United States Income Tax

Every month you receive a paycheck for your work and it is always baffling to see how much money is taken out of every check. Most employees could not tell you how much is regularly deducted from them or why. Most of the time we expect, or hope, for a larger amount written on our paycheck than there actually is. When you finally get your check many different taxes have been taken out of it. Obviously the amount of taxes vary for each person depending on where they live and where they work. Regardless of your individual situation though, most people pay income tax based on their wages. This leaves most of us asking, "What is an income tax?"

Most people usually forget about taxes until tax time in the middle of April. Who wants to think about payments and filings all year long? For a lot of people, tax time can turn into the most stressful and difficult time of the year. April 15th is the official filing date for your personal and business income taxes.

The tax system in the United States has become very large and overwhelming. It is close to impossible to know every rule and definition, but learning the basics takes very little time and can be useful when April 15th rolls around.

It is always recommended to seek a professionals advice when filing taxes, but if you must do it yourself, here are some steps on how to get started.

1) Calculate your gross income. Gross income is the amount of money you made before any expenses were taken out.

2) Subtract expenses. Take out any expenses you have incurred during the year. Make sure that these expenses are legal and valid based on the US tax code. The IRS website or a tax professional can help determine what is right and wrong.

3) Take out any deductions. Most individuals can subtract money spent on various things such as mortgage interest, dental expenses, and donations made to charity.

4) You are left with your taxable income. Figure out what percentage of your taxable income you are required to pay by locating your tax bracket. The IRS website will be able to tell you which tax bracket you fall under.

5) File and pay your taxes by April 15th or risk paying fees, fines, and interest.

Regardless if you owe nothing or millions in taxes, you must file a return. By not filing or lying on your tax return you could end up paying a lot of money and even spend time in jail. The Internal Revenue Service is very serious about collecting all income tax that is owed.

If you do not feel comfortable filing taxes yourself, always seek the advice and counsel of a tax professional. Most of the time their rates are very affordable and can even help you save money by locating hidden deductions that are applicable to you.

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