The income-tax filing season is drawing near, and that means Arizonans will start reviewing their income for 2023, check their filing status, and search for deductions and credits.
Based on figures compiled by the Internal Revenue Service, certain tax topics will weigh more heavily than others. Below are answers to five key questions about Arizona taxpayer characteristics and behavior. The information dates to the 2020 tax year, as the IRS hasn't released more recent statistics.
When are W-2 forms going out?
The IRS will start accepting returns on Jan. 29, and employers generally are required to mail W-2 Forms to workers by Jan. 31, allowing them to start their return preparation in earnest. The forms will show wages paid and taxes withheld in 2023.
Do most Arizonans file as married couples?
No. Slightly more than half of taxpayers here, 50.9%, file their federal returns as singles. Married couples filing jointly were next at 33.6%, followed by heads of household at 13.9%, with less common categories accounting for the rest.
Unsurprisingly, married Arizona couples typically report higher incomes: Nearly 42% of them had incomes of $100,000 and up in 2020, compared to fewer than 6% of singles and heads of household. Married couples often bring home two incomes, and they’re less likely to be young adults or elderly seniors — two groups with relatively modest incomes.
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How much do Arizonans earn on average?
The average adjusted gross income, for federal tax purposes, was $69,800 in 2020, the most recent year for which the IRS has supplied numbers.
To fall into the top 1%, Arizonans needed an AGI of around $485,100, whereas you could have reached the top 10% with an income of around $144,000 or stayed in the top half with an AGI above $41,900.
Nationally, the top 1% of taxpayers earned at least $561,300 or so, the top 10% earned nearly $154,700 or above and the top half were at $44,100 and up. AGI includes more than just wages. Dividends, capital gains, business income, retirement distributions and other income sources also are included.
AGI and other income measures don’t tell the entire story. Really, net worth —assets less liabilities ― is a better measure of wealth. Nationally, taxpayers reported about $76,500 in average AGI in 2020.
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Do many Arizonans pay taxes on their Social Security?
Social Security benefits aren’t taxable for everyone, but roughly 521,600 Arizona returns reported taxable Social Security benefits in 2020, averaging about $16,600. That compares to, say, 300,200 returns that reported taxable withdrawals from Individual Retirement Accounts or IRAs, averaging about $23,400.