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Understanding the Basics of Tax Law

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					Understanding the Basics of Tax Laws

Tax season can be a scary time for many, especially when they do not understand the laws and purposes
of the income toll. Even utilizing software that is supposed to make filing tax forms simple may not help
you to feel comfortable when April rolls around.

Where Does Your Money Go?
                                                Understanding the purpose, what these contributions
                                                are used for, and what the government expects of you
                                                during this time might help to make it easier to file
                                                when the time comes around. Why are Americans
                                                required to pay taxes?

                                                There are so many things that the United States
                                                government needs to pay for, including maintaining
                                                roads, schools, caring for national parks, and paying
                                                employees. In other words, it requires a great deal of
                                                money to keep the country functioning and to take care
                                                of all of the different aspects of our society.

                                                The only way that the government is able to pay for all
                                                of these expenses is through the use of money that is
                                                given in taxes by individuals and companies. It is called
                                                the income tax, because it is taken from the amount of
                                                money that citizens and businesses make throughout a
                                                year-long period.

                                                The President, in conjunction with Congress, is
                                                responsible for approving laws that govern taxes. They
                                                also write new ones that are to be put in place.


The IRS
Other bodies of the government like the Internal Revenue Service and the United States Treasury are
responsible for other aspects of the collecting and dispersing of the funds. The national budget includes
the amount that is expected to be spent on different programs and necessities.

As the government spends money on these different things, it is necessary for them to gain or earn
more to keep the process going and to keep the country stable. As it spends less money, it calls for
fewer taxes to be used for spending, and vice versa.

Each citizen is subject to having to pay taxes to the government; the amounts are different depending
on how much money they make each year and how many things that they are able to claim to decrease
their taxable amounts. There are different aspects of this system that are monitored and applied to all
citizens.
First off, it is necessary for every person, company, or non-profit to report their income and make
themselves subject to taxing. Some people and organizations may be exempt, but everyone is required
to at least declare the amount of money that they have made that year.

Any money that is earned is taxable, because it is considered income. This includes dividends, wages,
profits, and pensions.

What are Your Options
Citizens are also required to pay these amounts throughout the year; when you receive a check or wage,
companies are required to remove taxes from that amount. At the end of the year when you file, the
government decides if you have paid more than you owe through your filing.

If you have, then you usually receive a
refund. On the other hand, if you have
not given enough to cover the amount
that you owe, you will experience a
balance due to the government.

The system that has been put in place by
the United States is progressive, which
means that as your level of income
increases, you are subject to being taxed
more money. Accordingly, those that
make less money experience a lesser rate
than those individuals.

Believe it or not, the system is considered voluntary; this means that you can arrange your income and
manage your finances in a way that allows for you to pay fewer taxes to the government. All of these
things are important to understand, especially as you go through the filing process.

Many find it difficult to make these payments and are unsure about what to claim in order to possible
get a return back from the government. If you are unsure about what should include when you file, it
may be best to utilize the help of a certified public accountant of a financier to help you.

They will be able to instruct you in the types of claims you can make for a higher refund; this will be
especially beneficial, because the United States will essentially pay you back some of the funds that they
removed from your original income. The more you understand the basics of this process, the easier it
will be to understand and the more you should feel like an informed United States citizen.

For more information visit with a tax lawyer in Henderson Nevada or a Las Vegas tax lawyer.

Photo Credit: Wally G, Alan Cleaver

				
DOCUMENT INFO
Description: Tax season can be a scary time for many, especially when they do not understand the laws and purposes of the income toll. Even utilizing software that is supposed to make filing tax forms simple may not help you to feel comfortable when April rolls around.