Income Tax

An Income Tax is a tax imposed on a financial income of persons, corporations or other legal entities. The income tax department is governed by the IRS (internal revenue service). Preparing your income tax has many benefits like it is fast, easy, accurate and convenient.

Onilne Income Tax will be calculated on tax payer's income. There are two types of income Ordinary Income and Capital Gains. Ordinary income includes compensation for personal services such as wages and salaries, business profit and interest income from invested funds while Capital Gain generally comes from the sale of investment property.

Following Income Considered as taxable Income:

  • Some social security benefits and pensions
  • Employment related allowances and benefits
  • Some earned income
  • Some fringe benefits, for example, company cars
  • Some occupational pensions
  • Interest on some types of savings
  • Other types of income

The Tax payers have to pay Federal Income Tax and State Income Tax . Again there are two types of income taxes in the United States: the individual income tax and the corporate income tax. The individual income tax, also called the personal income tax, is a tax on a person's earnings. The corporate income tax is a tax on the profits of a corporation.

Income tax rates may be progressive, regressive, or flat. A progressive tax is differentially based on how much income you earned. Alternatively, a flat tax is based on all earnings at the same rate. A regressive income tax for income up to a certain amount, such as taxing only the first $90,000 earned. A tax system may use different taxation methods for different types of income, but when the tax imposed on the companies it is often called as corporate tax or corporate income tax or profit tax. The United States imposes a progressive tax on the taxable income of individuals, partnerships, companies, corporations, trusts, decedents' estates, and certain bankruptcy estates.

In the United States, the IRS (Internal Revenue Service) relies on taxpayers to comply with the law and voluntarily calculate and pay their taxes. In 2002 the IRS handled about 131 million federal personal income tax returns and almost 6 million corporate income tax returns. The agency also monitors tax evasion, instances in which people or corporations illegally avoid paying some or all of their required income taxes. The IRS may audit (check for accuracy and compliance in payment) anyone they suspect of tax evasion by requesting complete records of all earnings and expenses.

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