The Federal Income Tax is imposed by the federal government of the United States of America on the taxable income of the residents and tax paying individuals of the country. The federal income tax was first levied during the times of the civil war. After the civil war was over, the tax was again levies around the 1890s. It was again imposed when the 16th amendment was ratified in 1913. The current income tax guidelines are in Internal Revenue Code that was amended in 1986. The income tax structure in the United States in not a very easy one to understand. It is quite a complicated process that progressively taxes the income of earning members of the society. The taxable amount is usually not the same as the entire earned income. The due income tax is based on the adjusted gross income or the AGI. The AGI is calculated by deducting items from the Gross Income. The gross income is the total income is also no the total income, it is the total income minus any of the permissible deductions that have been declared as not necessary to be declared by the taxpayer. This includes the some insurance deductions like employer-paid health benefit plans and income from tax –exempt bonds, etc. The gross income is then subjected to the list of itemized deductions or standard deductions; whichever is greater in the case of the individual. Certain charity donations, medical expenses etc. are taken as deductions. There are also tax credits, which are more valuable than these deductions because tax credit is usually applied after the tax rate. So a tax credit saves the taxpayer more money than deductions. For example, if a deduction was of $100 with a 15% tax rate then the savings would be just $15 but with a tax credit of $100 the savings would be $100. Tax filing is the process of the paying the tax returns and this is also a complicated process. It involves a lot of calculations and paper work. There are a lot of areas which need careful handling because of the possibility of making a mistake. This is why many taxpayers prefer to file their returns online or electronically through a system know as e-filing. E-file is an option given by the IRS to the taxpayers to file their returns electronically. This eliminates a lot of the usual problems that are associated with filing tax returns. There are a lot of added benefits in e-filing such as getting to know about policies that may apply to you. There is no paperwork involved so there are fewer chances of making a mistake in your tax return. Plus the IRS has also engaged a few private organizations to arrange for free e-file. This option is open only to those taxpayers who have an AGI of less than $56,000. This option makes it easier for a lot of low-income people to avail tax benefits by being able to pay tax electronically.
Article Source: http://www.articlecontentprovider.com/articlesubmit
The Federal Income Tax is imposed by the federal government of the United States of America on the taxable income of the residents and tax paying individuals of the country.
To learn about 1040ez tax returns or to look up more information regarding tax returns, please visit our website.
Please Rate this Article
5 out of 5 4 out of 5 3 out of 5 2 out of 5 1 out of 5
