What Are The Taxes On Earnings

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.
What Are The Taxes On Earnings What Are The Taxes On Earnings Reviewed by Henda Yesti on July 06, 2018 Rating: 5

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