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Federal Income Taxation

The Federal government namely the IRS taxes its citizens on the amount of income that they have made in that year that is taxable.

The government of the United States makes its citizens pay a progressive tax on all of the income that they have deemed to be taxable. Almost everyone needs to pay these taxes. Some people that need to pay taxes are individuals, corporations, partnerships, trust, companies, and some other people as well. Some states will also impose a state tax on top of the federal tax that is already imposed on them.

The very first income tax was put in place during the Civil war. It is shows under Article I, Section 8, Clause 1 of the United States Constitution. IT was done again in about 1900, and then after the Sixteenth Amendment was put into place in 1913.

Today, income taxes are put into place under the Internal Revenue Code which was put into place in 1986. It has since been amended several times to include people other than just individuals. They have made it to also cover estates and trusts and also on income made by corporations.

Here are some of the basics although the income tax in the United States is very complicated and complex. Basically you take your gross income and minus your exclusions or deductions and credits. After you have done that you know how much you are going to be taxed on. Sometimes you will actually be owed money back due to how little money you receive or how many credits you have.

How much of the money that you make that is taxable is also a tricky thing to figure out. THere are several different types on income that can make up your taxable income. The main two include an earned income. This means any money that you earn from working . Another type is capital gains. Capital gains are any money that you make in the sale of an asset such as an income property that you sold. If you buy an income property for forty-five thousand dollars and then sell it for sixty-five thousand dollars your capital gain will be twenty-thousand dollars. YOu can be taxed on that amount as it is money that you made on an investment.

Overall, ask a professional or the IRS if you have any questions.

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