Table 2 Footnotes, File 97ftnt2.txt.
 
[1] Includes returns with adjusted gross deficit.
[2] U.S. totals in Table 2 do not agree with Tables 1 and 3 because Table 2 also includes (a) "substitutes for returns," whereby the Internal Revenue Service constructs returns for certain non-filers on the basis of available information and imposes an income tax on the resulting estimate of the tax base, i.e., "taxable income," and (b) returns of nonresident or departing aliens.  In addition, for Table 2:
a. "Number of exemptions" also includes responses of taxpayers who checked the boxes on their tax returns for age 65 or over or for blindness, partly to justify the additional standard deductions for age or blindness.  Treating these responses as if they were for personal exemptions enables some comparability to be maintained in the State data between years starting with 1987 (the first year for which the additional standard deductions were allowed for age and blindness) and earlier years, when additional personal exemptions were allowed for this purpose, instead.  Note, though, that these responses were not included in the 1996 statistics, so data for that year are not altogether comparable with those for 1997 and years preceding 1996.
b. "Itemized deductions" include any amounts reported by the taxpayer, even if they could not be used in computing "taxable income," the base on which the regular income tax was computed.  Thus, total itemized deductions include amounts that did not have to be reported by taxpayers with no "adjusted gross income." (Adjusted gross income is the total from which these deductions would normally be subtracted.).  In addition, total itemized deductions include amounts reported by some taxpayers who used the "standard deduction," but who also reported itemized deductions, as well.  In an effort to improve the quality of the data shown for total itemized deductions, the total of unusable itemized deductions was excluded from the statistics.  However, because the component deductions were not similarly excluded, the number of returns and related amounts for these component deductions are slightly overstated, especially in relation to the total itemized deductions shown. 
c. "Income tax" includes the "alternative minimum tax," but differs from "total income tax" in Tables 1 and 3 in that it is after subtraction of all tax credits except the "earned income credit."   For additional information, see footnotes 2e and 10 below (for an explanation of the treatment of the earned income credit).
d. "Total tax liability" differs from "income tax," shown above in Table 2, in that it is the sum of income tax after subtraction of all tax credits except the "earned income credit," and, in addition, includes the "alternative minimum tax," taxes from recapture of prior-year investment and low-income housing credits, tax applicable to Individual Retirement Arrangements (IRA's), Social Security taxes on self-employment income and on certain tip income, and certain other income-related taxes.  See also footnotes 2e and 10, below, for an explanation of the treatment of the earned income credit. 
e. "Earned income credit," limited somewhat starting with 1996, includes both the refundable and non-refundable portions.  The non-refundable portion could reduce income tax and certain related taxes to zero; credit amounts in excess of tax, or amounts when there was no tax liability at all, were refundable.  See also footnote 10, below.       
[3] See footnote 2a, above.
[4] Less deficit.
[5] "Number," here, and elsewhere in Table 2, represents number of returns, unless otherwise specified.
[6] Not included in AGI.
[7] See footnote 2b, above.
[8] Unlike Table 1, "total tax credits" excludes the "earned income credit," shown separately below, in Table 2.
[9] See footnote 2e, above.
[10] The refundable portion of the "earned income credit" equals the amount in excess of "total tax liability," which is shown below in Table 2 and defined in footnote 2d.  The excess credit shown includes any "advance earned income credit payments" for those returns that had such an excess.  See also, footnote 2e, above.
[11] See footnote 2c, above.
[12] See footnote 2d, above.
[13] Reflects payments of the taxes listed in footnote 2d, above.
[14] "Earned income credit," allowed certain low-income recipients, was liberalized starting with 1985, 1987, 1991, and 1994, and was further modified starting 1996.  Indexing for inflation was introduced into the credit computation, starting with 1985.  In Table 1, the amounts "used to offset income tax before credits" and "to offset other taxes" (that are income-related) are reflected in the statistics for "total tax credits"; however, "excess earned income credit (refundable)" is reflected in the statistics for tax "overpayments."  The refundable portion of the credit is the amount (in excess of the taxes) that could not be credited, including any "advance earned income credit payments" on those returns that had such an excess.  ("Advance earned income credit payments" were made to employees electing to receive such payments currently through their paychecks.  Such "payments" are included in the statistics only if the employees also met the tax return filing requirements; advance payments received by those not required to file are, therefore, excluded.)
[15] Includes, for example, returns filed from Army Post Office and Fleet Post Office addresses by members of the armed forces stationed overseas; returns filed by other U.S. citizens abroad; and returns filed by residents of Puerto Rico with income from sources outside Puerto Rico or with income earned as U.S. Government employees. 
NOTE:  This table presents aggregates of all returns filed and processed through the Individual Master File (IMF) system during Calendar Year 1998.  In general, during administrative or Master File processing, taxpayer reporting discrepancies are corrected only to the extent necessary to verify the income tax liability reported.  Most of the other corrections to the taxpayer records used for these statistics could not be made because of time and resource constraints.  The statistics in Table 2 should, therefore, be used with the knowledge that some of the data have not been perfected or edited for statistical purposes and that U.S. totals in this table may not be altogether comparable to U.S. totals in Tables 1 and 3, as a result.
Classification by State was usually based on the taxpayer's home address.  However, some taxpayers may have used the address of a tax lawyer or accountant or the address of a place of business; moreover, such addresses could each have been located in a State other than the State in which the taxpayer resided. 
SOURCE: IRS, Statistics of Income Bulletin, Spring 1999.  Internal Revenue Service, Information Services, Martinsburg Computing Center, Development Center Branch.
