WASHINGTON (Reuters) - Republican presidential hopeful Mitt Romney promises to unveil his 2010 tax return on Tuesday, a filing his rivals will scrutinize for insights into how he became one of the wealthiest people to run for president in U.S. history.
Romney, who earned most of his wealth after co-founding private equity firm Bain Capital, bowed to weeks of public pressure when he said he would disclose at least his 2010 return and possibly a tax estimate for 2011.
Last week he estimated he pays an actual tax rate of about 15 percent. His estimated net worth is up to $270 million.
Here are some key questions about Romney's taxes.
WHAT WILL THE RETURN SHOW - AND WHAT WILL IT NOT?
It is unclear how much depth of information the 2010 return will provide. Romney's surging rival for the Republican presidential nomination, Newt Gingrich, released a form 1040 -- the standard income-reporting form for American taxpayers -- with attachments last week, showing his income for the year was about $3.1 million. But some sources of Gingrich's income were unclear because he earns most of his wealth through a holding company for enterprises such as his consulting and production companies.
"If he just releases a 1040, that tells you nothing," said Joe Thorndike, a tax historian who works for the trade publication Tax Analysts.
"We are not going to know everything about Romney's financing -- tax returns don't do that," Thorndike said.
Much of Romney's wealth is held in an Individual Retirement Account and a blind trust - two things that may not show up on his personal federal tax return.
WHAT ABOUT HIS YEARS AT BAIN CAPITAL?
Romney co-founded Bain Capital in 1984 and worked there until 1999. Tax returns from those years might show how Romney built an estimated $200 million of his fortune and would provide a more comprehensive picture of his wealth but they are not expected to be released.
WHAT IS ROMNEY'S "EFFECTIVE" TAX RATE?
The effective tax rate is the actual tax rate paid after accounting for deductions, credits and the like. An individual might make enough to place among the richest Americans taxed at 35 percent but with deductions and alternative types of income, the actual rate paid can be much lower.
That will surely be the case with Romney, given his public estimate.
WHAT ABOUT HIS PRIVATE EQUITY OR "CARRIED INTEREST" INCOME?
Much of Romney's fortune likely qualifies as what is known as "carried interest," a share of profits earned by private equity managers taxed at the 15 percent capital gains tax rate rather than the 35 percent wage rate.
Critics say the lower rate is an unfair tax break because investment managers are providing a service that should be taxed at the higher rate paid by wage earners.
Democrats in Congress have come close to raising the rate to have it equal the rate paid on "ordinary" or wage income but fierce lobbying has paid off so far for the private equity, venture capital and hedge fund industries.
It likely will not be clear how much of Romney's income qualifies for carried interest.
"Everyone will speculate it is due to carried interest but there is nothing on the return that absolutely tells you it is a carried interest," said Terence Floyd Cuff, a private equity attorney for the wealthy in California.
Individuals also can defer taxes on their carried interest income, a benefit not allowed for wage and salary earners.
Americans on average pay an effective individual income tax rate of 9 percent but that figure includes the elderly and very poor who may get federal money back through child credits.
There also are wide fluctuations within income groups, whereby some millionaires pay a lower rate than some in the middle class.
WHAT ABOUT GIFT TAXES?
Romney has a $100 million trust set up for his five sons. How Romney handles this trust would be described in gift tax returns. Presumably the trust is funded somewhat using carried interest profits. Some wealthy Americans have undervalued gifts to trim their gift tax rates.
A 35 percent gift tax now applies to transfers of property -- including money -- after an annual exclusion of $13,000. The rate has been higher, and the exclusion lower, in years past.
A slew of Romney's investment funds run through Bain are in tax havens such as the Cayman Islands and Bermuda, a practice that is legal and common but that has come under some criticism during the campaign.
The Romney campaign's answer to questions on this front has been that he does not control the makeup of the funds because they are run as blind trusts.
Some of these investments also are held through two Individual Retirement Accounts and investing IRAs offshore can eliminate all taxes until withdrawals are made.
As a devout Mormon, Romney gives away at least 10 percent of his income to the Mormon Church, a practice known as tithing. He uses stock holdings from his time at Bain Capital and this practice makes him eligible for big tax deductions.