Taxes are a necessary part of organized societies. In order for governments to run, they need to be fuel by the people’s money. Citizens and residents are charged a certain amount from their earnings, purchases, and other transactions. There is great variation in terms of type and percentage. In the US, taxes can be imposed by different levels of government. This can make things quite complicated when it is time for filing. A lot of people also have difficulty paying the amount that they owe. Get tax relief help through an expert in taxation law. Learn more about the relationship between federal tax law and you to make better decisions.
The Sources of US Federal Taxes
According to federal tax receipts, nearly half of their annual revenues come from individual income. This is followed by payroll taxes, corporate income, and other sources. The total collection for the fiscal year 2015 reached as much as $3.25 trillion. This money is used to run various branches of the government, as well as several federal programs for the citizens. The Internal Revenue Service or IRS is responsible for the administration of all US federal tax laws. This includes the processing of tax returns, taxpayer assistance, tax collection, law enforcement, appeals resolution, prosecution referrals, information dissemination, and many more.
On Credits, Exemptions, and Deductions
Tax credits are available for certain qualified individuals or businesses to lower the amount they owe the federal government. For example, companies may be given Work Opportunity tax credits and other incentives if they meet certain criteria. Workers who earn low wages may also qualify for credits that help them keep more money in their pockets. There is also a tax credit given to those with dependent children as a form of assistance for educational expenses. Further reductions are possible by deducting expenditures from the gross income. Personal exemptions can also be applied by individual taxpayers.
Penalties for Late Filing and Payment
Those who owe taxes must file their returns and pay on or before the deadline every calendar year. This is usually in mid-April. Failing to do so will result in penalties and additional interest on the amount owed. The maximum charge is 5% of the unpaid taxes. The usual advice is to file even if you think that you cannot pay. Penalty for late filing is ten times as much as the penalty for late payment. Just pay as much as you current can afford. It is possible to get a loan or pay by installment by having an agreement with the IRS. There is an online tool that can be used to set this up.
Get Help with Tax Relief
If you have incurred a large amount of tax debt, then you will have to study your options carefully to avoid severe penalties or even prosecution. The IRS has several programs that give people tax relief in different ways. Check their Fresh Start initiative to learn more. If the amount is too big to be paid in full, then pay bit by bit through an installment agreement that is applicable for people who owe less than $50,000. It is also possible to use the Offer in Compromise tool to pay less than the amount owed and settle things permanently. The inability to pay in full must be proven. Those who are dealing with special hardships may also avail of tax relief programs.