Tax Calculation is complicated, especially if you are just starting. What is IRS? What is tax? While we know the basics, but when it comes to paying it, it’s essential to know about it. So, here we are going to talk about income tax. The basics of it, what it is and how you can pay less. For calculating it, you can use a tax calculator, but it’s essential to know the basics of it. Because once you know about it, it will always help you to understand it. For simple tax calculation use Tax Calculator to calculate tax
What is Income Tax?
Now, we are soon coming to the fundamental question about income tax. What it is exactly?. Well in simple language, It is a tax levied by any government ( Here we are talking about Federal Government) on individual and business entities on their generated income. It thus called income tax. Sometimes the states also imposed income taxes on their citizens. It is one of the most significant ways of generating revenue by the Federal government. Whoever is paying fee need to file the taxes annually. In a nutshell, this is the definition of Income-tax. Learn about Adjusted Gross Income ( AGI).
Types of Income-tax and Brackets
There are many ways by which one gains income. It is wages, Salaries, business entities and other kinds of income. One thing is every earns different, So the tax brackets are also different. Read more about Tax Brackets for 2019-2020 If you are earning $80,000 annually, you will pay a separate tax from someone who is making $2 Million per year. Check your eligibility for Tax Refund.
Types of filing
There are four types of filing for a different kind of filing. Here they are.
- Single ( $0 – $9,525 for 10%)
- Married Filing jointly ( $0 – 19,050 for 10%)
- Married Filing Separately ( $0 -$9,252 for 10%)
- Head of Household ( $0 – 13,600 for 10%)
Now, you know about it. Let’s see how you can ease up the Tax.
Ways to easing up the taxes
Now, a lot of folks want to know about how to pay fewer taxes. Let’s face it; this is what everyone wants to know. Not only things, how to get Tax Refund as well. But here we are going to talk about only Easing up your Income taxes. Here are some of the ways you can do it.
- Child Tax Credit
- Earned Income Tax Credit
- Education Credits
- Saver’s Credit
- Energy-Saving Tax Credits
- Credit for Child And Department care
How About Investing?
Many people want to know if investing is the right way to pay fewer income taxes. Yes, this is another way. There are mainly four ways of Investing it. They are Capital Gains, Capital Losses, Dividends And Tax-Exempt Interest are the ways to get the less income tax. Use Tax Calculator to calculate your tax liability
Now, Something extra information. There are some states where the state income tax does not apply. Some of them are Alaska, South Dakota, Washington, Texas, Or Nevada.
So, this is the necessary information regarding Income tax. I hope you will gain knowledge from it.Read more about tax on wiki.