- Overview
Every country has its systems and regulations when it comes to taxes. And it is essential to get acquainted with the tax system in the country you reside or operate in.
Taking the United States, for instance, what are the laws that are applied for taxes?
- Explanation
Most of the states in America are governed by federal law, which means that taxes are imposed on the federal level first, then on the state and local level. Few states don’t apply taxes on the state and local level, such as Delaware, Nevada, and Alaska.
To help you understand better what this actually means, it is essential to know what is meant by the federal tax.
The federal tax is the tax charged on individuals, corporations, trusts, and other legal entities’ annual earnings. Federal income taxes are applied to all forms of earnings that make up taxpayers’ taxable income, such as employment earnings or capital gains.
We have two kinds of federal tax: federal corporate tax and federal income tax.
The percentage of the federal corporate tax is a fixed rate of 21% on the taxable income.
The federal income tax is built on a progressive tax system, where higher income earners are taxed at a higher rate. The amount of taxable income that one earns determines which tax bracket he would fall into.
The percentage of the federal corporate tax is a fixed rate of 21% on the taxable income.
Here, a distinction between gross income and taxable income is crucial.
The gross income includes all income you receive that isn’t explicitly exempt from taxation. Alternatively, taxable income is the portion of your gross income that’s subject to taxation. So basically, deductions are subtracted from gross income to arrive at your amount of taxable income.
After the federal corporate tax comes to the state tax, its percentage varies from one country to another. As mentioned before, few don’t impose any.
- Why is it important?
In this video, we have been talking about nothing but taxes; why? Why is this subject this important?
Understanding more the tax system is not just important but crucial. It is more than essential that every taxpayer, every individual, and corporation which are liable to tax know their duties because, in case of default, penalties will be imposed. Such avoidance can be considered a crime.
Every taxpayer should be aware of the dates and the time limits they have to file their returns and pay their taxes accordingly.
- How can a lawyer help?
So, what is our job in all of this, you may ask yourself?
Well, a lawyer’s job concerning taxes is of the essence, since taxes are imposed based on the tax law and who better to advise you on the laws than a lawyer?
For this reason, if you need any assistance regarding your taxes, feel free to visit lexyom.com and book an online consultation with a lawyer.
