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What are the taxes on earnings?
Almost all governments across the globe are funded- in some form
- by the taxation of its citizens. Certain of the taxes are
collected at the time of sales or service whereas certain others
in a 12 month period or at the end of what they call a fiscal
year. Taxes on earnings or income tax is such a yearly beast.
Taxes on earnings are essentially a bill from the federal and
state governments, declaring the rules of taxation on one's
personal earnings through salaries and investment profits. It
has been designed as a progressive tax in which the financial
obligations of an individual increase with the rise in his/her
reportable income.
In United States, taxes on earnings came to effect officially or
in a full swing after the passing of national income tax law in
1914. At that time, the law was mainly aimed at the rich and the
greediest among the population who owned a lot of wealth in
contradiction to the majority of the people. Eventually in
another few years, the tax on earnings would trickle down to the
middle and lower working classes. In reality, even though the
tax on earnings is progressive, big corporate and wealthiest
individuals enjoy a lot of legal exceptions as of now at least.
Taxes on earnings are levied only on a positive income and not
on net loss. The taxes on earnings structure has been designed
in such a way that individuals can earn a certain non-taxable
income, the standard deduction amount being decided by the state
and federal governments and subsequently listed on the
respective tax forms. It follows that if a person is not earning
an amount that is above the specified standard deduction amount,
then he/she need not have to pay the taxes on earnings.
In the case of wage earners, the department of payroll is
obliged to cut a set percentage of the money from the pay checks
for taxation purposes. The amount to be deducted is decided on
the basis of some specific calculations based on the
individual's dependency and marital status. The amount deducted
in this regard is shown in an official tax form called a W-2.
The untaxed income will be reported on a form called a 1099.
The income tax season is from January to April 14 and during
this period every individual should report their total income
from wages and profits from investments to the government
without fail. The amount to be paid as tax will be in give a
chart provided with the form 1040.
If the amount deducted by the payroll department is higher than
the amount specified by the chart, then the excess amount
deducted will be refunded. If it is the other way around, the
individual must pay the IRS accordingly.
For a middle class person, the taxes on earnings can amount to
15% of their gross annual income. By sighting expenses related
to their profession, one can claim legal deductions from the tax
to be paid thus reducing the amount significantly. Also charity
donations can serve to offset taxes on earnings.
There is more than one provision by which one could save on the
taxes on earnings while still remaining within the contours as
mandated by the tax laws. A tax preparing firm or an experienced
accountant could help one in using the tax concessions to the
fullest.
About the author:
Jakob Jelling is the founder of http://www.cashbazar.com. Visit
his website for the latest on personal finance, debt
elimination, budgeting, credit cards and real estate.
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| Internal Revenue Service |
| The US government agency responsible for tax collection and tax law enforcement. Includes income tax forms, instructions, and agency publications. |
| www.irs.gov |
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| Tax Information for Individuals |
| Access to useful information, booklets and other tools from the Internal Revenue Service. |
| www.irs.gov |
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| Tax Center - Yahoo! Finance - Tax forms, tips and calculators. |
| Yahoo! Finance: Tax - Find all the resources you need for tax season. Review recent tax law changes, estimate your taxes, find tax tips and expert answers ... |
| tax.yahoo.com |
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| Taxes: Tax Planning, Tools and Advice - MSN Money |
| Microsoft's Tax Preparation site, in association with Tax Server. |
| moneycentral.msn.com |
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| Tax - Wikipedia, the free encyclopedia |
| Governments use different kinds of taxes and vary the tax rates: ... Taxes are most often levied as a percentage, called the tax rate, of a certain value, ... |
| en.wikipedia.org |
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| H&R Block | Taxes, Online Tax Preparation, Tax Software, Filing ... |
| Offers online and in-person tax preparation and tax software, mortgages, brokerage and financial services, consumer tips and tax planning information. |
| www.hrblock.com |
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| TaxCut Online | H&R Block | Online Taxes, File Taxes Online ... |
| File your Taxes online with TaxCut Online. Learn how to file taxes online here. |
| www.hrblock.com |
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| Income Taxes, Tax Returns, Refunds, Deductions and E-File Software ... |
| Popular tax preparation software by Intuit. Integrates with Quicken, spreadsheets and offers state by state electronic filing. |
| turbotax.intuit.com |
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| Taxes & Estates, Tax and Estate Planning Advice - Forbes.com |
| Personal Finance - Get tax and estate planning advice and information from Forbes.com. |
| www.forbes.com |
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| Essential Links to Taxes |
| TurboTax Premier For Federal Returns 2005 Win/Mac, TurboTax Total Tax Solution Deluxe 2005 with State Win/Mac, TurboTax Basic 2005 Win/Mac... ... |
| www.el.com |
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| Government > Taxes in the Yahoo! Directory |
| Yahoo! reviewed these sites and found them related to Government > Taxes. |
| dir.yahoo.com |
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| Taxes - Tax News for Home and Business from CNNMoney |
| The latest in tax law updates, news, forms & advice from CNNMoney.com. Includes a refund savings calculator, and interactive tax lessons. |
| money.cnn.com |
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| The Tax Foundation - Educating Taxpayers Since 1937 |
| Devoted to educating taxpayers about tax policy and the total tax burden borne by Americans at all levels of government. |
| www.taxfoundation.org |
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| Welcome to the Vermont Department of Taxes |
| Welcome to the Vermont Department of Taxes... ... Changes to Property Tax Adjustments in 2007 - updated 10/18. - Tax Expenditures Transition Report on ... |
| www.state.vt.us |
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| Franchise Tax Board Homepage |
| The department that collects state personal income taxes and bank and corporation taxes for the State of California. Access to forms and tax information. |
| www.ftb.ca.gov |
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| HM Revenue & Customs: Home Page |
| News and information on tax and national insurance, including downloadable leaflets and forms and the latest news on filing tax returns on-line. |
| www.hmrc.gov.uk |
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| State and Local Tax |
| Piper Resources; State Tax Rates and Structure ...Federation of Tax Administrators; State Payroll Taxes Information ...Symmetry Software ... |
| www.taxsites.com |
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| Quicken.com |
| www.quicken.com/taxes/ - 3k - Cached - Similar pages |
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| Tax news and advice from Bankrate.com |
| Information on all phases of tax planning and preparation. |
| www.bankrate.com |
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| Online Tax Advice - Tax Preparation Help - Income Tax Tips |
| Income Tax Tips - MarketWatch offers online tax advice and tips. ... IRS inflation adjustments mean tax break on next year's taxes. ... |
| www.marketwatch.com |
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