loss Partnership and S Corporation net income after Section 179 property deduction [1]: Net income Net loss Sales of capital assets: Net gain Net loss Sales of property other than capital assets: Net gain Net loss Taxable interest received Tax-exempt interest Dividends Qualified dividends Pensions and annuities in adjusted gross income Rent: Net income Net loss, total (deductible and nondeductible) Nondeductible rental loss Royalty: Net income Net loss Estate or trust: Net income Net loss State income tax refunds Alimony received Social Security benefits in adjusted gross income Social Security benefits (nontaxable) Unemployment compensation Other income Other loss Foreign-earned income exclusion Total income Statutory adjustments, total Payments to Individual Retirement Arrangements Payments to self-employed retirement (Keogh) plans Moving expenses adjustment Adjusted gross income
Total Amount (2)
Returns with worldwide income tax Number of returns (3) Amount (4)
Returns without worldwide income tax Number of returns (5) Amount (6)
3,841,459 1,206,006,303 834,512 279,978 32,353 86,873 97,942,679 8,190,538 2,932,892 4,404,124
3,836,086 1,205,065,218 832,578 278,574 32,244 86,518 97,756,984 7,990,693 2,923,494 4,353,088
5,373 1,934 1,404 109 355
941,085 185,695 199,846 9,398 51,036
1,336,738 434,780 1,399,950 1,642,796 156,133 248,585 4,110,421 1,445,881 3,297,067 3,026,504 891,095 481,111 559,640 422,649 318,523 7,774 110,108 12,663 1,492,468 7,644 680,321 680,403 108,633 624,099 46,300 45,574 1,854,824 117,082 406,698 46,228
446,954,372 49,185,125 417,476,734 4,325,089 7,277,531 5,094,788 94,867,127 45,329,526 125,088,989 97,500,545 43,619,043 24,461,499 12,942,218 8,313,039 17,579,870 114,808 16,042,417 1,529,563 8,820,109 1,201,551 14,264,249 2,520,221 597,295 17,669,751 1,994,956 3,744,720 37,514,618 998,769 12,978,980 281,084
1,333,992 430,075 1,395,932 1,637,720 155,074 246,819 4,100,379 1,440,031 3,288,444 3,018,444 888,606 479,633 557,635 421,369 315,952 7,622 109,395 12,323 1,489,310 7,620 676,362 676,446 108,531 621,252 46,095 45,562 1,850,207 116,869 406,329 46,204
446,350,417 46,137,308 415,457,828 4,310,498 7,211,671 4,815,125 92,202,380 44,417,650 123,449,595 96,373,008 43,485,345 24,360,296 12,775,372 8,241,701 17,489,558 113,485 15,974,403 1,361,145 8,705,069 1,198,945 14,179,207 2,505,159 596,501 17,540,630 1,961,284 3,743,755 37,439,713 996,975 12,963,925 280,802
2,746 4,705 4,018 5,076 1,059 1,766 10,042 5,850 8,623 8,060 2,489 1,478 2,005 1,280 2,571 152 713 340 3,158 24 3,959 3,957 102 2,847 205 12 10,824 4,617 213 369 24 10,824
603,955 3,047,817 2,018,906 14,591 65,860 279,663 2,664,747 911,875 1,639,394 1,127,538 133,698 101,203 166,846 71,338 90,312 1,323 68,014 168,418 115,040 2,607 85,042 15,062 795 129,121 33,672 965 6,420,729 74,905 1,795 15,055 281 6,345,824
4,375,660 2,499,522,581
4,364,836 2,493,101,852
4,375,660 2,462,007,963
4,364,836 2,455,662,139
29

Table 6. Returns With and Without Worldwide Income Tax and With Income of $200,000 or More Under Alternative Concepts: Income, Deductions, Credits, and Tax, by Tax Status, Tax Year 2008 Continued
[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Adjusted Gross Income ConceptContinued Investment interest expense deduction Total tax preferences excluded from adjusted gross income Total alternative minimum tax preference items (excluding tax-exempt interest from private activity bonds) Passive activity loss (alternative minimum tax adjustment) Expanded income Exemption amount Itemized deductions: Total per adjusted gross income concept Charitable contributions deduction Interest paid deduction: Total per adjusted gross income concept Total home mortgage interest Medical and dental expense deduction Net casualty or theft loss deduction Taxes paid deduction Net limited miscellaneous deductions per adjusted gross income concept Non-limited miscellaneous deductions Excess of exemptions and deductions over adjusted gross income Taxable income Tax at regular rates Alternitve minimum tax (Form 6251) Income tax before credits Tax credits: Total Child care credit Minimum tax credit Foreign tax credit General business credit Worldwide total income tax Foreign taxes paid Foreign taxes paid on excluded foreign-earned income (Form 1116) Taxable income which would yield: Income tax before credits Income tax after credits Worldwide total income tax Reconciliation of adjusted gross income and expanded income: Adjusted gross income plus: Total tax preferences excluded from adjusted gross income [2] Social Security benefits (nontaxable) Foreign-earned income exclusion minus: Investment interest expense deduction Non-limited miscellaneous deductions Unreimbursed employee business expenses Equals: Expanded income
Total Amount (2)
Returns without worldwide income tax Number of returns (5) Amount (6)
695,753 1,454,760 24,871 551,917 4,372,974 4,173,847 3,912,225 3,520,438 3,354,260 102,673 32,608 4,168,792 634,207 259,850 15,805 4,353,474 2,858,226 4,365,534 573,386 327,071 119,707 0 113,959 4,364,836 1,556,644 31,963
19,654,175 46,621,550 1,298,174 997,523 37,026,245 373,873,386 72,336,640 96,224,697 76,354,559 3,165,083 1,676,947 180,661,315 16,274,704 20,102,508 12,180,224 531,282,387 23,188,650 554,471,220 2,162,618 172,953 619,159 0 1,240,459 553,250,012 15,768,284 941,204
690,124 1,448,907 24,511 549,628 4,362,178 4,163,077 3,902,941 3,511,750 3,347,366 100,647 31,868 4,158,143 629,072 254,234 7,652 4,352,842 2,858,088 4,364,835 572,687 327,035 119,354 0 113,651 4,364,836 1,556,644 31,963
18,063,647 45,705,950 1,293,799 1,005,515 36,948,687 359,609,730 71,612,186 94,324,635 76,046,692 2,882,448 942,256 179,185,273 15,410,548 11,778,989 4,023,781 531,268,286 23,186,689 554,455,158 2,146,556 172,935 608,458 0 1,235,961 553,250,012 15,768,284 941,204
5,630 5,853 360 2,289 10,667 10,796 10,770 9,284 8,688 6,894 2,026 740 10,649 5,135 5,616 8,153 2,616 632 138 699 699 36 353 0 308 0 0 0 699 0 0 10,824 5,853 3,957 12 5,630 5,616 732 10,667
1,590,528 915,601 4,375 -7,991 -2,645,883 77,557 14,263,655 724,454 1,900,062 307,868 282,635 734,691 1,476,042 864,156 8,323,520 8,156,443 146,914 14,101 1,961 16,062 16,062 18 10,701 0 4,498 0 0 0 69,812 0 0 6,345,824 915,601 15,062 965 1,590,528 8,323,520 9,287 -2,645,883
4,375,503 2,468,922,075
4,364,836 2,471,567,958
4,359,794 2,060,968,496
4,357,178 2,060,821,581
4,365,534 1,892,750,588 4,364,836 1,888,985,700 4,364,836 1,888,986,289 4,375,660 2,462,007,963 1,454,760 680,403 45,574 695,753 259,850 833,017 46,621,550 2,520,221 3,744,720 19,654,175 20,102,508 6,215,696
4,364,835 1,892,680,777 4,364,836 1,888,985,700 4,364,836 1,888,986,289 4,364,836 2,455,662,139 1,448,907 676,446 45,562 690,124 254,234 832,285 45,705,950 2,505,159 3,743,755 18,063,647 11,778,989 6,206,409
4,375,503 2,468,922,075
4,364,836 2,471,567,958
30

[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Expanded Income Concept Salaries and wages Business or profession: Net income Net loss Farm: Net income Net loss Partnership and S Corporation net income after Section 179 property deduction [1]: Net income Net loss Sales of capital assets: Net gain Net loss Sales of property other than capital assets: Net gain Net loss Taxable interest received Tax-exempt interest Dividends Qualified dividends Pensions and annuities in adjusted gross income Rent: Net income Net loss, total (deductible and nondeductible) Nondeductible rental loss Royalty: Net income Net loss Estate or trust: Net income Net loss State income tax refunds Alimony received Social Security benefits in adjusted gross income Social Security benefits (nontaxable) Unemployment compensation Other income Other loss Foreign-earned income exclusion Total income Statutory adjustments, total Payments to Individual Retirement Arrangements Payments to self-employed retirement (Keogh) plans Moving expenses adjustment Adjusted gross income
Total Amount (2)
Returns without worldwide income tax Number of returns (5) 5,213 1,818 1,499 122 416 Amount (6) 682,978 119,219 169,933 8,832 54,496
3,830,564 1,201,368,030 840,819 275,481 32,603 88,318 98,587,318 8,127,258 2,944,387 4,406,786
3,825,351 1,200,685,052 839,001 273,982 32,481 87,902 98,468,099 7,957,325 2,935,555 4,352,290
1,351,269 444,238 1,428,850 1,681,414 158,735 252,216 4,158,531 1,534,394 3,366,908 3,094,105 927,025 496,173 555,636 417,630 332,103 8,194 115,440 13,170 1,481,897 7,155 741,388 741,490 103,755 631,101 54,149 69,606 1,867,183 118,425 413,205 45,759
446,925,736 48,755,457 416,311,399 4,440,973 7,307,248 4,978,219 94,151,140 54,426,667 128,456,728 100,113,299 45,538,426 24,772,453 12,649,648 8,122,056 17,744,890 117,443 16,141,175 1,483,895 8,793,824 1,199,334 15,599,939 2,756,627 574,038 17,546,210 2,120,432 5,982,507 37,769,262 1,012,167 13,149,947 283,320
1,348,262 437,912 1,424,372 1,671,188 157,439 250,099 4,143,515 1,520,899 3,352,432 3,080,329 922,874 494,462 553,516 416,414 328,570 7,971 114,435 12,791 1,478,043 7,139 733,653 733,753 103,693 627,325 53,841 69,494 1,861,946 118,137 412,853 45,743
446,656,674 46,115,876 415,273,174 4,411,259 7,244,000 4,747,569 92,252,080 50,909,082 126,563,032 98,764,141 45,398,214 24,688,953 12,511,445 8,065,622 17,675,918 113,671 16,108,279 1,353,656 8,697,193 1,197,952 15,438,834 2,727,853 573,559 17,444,549 2,095,268 5,966,563 37,700,789 1,009,870 13,138,481 283,140
3,007 6,326 4,478 10,227 1,296 2,117 15,016 13,495 14,476 13,776 4,151 1,711 2,120 1,217 3,534 223 1,005 379 3,854 16 7,735 7,737 62 3,776 309 112 15,306 5,237 288 352 16 15,307
269,062 2,639,581 1,038,226 29,714 63,248 230,650 1,899,060 3,517,585 1,893,696 1,349,158 140,213 83,500 138,203 56,434 68,971 3,772 32,896 130,238 96,631 1,382 161,104 28,774 479 101,660 25,163 15,944 3,376,231 68,473 2,297 11,466 180 3,307,758
4,416,984 2,495,083,362
4,401,678 2,491,707,132
4,416,985 2,457,314,100
4,401,678 2,454,006,343
31

[All figures are estimates based on samplesmoney amounts are in thousands of dollars] Returns with income of $200,000 or more Income concept, item Number of returns (1) Expanded Income ConceptContinued Investment interest expense deduction Total tax preferences excluded from adjusted gross income Total alternative minimum tax preference items (excluding tax-exempt interest from private activity bonds) Passive activity loss (alternative minimum tax adjustment) Expanded income Exemption amount Itemized deductions: Total per adjusted gross income concept Total per expanded income concept Charitable contributions deduction Interest paid deduction: Total per adjusted gross income concept Total per expanded income concept Total home mortgage interest Medical and dental expense deduction Net casualty or theft loss deduction Taxes paid deduction Net limited miscellaneous deductions per adjusted gross income concept Non-limited miscellaneous deductions Excess of exemptions and deductions over adjusted gross income Taxable income Tax at regular rates Alternitve minimum tax (Form 6251) Income tax before credits Tax credits: Total Child care credit Minimum tax credit Foreign tax credit General business credit Worldwide total income tax Foreign taxes paid Foreign taxes paid on excluded foreign-earned income (Form 1116) Taxable income which would yield: Income tax before credits Income tax after credits Worldwide total income tax Reconciliation of adjusted gross income and expanded income: Adjusted gross income Total tax preferences excluded from adjusted gross income [2] Social Security benefits (nontaxable) Foreign-earned income exclusion minus: Investment interest expense deduction Non-limited miscellaneous deductions Unreimbursed employee business expenses Equals: Expanded income plus: 3,492,146 3,326,684 3,320,249 124,511 32,351 4,183,437 612,868 239,253 18,956 4,387,395 2,851,659 4,402,563 575,683 321,998 126,514 0 115,037 4,401,678 1,611,379 44,346 92,132,121 75,563,301 75,357,677 3,671,139 1,641,046 181,328,663 15,890,085 7,685,253 6,655,547 532,189,776 23,191,552 555,386,195 2,166,985 170,111 625,194 0 1,240,376 554,461,616 16,472,203 1,242,200 3,483,095 3,319,954 3,313,553 117,570 31,556 4,168,959 602,529 236,380 8,992 4,386,609 2,851,490 4,401,671 574,791 321,980 126,030 0 114,756 4,401,678 1,611,379 44,346 91,294,796 75,274,716 75,070,592 3,140,739 906,369 179,751,118 15,016,319 7,467,124 4,143,741 532,175,813 23,189,598 555,370,279 2,151,068 170,101 614,445 0 1,236,127 554,461,616 16,472,203 1,242,200 9,051 6,731 6,696 6,941 795 14,478 10,339 2,874 9,964 5,303 786 169 892 892 18 484 0 281 0 0 0 892 0 0 15,307 13,499 7,737 112 5,407 2,874 893 15,308 837,325 288,585 287,085 530,399 734,677 1,577,545 873,767 218,129 2,511,807 208,329 13,963 1,954 15,917 15,917 10 10,749 0 4,249 0 0 0 69,986 0 0 3,307,758 3,525,162 28,774 15,944 548,740 218,129 5,469 6,084,931 4,188,788 4,188,328 3,926,492 358,677,845 347,954,469 72,826,976 4,174,255 4,173,795 3,913,142 353,204,618 343,235,575 72,108,182 14,534 14,534 13,350 5,473,228 4,718,894 718,793 696,821 1,544,113 26,661 568,177 4,414,005 16,568,820 55,838,347 1,418,150 1,020,259 37,153,129 691,414 1,530,615 26,242 565,145 4,398,719 16,020,080 52,313,185 1,409,684 1,028,564 37,037,147 5,407 13,499 419 3,032 15,308 15,287 548,740 3,525,162 8,466 -8,304 6,084,931 115,982 Total Amount (2) Returns with worldwide income tax Number of returns (3) Amount (4) Returns without worldwide income tax Number of returns (5) Amount (6)
4,416,986 2,492,366,777
4,401,678 2,486,281,846
4,397,983 2,065,540,864
4,392,680 2,065,332,534
4,402,563 1,896,918,373 4,401,678 1,894,088,013 4,401,678 1,894,088,602 4,416,985 2,457,314,100 1,544,113 55,838,347 741,490 2,756,627 69,606 5,982,507 696,821 16,568,820 239,253 7,685,253 779,123 5,248,262 4,416,986 2,492,366,777
4,401,671 1,896,848,387 4,401,678 1,894,088,013 4,401,678 1,894,088,602 4,401,678 2,454,006,343 1,530,615 52,313,185 733,753 2,727,853 69,494 5,966,563 691,414 16,020,080 236,380 7,467,124 778,230 5,242,792 4,401,678 2,486,281,846
32
[1] Section 179 of the Internal Revenue Code permits certain taxpayers to elect to deduct all or part of the cost of certain qualifying property in the year they place it in service, instead of taking depreciation deductions over a specified recovery period. [2] Includes tax-exempt interest and tax preference items subject to alternative minimum tax. NOTE: Detail may not add to totals because of rounding.

Table 7. Returns With and Without U.S. Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns and Percentages Classified by Item With the Largest Tax Effect and by Item With the Second Largest Tax Effect, Tax Year 2008
[All figures are estimates based on samples] Item with the largest tax effect
Total Tax status, income concept, and item with the second largest tax effect Number of returns (1) Returns with U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Interest paid deduction
Investment interest expense deduction [1]
Taxes paid deduction
Percentage of total (2)
Number of returns (3)
4,257,915 1,454,069 57,045 1,467,576 772,772 18,592 3,637 147,289 65,786 13,285 24,766 70,960 47,688 114,450
100.0 34.1 1.3 34.5 18.1 0.4 0.1 3.5 1.5 0.3 0.6 1.7 1.1 2.7
1,167,362 0 6,494 1,051,933 65,820 3,540 284 21,980 813 852 2,165 10,980 2,494 8
27.4 0.0 0.6 90.1 5.6 0.3 [2] 1.9 0.1 0.1 0.2 0.9 0.2 [2]
35,890 6,540 0 17,912 4,564 169 15 2,249 725 262 178 1,801 ** 1,476 **
0.8 18.2 0.0 49.9 12.7 0.5 [2] 6.3 2.0 0.7 0.5 5.0 ** 4.1 **
2,276,417 1,302,031 37,598 0 668,799 10,403 1,927 100,379 46,639 9,195 13,847 38,235 19,441 27,924
53.5 57.2 1.7 0.0 29.4 0.5 0.1 4.4 2.0 0.4 0.6 1.7 0.9 1.2
4,325,785 1,411,387 222,345 1,523,464 650,356 19,106 3,413 54,554 73,291 12,940 23,094 68,485 31,740 2,307 92,976 50,258 86,069
100.0 32.6 5.1 35.2 15.0 0.4 0.1 1.3 1.7 0.3 0.5 1.6 0.7 0.1 2.1 1.2 2.0
1,145,684 0 2,993 1,050,970 66,570 4,018 281 2,536 665 835 2,308 10,904 0 341 803 ** 2,461 **
26.5 0.0 0.3 91.7 5.8 0.4 [2] 0.2 0.1 0.1 0.2 1.0 0.0 [2] 0.1 ** 0.2 **
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2,179,063 1,272,991 165,812 0 536,542 8,081 1,778 29,126 27,638 7,697 12,386 33,429 584 1,331 43,126 15,005 23,537
50.4 58.4 7.6 0.0 24.6 0.4 0.1 1.3 1.3 0.4 0.6 1.5 [2] 0.1 2.0 0.7 1.1
33

Table 7. Returns With and Without U.S. Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns and Percentages Classified by Item With the Largest Tax Effect and by Item With the Second Largest Tax Effect, Tax Year 2008Continued
[All figures are estimates based on samples] Item with the largest tax effect continued
Tax status, income concept, and item with the second largest tax effect
Charitable contributions deduction
Medical and dental expense deduction
Net casualty or theft loss deduction
Total miscellaneous deductions
Number of returns (9) Returns with U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
300,717 61,675 3,497 202,769 0 1,976 635 11,065 1,756 1,003 1,401 6,576 8,311 53
7.1 20.5 1.2 67.4 0.0 0.7 0.2 3.7 0.6 0.3 0.5 2.2 2.8 [2]
27,929 3,282 161 15,988 3,278 0 0 ** 1,655 ** 0 0 158 3,407 0
0.7 11.8 0.6 57.2 11.7 0.0 0.0 ** 5.9 ** 0.0 0.0 0.6 12.2 0.0
6,287 1,225 84 3,380 735 0 0 ** 639 ** 3 139 28 55 0
0.1 19.5 1.3 53.8 11.7 0.0 0.0 ** 10.2 ** [2] 2.2 0.4 0.9 0.0
97,538 25,429 1,243 54,402 8,775 1,054 360 0 1,580 138 70 2,690 ** 1,797 **
2.3 26.1 1.3 55.8 9.0 1.1 0.4 0.0 1.6 0.1 0.1 2.8 ** 1.8 **
290,732 62,121 15,721 186,887 0 1,704 643 4,258 901 987 1,297 6,296 77 66 1,664 8,023 86
6.7 21.4 5.4 64.3 0.0 0.6 0.2 1.5 0.3 0.3 0.4 2.2 [2] [2] 0.6 2.8 [2]
28,160 3,290 2,779 13,546 2,578 0 0 818 300 0 0 155 0 0 961 3,732 0
0.7 11.7 9.9 48.1 9.2 0.0 0.0 2.9 1.1 0.0 0.0 0.6 0.0 0.0 3.4 13.3 0.0
5,562 1,207 198 3,153 729 0 0 47 0 3 139 ** 36 0 0 ** 52 0
0.1 21.7 3.6 56.7 13.1 0.0 0.0 0.8 0.0 0.1 2.5 ** 0.6 0.0 0.0 ** 0.9 0.0
16,400 1,948 3,440 8,498 768 18 ** 0 542 ** 3 9 503 55 0 144 ** 472 **
0.4 11.9 21.0 51.8 4.7 0.1 ** 0.0 3.3 ** [2] 0.1 3.1 0.3 0.0 0.9 ** 2.9 **
34

[All figures are estimates based on samples] Item with the largest tax effectcontinued Capital gains taxed at 0 percent
Foreign tax credit
General business credit
All other tax credits
Partnership and S Corporation net losses
Number of returns (17) Returns with U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
127,187 17,792 1,889 33,950 4,293 328 305 2,356 0 261 4,978 4,288 1,516 55,230
3.0 14.0 1.5 26.7 3.4 0.3 0.2 1.9 0.0 0.2 3.9 3.4 1.2 43.4
17,502 3,916 247 7,938 1,504 0 0 44 679 0 330 712 5 2,128
0.4 22.4 1.4 45.4 8.6 0.0 0.0 0.3 3.9 0.0 1.9 4.1 [2] 12.2
24,010 3,680 239 7,341 1,658 0 7 64 2,269 289 0 361 13 8,088
0.6 15.3 1.0 30.6 6.9 0.0 [2] 0.3 9.5 1.2 0.0 1.5 0.1 33.7
110,304 16,080 4,044 50,941 8,690 515 93 3,776 5,938 978 1,134 0 9,182 8,934
2.6 14.6 3.7 46.2 7.9 0.5 0.1 3.4 5.4 0.9 1.0 0.0 8.3 8.1
66,772 12,418 1,550 21,023 4,657 608 11 3,395 5,074 304 525 5,131 0 12,077
97,800 10,243 5,736 27,611 2,737 154 305 759 0 147 1,327 1,247 30,615 96 1,756 1,113 13,954
2.3 10.5 5.9 28.2 2.8 0.2 0.3 0.8 0.0 0.2 1.4 1.3 31.3 0.1 1.8 1.1 14.3
16,589 4,084 1,224 7,292 1,412 0 0 4 282 0 183 692 0 12 578 5 820
0.4 24.6 7.4 44.0 8.5 0.0 0.0 [2] 1.7 0.0 1.1 4.2 0.0 0.1 3.5 [2] 4.9
23,641 3,937 1,931 7,391 1,547 0 ** ** 6 957 283 0 361 7 28 222 56 6,915
0.5 16.7 8.2 31.3 6.5 0.0 ** ** [2] 4.0 1.2 0.0 1.5 [2] 0.1 0.9 0.2 29.2
103,995 16,514 7,194 48,027 8,007 556 93 2,238 3,287 881 968 0 295 363 2,836 9,092 3,646
2.4 15.9 6.9 46.2 7.7 0.5 0.1 2.2 3.2 0.8 0.9 0.0 0.3 0.3 2.7 8.7 3.5
64,545 12,993 5,375 18,536 4,118 605 ** ** 1,505 882 307 524 5,433 49 0 10,321 0 3,898
35

[All figures are estimates based on samples] Item with the largest tax effectcontinued Capital gains taxed at 0 percent continued Percentage of total (26) Returns with U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Foreign-earned income exclusion [3]
Tax-exempt interest [3]
AMT tax preference [3]
Nontaxable Social Security benefits [3]
1.6 18.6 2.3 31.5 7.0 0.9 [2] 5.1 7.6 0.5 0.8 7.7 0.0 18.1
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
1.5 20.1 8.3 28.7 6.4 0.9 ** ** 2.3 1.4 0.5 0.8 8.4 0.1 0.0 16.0 0.0 6.0
26,154 4,738 1,237 3,861 986 300 ** ** 13 12,362 0 ** ** 499 0 0 ** 308 1,849
0.6 18.1 4.7 14.8 3.8 1.1 ** ** [2] 47.3 0.0 ** ** 1.9 0.0 0.0 ** 1.2 7.1
263,228 11,648 0 136,353 23,768 3,636 307 13,240 17,946 1,324 3,256 6,212 17 61 30,362 9,020 6,078
6.1 4.4 0.0 51.8 9.0 1.4 0.1 5.0 6.8 0.5 1.2 2.4 [2] [2] 11.5 3.4 2.3
5,306 1,242 406 2,400 553 34 0 0 166 ** ** 78 174 41 0 194 11 6
0.1 23.4 7.7 45.2 10.4 0.6 0.0 0.0 3.1 ** ** 1.5 3.3 0.8 0.0 3.7 0.2 0.1
58,925 4,431 8,300 8,939 42 0 0 8 7,361 472 620 2,554 0 8 0 913 25,277
1.4 7.5 14.1 15.2 0.1 0.0 0.0 [2] 12.5 0.8 1.1 4.3 0.0 [2] 0.0 1.5 42.9
36

[All figures are estimates based on samples] Item with the largest tax effect
Total Tax status, income concept, and item with the second largest tax effect Number of returns (1) Returns without U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Interest paid deduction
Investment interest expense deduction [1]
Taxes paid deduction
18,741 3,922 1,342 4,242 1,835 235 49 1,246 189 101 146 1,554 994 2,886
100.0 20.9 7.2 22.6 9.8 1.3 0.3 6.6 1.0 0.5 0.8 8.3 5.3 15.4
447 0 36 184 54 14 ** ** 43 10 8 10 31 57 0
2.4 0.0 8.1 41.2 12.1 3.1 ** ** 9.6 2.2 1.8 2.2 6.9 12.8 0.0
1,325 226 0 271 187 18 ** ** 154 28 6 8 341 ** 86 **
7.1 17.1 0.0 20.5 14.1 1.4 ** ** 11.6 2.1 0.5 0.6 25.7 ** 6.5 **
709 91 92 0 184 25 5 135 ** 14 7 ** 133 23 0
3.8 12.8 13.0 0.0 26.0 3.5 0.7 19.0 ** 2.0 1.0 ** 18.8 3.2 0.0
27,394 2,197 2,535 4,263 2,289 1,378 53 1,754 1,561 94 112 1,721 6,658 6 316 1,473 984
100.0 8.0 9.3 15.6 8.4 5.0 0.2 6.4 5.7 0.3 0.4 6.3 24.3 [2] 1.2 5.4 3.6
471 0 49 192 57 ** 18 ** 29 6 8 10 34 ** 7 ** 4 57 0
1.7 0.0 10.4 40.8 12.1 ** 3.8 ** 6.2 1.3 1.7 2.1 7.2 ** 1.5 ** 0.8 12.1 0.0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
1,098 98 445 0 175 28 6 138 10 6 4 152 6 0 3 27 0
4.0 8.9 40.5 0.0 15.9 2.5 0.5 12.6 0.9 0.5 0.4 13.8 0.5 0.0 0.3 2.5 0.0
37

[All figures are estimates based on samples] Item with the largest tax effect continued
Charitable contributions deduction
Medical and dental expense deduction
Net casualty or theft loss deduction
Total miscellaneous deductions
Number of returns (9) Returns without U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
1,172 190 135 276 0 83 4 159 41 17 8 79 ** 180 **
6.3 16.2 11.5 23.5 0.0 7.1 0.3 13.6 3.5 1.5 0.7 6.7 ** 15.4 **
1,102 74 20 365 235 0 ** ** 234 ** 3 4 ** 18 146 3
5.9 6.7 1.8 33.1 21.3 0.0 ** ** 21.2 ** 0.3 0.4 ** 1.6 13.2 0.3
654 213 29 248 51 ** 9 0 42 4 ** 0 42 16 **
3.5 32.6 4.4 37.9 7.8 ** 1.4 0.0 6.4 0.6 ** 0.0 6.4 2.4 **
4,128 960 207 1,753 341 38 20 0 6 13 11 594 115 70
22.0 23.3 5.0 42.5 8.3 0.9 0.5 0.0 0.1 0.3 0.3 14.4 2.8 1.7
1,205 187 196 261 0 87 3 117 35 18 8 80 4 0 28 181 0
4.4 15.5 16.3 21.7 0.0 7.2 0.2 9.7 2.9 1.5 0.7 6.6 0.3 0.0 2.3 15.0 0.0
1,789 70 781 305 178 0 3 206 ** 3 4 ** 18 3 0 61 157 0
6.5 3.9 43.7 17.0 9.9 0.0 0.2 11.5 ** 0.2 0.2 ** 1.0 0.2 0.0 3.4 8.8 0.0
674 213 75 234 ** 53 ** 0 25 ** 4 ** 0 41 6 0 9 14 0
2.5 31.6 11.1 34.7 ** 7.9 ** 0.0 3.7 ** 0.6 ** 0.0 6.1 0.9 0.0 1.3 2.1 0.0
501 47 120 131 80 17 0 0 ** ** 3 0 85 0 0 3 15 0
1.8 9.4 24.0 26.1 16.0 3.4 0.0 0.0 ** ** 0.6 0.0 17.0 0.0 0.0 0.6 3.0 0.0
38

[All figures are estimates based on samples] Item with the largest tax effectcontinued Capital gains taxed at 0 percent
Foreign tax credit
General business credit
All other tax credits
Partnership and S Corporation net losses
Number of returns (17) Returns without U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
7,085 1,945 304 720 458 ** 29 4 166 0 ** 85 294 277 2,804
37.8 27.5 4.3 10.2 6.5 ** 0.4 0.1 2.3 0.0 ** 1.2 4.1 3.9 39.6
96 38 5 17 9 0 0 3 ** 3 0 ** 8 13 0
0.5 39.6 5.2 17.7 9.4 0.0 0.0 3.1 ** 3.1 0.0 ** 8.3 13.5 0.0
237 61 13 72 21 ** 4 0 6 3 ** 0 11 42 4
1.3 25.7 5.5 30.4 8.9 ** 1.7 0.0 2.5 1.3 ** 0.0 4.6 17.7 1.7
1,692 91 494 320 281 12 11 306 75 42 17 0 ** 43 **
9.0 5.4 29.2 18.9 16.6 0.7 0.7 18.1 4.4 2.5 1.0 0.0 ** 2.5 **
93 33 7 16 14 8 ** ** 3 ** 9 0 ** 3 0 0
9,470 681 111 391 245 16 3 56 0 0 32 205 ** 6,629 ** 36 246 819
34.6 7.2 1.2 4.1 2.6 0.2 [2] 0.6 0.0 0.0 0.3 2.2 ** 70.0 ** 0.4 2.6 8.6
87 ** 35 ** 17 10 0 0 ** ** 3 0 ** ** 9 0 0 0 13 0
0.3 ** 40.2 ** 19.5 11.5 0.0 0.0 ** ** 3.4 0.0 ** ** 10.3 0.0 0.0 0.0 14.9 0.0
239 64 10 74 26 ** 0 ** 3 ** 5 ** 0 14 0 0 0 39 4
0.9 26.8 4.2 31.0 10.9 ** 0.0 ** 1.3 ** 2.1 ** 0.0 5.9 0.0 0.0 0.0 16.3 1.7
1,772 73 710 324 261 17 11 193 76 44 17 0 ** 7 ** ** ** 39 **
6.5 4.1 40.1 18.3 14.7 1.0 0.6 10.9 4.3 2.5 1.0 0.0 ** 0.4 ** ** ** 2.2 **
141 33 34 17 20 12 0 4 7 ** ** 5 4 ** 0 ** 5 0 0
39

[All figures are estimates based on samples] Item with the largest tax effectcontinued Capital gains taxed at 0 percent continued Percentage of total (26) Returns without U.S. income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions Foreign tax credit General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item 0.5 23.4 24.1 12.1 14.2 8.5 0.0 2.8 5.0 ** ** 3.5 2.8 ** 0.0 ** 3.5 0.0 0.0 1,554 ** 77 ** 35 18 ** 9 ** ** 1,395 ** ** 5 ** 0 0 0 10 5 5.7 ** 5.0 ** 2.3 1.2 ** 0.6 ** ** 89.8 ** ** 0.3 ** 0.0 0.0 0.0 0.6 0.3 8,348 620 0 2,282 1,172 1,169 24 981 22 7 30 1,077 ** 3 ** 165 675 122 30.5 7.4 0.0 27.3 14.0 14.0 0.3 11.8 0.3 0.1 0.4 12.9 ** [2] ** 2.0 8.1 1.5 6 0 ** 6 0 0 0 0 0 0 0 0 ** ** 0 0 ** ** [2] 0.0 ** 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ** ** 0.0 0.0 ** ** 38 ** ** 4 0 ** 0 0 ** 0 0 ** ** 0 0 0 0 ** 34 0.1 ** ** 10.5 0.0 ** 0.0 0.0 ** 0.0 0.0 ** ** 0.0 0.0 0.0 0.0 ** 89.5 0.5 35.5 7.5 17.2 15.1 8.6 ** ** 3.2 ** 9.7 0.0 ** 3.2 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Foreign-earned income exclusion [3]
Tax-exempt interest [3]
AMT tax preference [3]
Nontaxable Social Security benefits [3]
** Data combined to avoid disclosure of information for specific taxpayers. [1] Investment interest expense deduction only has an effect when using the adjusted gross income concept. [2] Less than 0.05 percent. [3] Tax-exempt interest, foreign-earned income exclusion, AMT tax preference, and nontaxable Social Security benefits only have an effect when using the expanded income concept. NOTE: Detail may not add to totals because of rounding. Total columns do not include returns with no tax effect.
40

Table 8. Returns With and Without Worldwide Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns and Percentages Classified by Item With the Largest Tax Effect and by Item With the Second Largest Tax Effect, Tax Year 2008
[All figures are estimates based on samples] Item with the largest tax effect Total Tax status, income concept, and item with the second largest tax effect Number of returns (1) Returns with worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Interest paid deduction Number of returns (3) Percentage of total (4)
Investment interest expense deduction [1] Number of returns (5) Percentage of total (6)
Taxes paid deduction Number of returns (7) Percentage of total (8)
4,207,837 1,460,584 59,255 1,462,184 807,999 18,762 3,749 151,098 14,181 21,207 70,011 47,445 91,364
100.0 34.7 1.4 34.7 19.2 0.4 0.1 3.6 0.3 0.5 1.7 1.1 2.2
1,187,140 0 6,679 1,068,779 67,758 3,547 285 22,203 855 2,783 11,270 2,536 446
28.2 0.0 0.6 90.0 5.7 0.3 [2] 1.9 0.1 0.2 0.9 0.2 [2]
38,195 6,993 0 19,671 4,771 177 15 2,384 275 350 1,960 1,523 76
0.9 18.3 0.0 51.5 12.5 0.5 [2] 6.2 0.7 0.9 5.1 4.0 0.2
2,311,131 1,322,389 40,186 0 705,124 10,854 2,332 105,455 9,660 14,374 39,654 20,145 40,956
54.9 57.2 1.7 0.0 30.5 0.5 0.1 4.6 0.4 0.6 1.7 0.9 1.8
4,323,103 1,432,709 232,806 1,521,315 668,148 19,372 3,120 55,753 13,798 25,574 71,277 3,595 2,452 96,335 50,518 126,331
100.0 33.1 5.4 35.2 15.5 0.4 0.1 1.3 0.3 0.6 1.6 0.1 0.1 2.2 1.2 2.9
1,156,657 0 3,135 1,061,279 66,783 4,021 282 2,549 837 2,334 10,977 591 344 946 2,494 86
26.8 0.0 0.3 91.8 5.8 0.3 [2] 0.2 0.1 0.2 0.9 0.1 [2] 0.1 0.2 [2]
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
2,207,109 1,289,878 172,610 0 554,263 8,230 1,785 30,423 7,963 12,474 34,364 1,554 1,360 45,128 15,507 31,571
51.1 58.4 7.8 0.0 25.1 0.4 0.1 1.4 0.4 0.6 1.6 0.1 0.1 2.0 0.7 1.4
41

Table 8. Returns With and Without Worldwide Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns and Percentages Classified by Item With the Largest Tax Effect and by Item With the Second Largest Tax Effect, Tax Year 2008Continued
[All figures are estimates based on samples] Item with the largest tax effect continued Tax status, income concept, and item with the second largest tax effect Charitable contributions deduction Number of returns (9) Returns with worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Medical and dental expense deduction Number of returns (11) Percentage of total (12)
Net casualty or theft loss deduction Number of returns (13) Percentage of total (14)
Total miscellaneous deductions Number of returns (15) Percentage of total (16)
305,645 62,711 3,986 206,548 0 1,996 645 11,425 1,031 1,413 6,880 8,510 502
7.3 20.5 1.3 67.6 0.0 0.7 0.2 3.7 0.3 0.5 2.3 2.8 0.2
28,310 3,290 161 16,452 3,335 0 0 1,349 ** ** 3 161 3,417 143
0.7 11.6 0.6 58.1 11.8 0.0 0.0 4.8 ** ** [2] 0.6 12.1 0.5
6,605 1,530 87 3,384 740 0 0 638 ** ** 142 28 57 0
0.2 23.2 1.3 51.2 11.2 0.0 0.0 9.7 ** ** 2.1 0.4 0.9 0.0
100,127 26,181 1,423 56,534 9,449 1,060 360 0 142 73 2,799 1,934 173
2.4 26.1 1.4 56.5 9.4 1.1 0.4 0.0 0.1 0.1 2.8 1.9 0.2
293,892 62,987 16,315 188,951 0 1,722 644 4,347 1,025 1,302 6,352 204 70 1,682 8,124 166
6.8 21.4 5.6 64.3 0.0 0.6 0.2 1.5 0.3 0.4 2.2 0.1 [2] 0.6 2.8 0.1
28,365 3,301 2,789 14,000 2,584 0 0 821 ** 4 ** ** 161 ** 0 961 3,744 0
0.7 11.6 9.8 49.4 9.1 0.0 0.0 2.9 ** [2] ** ** 0.6 ** 0.0 3.4 13.2 0.0
5,881 1,512 202 3,156 732 0 0 47 3 139 ** 30 ** 0 8 53 0
0.1 25.7 3.4 53.7 12.4 0.0 0.0 0.8 0.1 2.4 ** 0.5 ** 0.0 0.1 0.9 0.0
17,233 2,196 3,710 8,873 1,005 ** 22 ** 0 ** ** 11 527 206 0 146 525 11
0.4 12.7 21.5 51.5 5.8 ** 0.1 ** 0.0 ** ** 0.1 3.1 1.2 0.0 0.8 3.0 0.1
42

[All figures are estimates based on samples] Item with the largest tax effectcontinued Tax status, income concept, and item with the second largest tax effect General business credit Number of returns (17) Returns with worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
All other tax credits Number of returns (19) Percentage of total (20)
Partnership and S Corporation net losses Number of returns (21) Percentage of total (22)
Capital gains taxed at 0 percent Number of returns (23) Percentage of total (24)
17,792 3,968 264 8,085 1,532 0 0 46 0 343 717 6 2,831
0.4 22.3 1.5 45.4 8.6 0.0 0.0 0.3 0.0 1.9 4.0 [2] 15.9
29,173 4,077 292 8,122 1,696 0 7 217 884 0 1,307 37 12,534
0.7 14.0 1.0 27.8 5.8 0.0 [2] 0.7 3.0 0.0 4.5 0.1 43.0
115,113 16,489 4,469 52,213 8,856 518 94 3,930 1,015 1,194 0 9,280 17,056
2.7 14.3 3.9 45.4 7.7 0.5 0.1 3.4 0.9 1.0 0.0 8.1 14.8
68,606 12,956 1,708 22,396 4,738 612 11 3,452 314 537 5,235 0 16,647
1.6 18.9 2.5 32.6 6.9 0.9 [2] 5.0 0.5 0.8 7.6 0.0 24.3
16,762 4,092 1,241 7,418 1,433 0 0 5 0 195 697 0 12 578 6 1,084
0.4 24.4 7.4 44.3 8.5 0.0 0.0 [2] 0.0 1.2 4.2 0.0 0.1 3.4 [2] 6.5
25,101 4,010 2,262 7,812 ** 1,566 0 ** 14 816 0 374 169 28 230 78 7,741
0.6 16.0 9.0 31.1 ** 6.2 0.0 ** 0.1 3.3 0.0 1.5 0.7 0.1 0.9 0.3 30.8
105,669 16,817 7,810 48,874 8,137 560 94 2,285 913 983 0 550 363 2,842 9,185 6,257
2.4 15.9 7.4 46.3 7.7 0.5 0.1 2.2 0.9 0.9 0.0 0.5 0.3 2.7 8.7 5.9
65,961 13,296 6,137 18,778 4,181 ** 614 ** 1,516 309 527 5,645 67 0 10,551 0 4,342
1.5 20.2 9.3 28.5 6.3 ** 0.9 ** 2.3 0.5 0.8 8.6 0.1 0.0 16.0 0.0 6.6
43

[All figures are estimates based on samples] Item with the largest tax effectcontinued Tax status, income concept, and item with the second largest tax effect Foreign-earned income exclusion [3] Number of returns (25) Returns with worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Tax-exempt interest [3] Number of returns (27) Percentage of total (28)
AMT tax preference [3] Number of returns (29) Percentage of total (30)
Nontaxable Social Security benefits [3] Number of returns (31) Percentage of total (32)
0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0 0 0 0 0 0 0 0 0 0 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
64,860 17,035 5,688 9,802 ** 2,531 479 ** 247 61 2,516 1,710 0 54 623 540 23,574
1.5 26.3 8.8 15.1 ** 3.9 0.7 ** 0.4 0.1 3.9 2.6 0.0 0.1 1.0 0.8 36.3
269,490 11,907 0 140,842 24,324 3,695 307 13,491 1,345 4,337 7,327 148 212 32,446 9,337 19,772
6.2 4.4 0.0 52.3 9.0 1.4 0.1 5.0 0.5 1.6 2.7 0.1 0.1 12.0 3.5 7.3
5,405 1,243 415 2,553 558 34 0 0 5 95 178 101 0 194 11 19
0.1 23.0 7.7 47.2 10.3 0.6 0.0 0.0 0.1 1.8 3.3 1.9 0.0 3.6 0.2 0.3
60,717 4,433 10,492 8,977 57 0 0 8 516 660 2,941 0 9 0 915 31,709
1.4 7.3 17.3 14.8 0.1 0.0 0.0 [2] 0.8 1.1 4.8 0.0 [2] 0.0 1.5 52.2
44

[All figures are estimates based on samples] Item with the largest tax effect Total Tax status, income concept, and item with the second largest tax effect Number of returns (1) Returns without worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Interest paid deduction Number of returns (3) Percentage of total (4)
Investment interest expense deduction [1] Number of returns (5) Percentage of total (6)
Taxes paid deduction Number of returns (7) Percentage of total (8)
10,782 1,881 984 3,389 1,297 193 44 1,038 63 45 1,208 558 82
100.0 17.4 9.1 31.4 12.0 1.8 0.4 9.6 0.6 0.4 11.2 5.2 0.8
404 0 33 175 53 ** 15 ** 41 5 7 27 48 0
3.7 0.0 8.2 43.3 13.1 ** 3.7 ** 10.1 1.2 1.7 6.7 11.9 0.0
1,213 206 0 260 179 18 ** ** 146 ** ** 9 329 66 **
11.3 17.0 0.0 21.4 14.8 1.5 ** ** 12.0 ** ** 0.7 27.1 5.4 **
665 84 88 0 180 25 5 130 6 0 127 20 0
6.2 12.6 13.2 0.0 27.1 3.8 0.8 19.5 0.9 0.0 19.1 3.0 0.0
15,303 1,387 2,342 3,713 1,904 1,329 48 1,663 58 52 1,420 12 ** ** 283 927 165
100.0 9.1 15.3 24.3 12.4 8.7 0.3 10.9 0.4 0.3 9.3 0.1 ** ** 1.8 6.1 1.1
421 0 46 178 56 15 ** 29 6 7 31 ** 4 ** ** 5 44 0
2.8 0.0 10.9 42.3 13.3 3.6 ** 6.9 1.4 1.7 7.4 ** 1.0 ** ** 1.2 10.5 0.0
0 0 0 0 0 0 0 0 0 0 0 0 ** ** 0 0 0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ** ** 0.0 0.0 0.0
1,054 92 442 0 172 28 6 ** 137 5 ** ** 149 ** ** ** 3 20 0
6.9 8.7 41.9 0.0 16.3 2.7 0.6 ** 13.0 0.5 ** ** 14.1 ** ** ** 0.3 1.9 0.0
45

[All figures are estimates based on samples] Item with the largest tax effect continued Charitable contributions deduction Number of returns (9) Returns without worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
Medical and dental expense deduction Number of returns (11) Percentage of total (12)
Net casualty or theft loss deduction Number of returns (13) Percentage of total (14)
Total miscellaneous deductions Number of returns (15) Percentage of total (16)
995 180 121 257 0 75 4 150 ** 13 7 69 119 **
9.2 18.1 12.2 25.8 0.0 7.5 0.4 15.1 ** 1.3 0.7 6.9 12.0 **
1,077 72 20 363 231 0 ** ** 233 ** 0 ** 19 136 3
10.0 6.7 1.9 33.7 21.4 0.0 ** ** 21.5 ** 0.0 ** 1.8 12.6 0.3
645 210 29 248 50 7 0 ** 44 ** 0 42 15 **
6.0 32.6 4.5 38.4 7.8 1.1 0.0 ** 6.8 ** 0.0 6.5 2.3 **
4,061 955 203 1,740 335 38 20 0 9 10 584 97 70
37.7 23.5 5.0 42.8 8.2 0.9 0.5 0.0 0.2 0.2 14.4 2.4 1.7
1,027 176 172 247 0 ** 83 ** 110 12 6 71 0 ** ** 28 122 0
6.7 17.1 16.7 24.1 0.0 ** 8.1 ** 10.7 1.2 0.6 6.9 0.0 ** ** 2.7 11.9 0.0
1,754 69 772 304 175 0 3 205 ** 0 ** 20 ** ** ** 61 145 0
11.5 3.9 44.0 17.3 10.0 0.0 0.2 11.7 ** 0.0 ** 1.1 ** ** ** 3.5 8.3 0.0
664 210 74 234 45 7 0 ** 26 ** 0 41 4 ** ** 9 14 0
4.3 31.6 11.1 35.2 6.8 1.1 0.0 ** 3.9 ** 0.0 6.2 0.6 ** ** 1.4 2.1 0.0
483 44 117 130 78 17 0 0 ** 0 ** 83 0 ** ** 3 11 0
3.2 9.1 24.2 26.9 16.1 3.5 0.0 0.0 ** 0.0 ** 17.2 0.0 ** ** 0.6 2.3 0.0
46

[All figures are estimates based on samples] Item with the largest tax effectcontinued General business credit Number of returns (17) Returns without worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item
All other tax credits Number of returns (19) Percentage of total (20)
Partnership and S Corporation net losses Number of returns (21) Percentage of total (22)
Capital gains taxed at 0 percent Number of returns (23) Percentage of total (24)
68 28 5 7 7 0 0 ** 3 0 ** 6 12 0
0.6 41.2 7.4 10.3 10.3 0.0 0.0 ** 4.4 0.0 ** 8.8 17.6 0.0
137 42 12 37 13 ** 0 ** ** 6 0 5 18 4
1.3 30.7 8.8 27.0 9.5 ** 0.0 ** ** 4.4 0.0 3.6 13.1 2.9
1,465 84 468 295 239 10 10 ** 296 24 12 0 27 **
13.6 5.7 31.9 20.1 16.3 0.7 0.7 ** 20.2 1.6 0.8 0.0 1.8 **
52 20 5 7 10 5 ** 5 0 0 ** ** 0 0
0.5 38.5 9.6 13.5 19.2 9.6 ** 9.6 0.0 0.0 ** ** 0.0 0.0
61 27 0 7 ** 8 0 0 ** 0 ** ** 7 0 ** ** 0 12 0
0.4 44.3 0.0 11.5 ** 13.1 0.0 0.0 ** 0.0 ** ** 11.5 0.0 ** ** 0.0 19.7 0.0
138 46 ** 41 18 ** 4 0 0 ** 0 ** 8 0 ** ** 0 17 4
0.9 33.3 ** 29.7 13.0 ** 2.9 0.0 0.0 ** 0.0 ** 5.8 0.0 ** ** 0.0 12.3 2.9
1,550 63 694 298 222 14 10 186 25 12 0 0 ** ** 4 ** 22 **
10.1 4.1 44.8 19.2 14.3 0.9 0.6 12.0 1.6 0.8 0.0 0.0 ** ** 0.3 ** 1.4 **
84 21 20 10 12 7 0 ** 5 ** ** ** ** 5 ** ** 4 0 0
0.5 25.0 23.8 11.9 14.3 8.3 0.0 ** 6.0 ** ** ** ** 6.0 ** ** 4.8 0.0 0.0
47

[All figures are estimates based on samples] Item with the largest tax effectcontinued Foreign-earned income exclusion [3] Number of returns (25) Returns without worldwide income tax Returns with adjusted gross income of $200,000 or more Total Interest paid deduction Investment interest expense deduction [1] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Capital gains taxed at 0 percent No second largest item Returns with expanded income of $200,000 or more Total Interest paid deduction Tax-exempt interest [3] Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Total miscellaneous deductions General business credit All other tax credits Partnership and S Corporation net losses Foreign-earned income exclusion [3] AMT tax preference [3] Nontaxable Social Security benefits [3] Capital gains taxed at 0 percent No second largest item 89 ** 41 ** 29 4 7 0 ** 0 ** 0 0 ** ** 0 ** 3 5 0.6 ** 46.1 ** 32.6 4.5 7.9 0.0 ** 0.0 ** 0.0 0.0 ** ** 0.0 ** 3.4 5.6 7,933 598 0 2,235 1,114 1,152 24 965 3 20 ** 1,016 ** ** ** 166 519 122 51.8 7.5 0.0 28.2 14.0 14.5 0.3 12.2 [2] 0.3 ** 12.8 ** ** ** 2.1 6.5 1.5 6 0 ** 6 0 0 0 0 0 0 0 ** ** ** ** 0 ** ** [2] 0.0 ** 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 ** ** ** ** 0.0 ** ** 38 ** ** 4 0 ** 0 0 ** 0 ** ** 0 ** ** 0 0 ** 34 0.2 ** ** 10.5 0.0 ** 0.0 0.0 ** 0.0 ** ** 0.0 ** ** 0.0 0.0 ** 89.5 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0 0 0 0 0 0 0 0 0 0 0 0 0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Percentage of total (26) Tax-exempt interest [3] Number of returns (27) Percentage of total (28) AMT tax preference [3] Number of returns (29) Percentage of total (30) Nontaxable Social Security benefits [3] Number of returns (31) Percentage of total (32)
** Data combined to avoid disclosure of information for specific taxpayers. [1] Investment interest expense deduction only has an effect when using the adjusted gross income concept. [2] Less than 0.05 percent. [3] Tax-exempt interest, foreign-earned income exclusion, AMT tax preference, and nontaxable Social Security benefits only have an effect when using the expanded income concept. NOTE: Detail may not add to totals because of rounding. Total columns do not include returns with no tax effect.
48

Table 9. Returns Without U.S. Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns With Itemized Deductions, Credits, and Tax Preferences, as Percentages of Income, Tax Year 2008
[All figures are estimates based on samples] No deduction, credit, or tax preference (2) Number of returns on which income was reduced by percentages of income Under 10 percent (3) 10 percent under 20 percent (4) 20 percent under 30 percent (5) 30 percent under 40 percent (6)
Income concept and type of deduction, credit, or tax preference
Total
(1) Adjusted gross income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent Expanded income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent
18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783 18,783
3,162 5,935 11,667 3,981 6,046 16,562 18,018 12,769 12,726 10,126 10,825 18,280 11,289 14,216 15,335
2,506 6,044 3,505 8,631 8,547 717 53 2,793 1,980 581 567 215 4,570 4,563 1,556
1,156 2,072 733 2,785 971 167 14 1,108 144 232 89 63 759 4 1,058
378 1,171 488 1,252 631 112 12 604 86 181 101 53 446 0 722
225 757 428 628 678 106 15 448 76 205 119 46 348 0 111
27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399 27,399
6,712 15,955 20,586 7,693 9,878 19,979 26,573 16,079 24,090 14,423 15,315 26,861 11,623 18,826 20,638
3,936 6,552 5,040 11,179 12,049 3,966 87 6,109 2,934 1,089 894 252 3,310 8,564 3,727
2,982 2,859 635 4,205 2,035 754 18 2,494 128 628 476 67 995 ** 9 1,904
1,995 1,331 332 1,711 1,233 424 14 1,174 49 302 210 61 1,041 0 995
1,589 378 200 787 828 377 20 541 37 464 385 42 1,140 0 135
49

Table 9. Returns Without U.S. Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns With Itemized Deductions, Credits, and Tax Preferences, as Percentages of Income, Tax Year 2008Continued
[All figures are estimates based on samples] Number of returns on which income was reduced by percentages of incomecontinued Income concept and type of deduction, credit, or tax preference 40 percent under 50 percent (7) Adjusted gross income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent Expanded income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent
** Data combined to avoid disclosure of information for specific taxpayers. NOTE: Detail may not add to totals because of rounding.
50 percent under 60 percent (8)
100 percent or more (11)
210 485 323 389 458 98 18 276 61 460 349 47 231 0 0
207 412 311 235 1,386 112 29 197 84 450 354 43 187 0 0
399 404 290 171 0 149 26 113 124 298 247 21 139 0 0
3,085 921 617 289 9 494 184 202 1,430 3,165 3,057 11 306 0 0
7,455 582 421 422 57 266 414 273 2,072 3,085 3,075 4 508 0 0
1,497 91 139 448 724 334 21 306 19 834 718 40 1,320 0 0
1,274 39 94 312 361 320 38 184 17
1,256 40 51 208 80 320 38 101 19
3,005 108 122 339 126 665 177 204 23 6,909 6,791 10 4,127 ** 0
3,153 46 200 517 85 260 413 207 83 14 10 3 791 0 0
1,009 936 43 1,494 ** 0
1,728 1,665 20 1,558 0 0
50

Table 10. Returns Without Worldwide Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns With Itemized Deductions, Credits, and Tax Preferences, as Percentages of Income, Tax Year 2008
Income concept and type of deduction, credit, or tax preference
Total
No deduction, credit, or tax preference (2)
Number of returns on which income was reduced by percentages of income Under 10 percent (3) 10 percent under 20 percent (4) 20 percent under 30 percent (5) 30 percent under 40 percent (6)
(1) Adjusted gross income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent Expanded income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent
10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824 10,824
54 2,136 5,194 175 1,540 8,798 10,084 5,689 5,208 10,125 10,824 10,516 4,971 6,867 8,432
34 3,071 2,309 5,140 5,620 592 41 2,114 1,613 282 0 120 3,175 ** 3,957 1,057
61 1,345 636 2,353 772 146 13 989 125 74 0 40 665 ** 760
39 964 432 1,108 537 92 11 563 78 53 0 30 408 0 507
47 658 386 582 617 94 12 420 67 47 0 28 321 0 68
15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308 15,308
782 8,579 9,904 838 1,959 8,368 14,513 5,099 12,437 14,416 15,308 15,027 1,809 7,571 10,221
781 3,010 3,821 6,714 8,504 3,595 72 5,192 2,525 485 0 99 1,666 7,733 2,831
1,360 1,943 557 3,665 1,768 712 16 2,366 113 64 0 35 867 ** 4 1,463
1,469 1,135 296 1,569 1,107 393 13 1,139 44 62 0 38 960 0 717
1,343 334 180 741 739 364 17 523 34 47 0 29 1,050 0 76
51

Table 10. Returns Without Worldwide Income Tax and With Income of $200,000 or More Under Alternative Concepts: Number of Returns With Itemized Deductions, Credits, and Tax Preferences, as Percentages of Income, Tax Year 2008Continued
Number of returns on which income was reduced by percentages of incomecontinued Income concept and type of deduction, credit, or tax preference 40 percent under 50 percent (7) Adjusted gross income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent Expanded income concept Total itemized deductions Interest paid deduction: Total Investment interest per income concept Taxes paid deduction Charitable contributions deduction Medical and dental expense deduction Net casualty or theft loss deduction Net limited miscellaneous deduction per income concept Non-limited miscellaneous deduction Deduction equivalent of: Total credits Foreign tax credit General business credit Tax preferences excluded from adjusted gross income Nontaxable Social Security benefits Capital gains taxed at 0 percent
** Data combined to avoid disclosure of information for specific taxpayers. NOTE: Detail may not add to totals because of rounding.
100 percent or more (11)
55 424 293 368 417 93 16 270 58 71 0 35 212 0 0
77 385 291 223 1,255 110 26 194 79 67 0 33 173 0 0
242 380 275 168 0 144 24 112 118 36 0 13 126 0 0
2,773 880 588 286 9 489 183 201 1,411 ** 69 0 ** 9 293 0 0
7,442 581 420 421 57 266 414 272 2,067 ** 0 ** 480 0 0
1,289 78 130 423 621 325 16 300 18 64 0 27 1,248 0 0
1,116 38 83 301 327 313 35 180 16 59 0 32 1,412 ** 0
1,136 37 46 204 74 315 36 100 19 41 0 15 1,482 0 0
2,882 108 106 338 123 663 177 202 21 ** 70 0 ** 6 4,023 ** 0
3,150 46 185 515 85 260 413 207 81 ** 0 ** 791 0 0
52

Table 11. Returns With and Without U.S. Income Tax: Number and Percentages of Returns, by Effective Tax Rate, and by Size of Income Under Alternative Concepts, Tax Year 2008
Size of adjusted gross income Total Tax status, effective tax rate Number of returns (1) All returns Returns without U.S. income tax Returns with U.S. income tax Effective tax rate: Under 5 percent 5 under 10 percent 10 under 15 percent 15 under 20 percent 20 under 25 percent 25 under 30 percent 30 under 35 percent 35 under 40 percent 40 under 45 percent 45 under 50 percent 50 under 60 percent 60 under 70 percent 70 under 80 percent 80 percent or more 28,020,852 36,376,239 20,799,115 7,318,286 1,797,226 766,446 100,320 2,524 1,310 345 457 983 96 4,513 Total Tax status, effective tax rate Number of returns (11) All returns Returns without U.S. income tax Returns with U.S. income tax Effective tax rate: Under 5 percent 5 under 10 percent 10 under 15 percent 15 under 20 percent 20 under 25 percent 25 under 30 percent 30 under 35 percent 35 under 40 percent 40 under 45 percent 45 under 50 percent 50 under 60 percent 60 under 70 percent 70 under 80 percent 80 percent or more 28,675,845 35,556,910 20,902,085 7,391,310 1,803,465 748,886 98,134 2,290 458 194 1,041 998 762 6,333 20.1 25.0 14.7 5.2 1.3 0.5 0.1 [2] [2] [2] [2] [2] [2] [2] 21,715,757 18,852,290 5,694,546 51,757 15,954 12,659 6,483 490 ** 10 ** 657 793 69 6,306 23.6 20.5 6.2 0.1 [2] [2] [2] [2] ** [2] ** [2] [2] [2] [2] 6,391,688 13,798,604 7,874,372 2,723,247 11,055 1,976 726 966 ** 54 ** 0 ** 673 9 19.7 42.5 24.3 8.4 [2] [2] [2] [2] ** [2] ** 0.0 ** [2] [2] 492,003 2,792,227 6,857,137 3,073,131 413,964 7,840 1,133 17 158 0 172 184 8 8 3.6 20.3 49.8 22.3 3.0 0.1 [2] [2] [2] 0.0 [2] [2] [2] [2] 76,397 113,789 476,030 1,543,175 1,362,492 726,411 89,792 817 247 ** 203 212 ** 12 10 1.7 2.6 10.8 34.9 30.8 16.4 2.0 [2] [2] ** [2] [2] ** [2] [2] 142,450,569 47,261,857 95,188,712 Percentage of total (12) 100.0 33.2 66.8 Under $50,000 [1] Number of returns (13) 91,824,448 45,466,675 46,357,772 Percentage of total (14) 100.0 49.5 50.5 $50,000 under $100,000 Number of returns (15) 32,444,747 1,641,378 30,803,369 Percentage of total (16) 100.0 5.1 94.9 $100,000 under $200,000 Number of returns (17) 13,764,389 126,405 13,637,984 Percentage of total (18) 100.0 0.9 99.1 $200,000 or more Number of returns (19) 4,416,986 27,399 4,389,587 Percentage of total (20) 100.0 0.6 99.4 19.7 25.5 14.6 5.1 1.3 0.5 0.1 [2] [2] [2] [2] [2] [2] [2] 22,208,754 19,760,597 5,504,488 51,654 21,566 12,030 3,942 1,184 ** 664 ** 0 796 69 3,820 23.8 21.2 5.9 0.1 [2] [2] [2] [2] ** [2] ** 0.0 [2] [2] [2] 5,255,224 13,589,351 8,012,378 2,632,964 8,652 666 800 310 53 15 ** 4 ** 8 662 17.0 43.9 25.9 8.5 [2] [2] [2] [2] [2] [2] ** [2] ** [2] [2] 499,713 2,927,531 6,836,292 3,081,035 409,925 5,834 318 23 ** 153 ** 183 147 9 20 3.6 21.1 49.4 22.2 3.0 [2] [2] [2] ** [2] ** [2] [2] [2] [2] 57,161 98,760 445,957 1,552,634 1,357,082 747,916 95,260 1,006 446 324 ** 310 ** 10 11 1.3 2.3 10.2 35.5 31.0 17.1 2.2 [2] [2] [2] ** [2] ** [2] [2] 142,450,569 47,261,857 95,188,712 Percentage of total (2) 100.0 33.2 66.8 Under $50,000 [1] Number of returns (3) 93,297,623 45,728,059 47,569,564 Percentage of total (4) 100.0 49.0 51.0 $50,000 under $100,000 Number of returns (5) 30,925,946 1,424,858 29,501,088 Percentage of total (6) 100.0 4.6 95.4 $100,000 under $200,000 Number of returns (7) 13,851,341 90,158 13,761,183 Percentage of total (8) 100.0 0.7 99.3 $200,000 or more Number of returns (9) 4,375,660 18,783 4,356,877 Percentage of total (10) 100.0 0.4 99.6
Size of expanded income
** Data combined to avoid disclosure of information for specific taxpayers. [1] Includes returns with adjusted gross deficit or with negative expanded income. [2] Less than 0.05 percent. NOTE: Detail may not add to totals because of rounding.
53

Table 12. Returns With and Without Worldwide Income Tax: Number and Percentages of Returns, by Effective Tax Rate, and by Size of Income Under Alternative Concepts, Tax Year 2008
Size of adjusted gross income Total Tax status, effective tax rate Number of returns (1) All returns Returns without U.S. income tax Returns with U.S. income tax Effective tax rate: Under 5 percent 5 under 10 percent 10 under 15 percent 15 under 20 percent 20 under 25 percent 25 under 30 percent 30 under 35 percent 35 under 40 percent 40 under 45 percent 45 under 50 percent 50 under 60 percent 60 under 70 percent 70 under 80 percent 80 percent or more 28,109,976 36,366,290 20,807,958 7,356,412 1,817,072 796,286 120,885 18,501 9,619 5,382 3,679 5,862 1,474 13,310 Total Tax status, effective tax rate Number of returns (11) All returns Returns without U.S. income tax Returns with U.S. income tax Effective tax rate: Under 5 percent 5 under 10 percent 10 under 15 percent 15 under 20 percent 20 under 25 percent 25 under 30 percent 30 under 35 percent 35 under 40 percent 40 under 45 percent 45 under 50 percent 50 under 60 percent 60 under 70 percent 70 under 80 percent 80 percent or more 28,777,221 35,542,716 20,913,839 7,433,438 1,834,719 792,258 122,273 5,498 820 301 1,090 1,009 767 6,756 20.2 25.0 14.7 5.2 1.3 0.6 0.1 [2] [2] [2] [2] [2] [2] [2] 21,830,533 18,870,934 5,701,379 51,531 18,943 13,333 6,483 490 ** 11 ** 657 793 69 6,725 23.8 20.6 6.2 0.1 [2] [2] [2] [2] ** [2] ** [2] [2] [2] [2] 6,414,979 13,796,853 7,895,228 2,738,315 11,728 2,649 726 966 ** 54 ** 0 ** 673 9 19.8 42.5 24.3 8.4 [2] [2] [2] [2] ** [2] ** 0.0 ** [2] [2] 485,489 2,778,437 6,863,857 3,096,644 422,323 17,171 2,467 34 166 3 174 185 9 8 3.5 20.2 49.9 22.5 3.1 0.1 [2] [2] [2] [2] [2] [2] [2] [2] 46,220 96,492 453,375 1,546,947 1,381,726 759,106 112,597 4,008 601 ** 318 259 ** 16 14 1.0 2.2 10.3 35.0 31.3 17.2 2.5 0.1 [2] ** [2] [2] ** [2] [2] 142,450,569 47,017,863 95,432,706 Percentage of total (12) 100.0 33.0 67.0 Under $50,000 [1] Number of returns (13) 91,824,448 45,322,567 46,501,880 Percentage of total (14) 100.0 49.4 50.6 $50,000 under $100,000 Number of returns (15) 32,444,747 1,582,567 30,862,179 Percentage of total (16) 100.0 4.9 95.1 $100,000 under $200,000 Number of returns (17) 13,764,389 97,421 13,666,968 Percentage of total (18) 100.0 0.7 99.3 $200,000 or more Number of returns (19) 4,416,986 15,308 4,401,678 Percentage of total (20) 100.0 0.3 99.7 19.7 25.5 14.6 5.2 1.3 0.6 0.1 [2] [2] [2] [2] [2] [2] [2] 22,317,043 19,788,430 5,513,725 54,971 22,631 12,800 4,713 1,185 665 8 681 3,446 1,048 12,480 23.9 21.2 5.9 0.1 [2] [2] [2] [2] [2] [2] [2] [2] [2] [2] 5,269,964 13,580,078 8,036,885 2,647,956 11,022 1,663 2,591 720 990 1,645 66 2,090 59 763 17.0 43.9 26.0 8.6 [2] [2] [2] [2] [2] [2] [2] [2] [2] [2] 488,316 2,913,935 6,831,643 3,104,828 416,690 8,956 3,080 2,836 2,782 1,883 1,961 246 347 48 3.5 21.0 49.3 22.4 3.0 0.1 [2] [2] [2] [2] [2] [2] [2] [2] 34,653 83,847 425,704 1,548,658 1,366,728 772,867 110,500 13,760 5,181 1,846 971 80 20 18 0.8 1.9 9.7 35.4 31.2 17.7 2.5 0.3 0.1 [2] [2] [2] [2] [2] 142,450,569 47,017,863 95,432,706 Percentage of total (2) 100.0 33.0 67.0 Under $50,000 [1] Number of returns (3) 93,297,623 45,563,796 47,733,827 Percentage of total (4) 100.0 48.8 51.2 $50,000 under $100,000 Number of returns (5) 30,925,946 1,369,454 29,556,492 Percentage of total (6) 100.0 4.4 95.6 $100,000 under $200,000 Number of returns (7) 13,851,341 73,789 13,777,551 Percentage of total (8) 100.0 0.5 99.5 $200,000 or more Number of returns (9) 4,375,660 10,824 4,364,836 Percentage of total (10) 100.0 0.2 99.8
Size of expanded income
** Data combined to avoid disclosure of information for specific taxpayers. [1] Includes returns with adjusted gross deficit or with negative expanded income. [2] Less than 0.05 percent. NOTE: Detail may not add to totals because of rounding.
54

High Income Earners Tax Liability Report

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High Income Earners Tax Liability Report

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High-Income Tax Returns for 2008

Number of High-Income Returns

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

Nontaxable High-Income Returns

High-Income Tax Returns for 2008

Tax year Current Dollars 1976 Constant Dollars [1]

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

Detailed Data for 2008

Distribution of Tax Levels

High-Income Tax Returns for 2008

Reasons for Nontaxability

Characteristics of Tax Returns

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

Partnership and S Corporation net losses 13.5%

Other [1] 6.5%

Investment interest expense deduction 11.2%

Medical and dental expense deduction 10.0%

Taxes paid deduction 6.1% 10,824

Net casualty or theft loss deduction 6.0%

Charitable contributions deduction 9.2%

Total miscellaneous deductions 37.5%

High-Income Tax Returns for 2008

Other [1] 8.7% Charitable contributions deduction 6.7%

Tax-exempt interest 51.8%

Medical and dental expense deduction 11.5%

Partnership and S Corporation net losses 10.1%

Appendix A: Income Concepts

High-Income Tax Returns for 2008

Adjusted Gross Income

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

Appendix B: Tax Concepts

U.S. Taxation of Worldwide Income and the Foreign Tax Credit

High-Income Tax Returns for 2008

PLUS: EQUALS: MINUS: EQUALS: PLUS: PLUS: EQUALS:

Two Tax Concepts

Comparing Exclusions, Deductions, Tax Credits, and Special Tax Computations

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

Cumulative percentage of total (3)

Cumulative percentage of total (3)

High-Income Tax Returns for 2008

Total Amount (2)

11,899 3,184 1,826 135 483

4,218,516 467,865 256,572 9,993 64,850

High-Income Tax Returns for 2008

Total Amount (2)

High-Income Tax Returns for 2008

Total Amount (2)

15,508 3,515 2,037 151 571

4,813,419 447,028 227,198 9,603 69,082

High-Income Tax Returns for 2008

High-Income Tax Returns for 2008

Total Amount (2)

5,373 1,934 1,404 109 355

941,085 185,695 199,846 9,398 51,036

27,929 3,282 161 15,988 3,278 0 0 1,655 0 0 158 3,407 0

6,287 1,225 84 3,380 735 0 0 639 3 139 28 55 0

5,562 1,207 198 3,153 729 0 0 47 0 3 139 36 0 0 52 0

16,400 1,948 3,440 8,498 768 18 0 542 3 9 503 55 0 144 472

5,306 1,242 406 2,400 553 34 0 0 166 78 174 41 0 194 11 6