INCOME TAX

WELCOME TO INCOME TAX

INCOME TAX

 

A tax is imposed on income In the United States, either by the federal government, most state governments, and many local governments. By applying a tax rate, the income tax is determined as per the amount of income and can vary with the rise and fall of the income, to taxable income as defined. Corporations and Individuals and are directly taxable, and trusts and estates may be taxable on undistributed income. Though the partnership ventures are not taxed, but on the basis of their shares of partnership income, partners are taxed. While nonresidents are taxed only on income within the jurisdiction, residents and citizens are taxed on worldwide income. An alternative tax applies at the federal and some state levels. Several types of credits reduce tax, and some types of credits may exceed tax before credits.

 

Taxable income is total income less allowable deductions. Income is broadly defined. Most business expenses are deductible. Individuals may also deduct a personal allowance (exemption) and certain personal expenses, including state taxes, home mortgage interest, contributions to charity, and some other items. Some deductions are subject to limits.

Capital gains are taxable, and capital losses reduce taxable income to the extent of gains (plus, in certain cases, $3,000 or $1,500 of ordinary income). Individuals currently pay a lower rate of tax on capital gains and certain corporate dividends.

 

Taxpayers generally must self-assess income tax by filing tax returns. Advance payments of tax are required in the form of withholding tax or estimated tax payments. Taxes are determined separately by each jurisdiction imposing a tax. Due dates and other administrative procedures vary by jurisdiction. April 15 following the tax year is the last day for individuals to file tax returns for federal and many state and local returns. Tax, as determined by the taxpayer may be adjusted by the taxing jurisdiction.