Importance of Filing Income Tax
Generally, not most people thought about their taxes; well except when the year tax season comes around. For many Americans, it is no doubt the most stressful time of their year and a lot of people mark their calendars along with the special events of their lives. There is no joy that could be linked with the deadline for the filing of tax returns come.
The preparation for an income tax return is one humongous job and this is something that demands time. It may appear to be a cumbersome job, not to mention quite tiring but this is something that can’t be taken for granted.
As for the calculation of your individual tax, the one thing where you have to start it is by assessing your gross income which normally includes interest income, work income, annuities, and pension and then subtract any adjustments similar to tax on self-employment, educational loan interest paid, alimony, retirement plans, adjusted gross income or AGI and interest penalty on the early withdrawal of savings. As soon as you’ve calculated the AGI, you are given with a couple of options and one is to subtract the itemized deductions or the standard deductions; basically whichever is greater.
Few examples of the itemized deductions may include a couple of dental and medical expenses, charitable contributions, interest on home mortgages, local and state taxes as well as casualty losses.
After subtracting personal exemptions, you are going to reach a ballpark figure of taxable income you have. If for example that your taxable income is greater than a hundred thousand dollars, then you have to visit the IRS tax rate schedules. The marginal tax rate system will be imposed, which may somehow make everything more complicated. In here, there are six brackets of percentage applied and they’re ten, fifteen, twenty-five, twenty-eight, thirty-three, and thirty-five percent. As a matter of fact, your marital status and your income will dictate which tax bracket you fall to.
As a matter of fact, in the US, the tax returns are basically forms that are filed with the IRS or the Internal Revenue Service either done through the state or with local tax collection agency where such organization has people who can properly and accurately calculate the income tax or whatever tax for that matter. The form 1040 is standard US individual tax return form and several other variations of the form are available similar to the 1040EZ and 1040A. And just a quick fact about taxes; it doesn’t matter if the tax came from legal or illegal business, so long as it is taxable, except that you have to pay your taxes.