Things to Know About Income Taxes

It is really a great excitement for you to get the salary that to your first one. You might have worked really harder for the whole month and you are getting the salary. There is a thing that might disturb you which is nothing but a deduction in your salary in the form of income tax. Just ask the founder of Optima Tax Relief, Jesse Stockwell. There are chances for you to get the finest way you to get the best kind of the income tax. It is necessary for you to know more about this so that you can get the finest idea of how it works and what amount of your salary goes in the form of income tax.

History of Taxes in America
It is a truth that the various forms of taxes have always created an issue for the citizens of America. The citizens could never ever accept this idea of taxing. This hatred towards taxing is something that started from the early times when the Britain made America as their colony and also levied extremely heavy taxes on the citizens. The people who lived in that era had to pay indeed a huge tax on each and everything that they buy and also many other cases. It is true that the American’s fought with British for freedom but even when the nation got the Government of its own tax was still a major form of income that kept the Government moving in a positive direction. Taxes of various forms include the major part of the revenue of the American Government.

First Income Tax
First ever income tax was collected in the year of 1863 by Federal Government. This is the graduated tax which is similar with the income tax that you pay these days. The time when the income tax was first implemented, the ones who earned between 600 to 10,00 dollars were meant to pay income tax at the rate of about 3 percentage. The ones who earn more than 10,000 dollars needed to pay 5 percentage of what they earn.

Tax Process
There are chances for you to know more about the tax process. The whole process of taxation begins with the new job. It is necessary for you and also your employer to agree on the salary that needs to be paid to you. There is also a requirement for you to fill the W-4 form. This is the form which is similar to the tax survey which actually says whether you are married or single. These forms help you in getting the first thing related with the chances. The employers have got the responsibility for the chances of getting the best kind of results.

Flat Tax

A flat tax is the kind of the system that can help you in easily handling the complicated stuff of tax forms and also tax code. It is the kind of the tax that need the only single form for it. This is the kind of the form which may be of the size of the postcard.

Facts to Know About the Premium Tax Credit

The premium tax credit is the option that is applicable to you if you are getting the health insurance related with you through Health Insurance Marketplace. This is the kind of the plan which can help the individuals who have moderate incomes to get the health insurance coverage in a much affordable rate. There are chances for the Health Insurance marketplace to come with a period of open enrollment every year. This is the time for you to purchase the health insurance. The period for that was closed by Feb. 15, 2015, and has got extended to April 2015 so that the ones who could not register could do the registration process. It is possible for you to make use of the enrollment period that is allotted extra for the purpose of enrolling the individuals and also the families in the states which make use marketplace that is federally facilitated. There are chances for the individuals to get the things possible so that it is possible for you to get the best way possible so that you get the finest kind of the things. There are chances for you to choose the finest way so that you can get the best possible things. There are chances for you to choose the get the individual so that there are chances for you to do that in most appropriate manner. This is something that can help the individuals in a much better manner so that you can get the possibility of better kind of the health insurance. There are many things that you need to know about it so that the whole thing can be much easier for you to deal with.

There are certain things that you need to take care so that it becomes much easier for you to choose the finest service. You can easily get the premium tax credit if you are buying insurance through the marketplace. If you are not getting any coverage through government plan or employer then also it is possible for you to avail the premium tax credit. There are chances for you to even avail this benefit if you have some limitations in your income. If you are having the premium tax credit option available for you then it is possible for you to either choose the option of getting it now or the one named get it later. It is always good for you to get the finest kind of the details from this and also to enjoy that well.

Claiming Credit
If you have chosen to pay the credit payments in advance to insurer then you need to file for the income tax – return of the federal government. This is a good option for you even when you are able to get the return. It is possible for you to get either the low tax due or the highest refund so that there are chances for you to get the finest thing possible.

Failing to File the Tax Returns
It is necessary for you to make sure that you pay the tax returns of the previous year else it is not possible for you to avail the credit payment method.

IRS’s 2015 Tax Bracket Announcement

The Internal Revenue Service (IRS) made the announcement on the annual inflation adjustment for the year 2015. This announcement includes multiple provisions such as tax tables, tax rate schedules and also cost of living regulation for some tax items. And these rules will be effective from the 1st January 2015. The new tax rules will not be applicable for the tax returns of 2015; it will be applicable for the tax returns of 2016. Here is the some important information of Income Tax Brackets for the individual taxpayer.

• If your individual income is in between 0 – $9,225 then you will have to pay 10% tax.

• If it is in between $9,226 -$37,450 then the tax due is 15%.

• If your earning is in between $37, 451-$90,750 then the tax payment will be 25%

• If your income is in between $90, 751- $ 189, 300 then the tax amount will be 28 %

• If it is in between $ 189, 301- $411, 500 then the tax due will be 33%

• If your earning is in between $ 411,501- $413,200 then the tax due is 35%

• And if your individual earning is $411,201+ then the tax due is 39.6%

If you are married individuals and filing joint returns then your tax due will be less such as if your income is in between the $0- $18, 450 then you will have to pay 10% tax but in case of individual tax payer you need to pay 10% tax for $0- $9, 225 only. If you are a married individual, but filing for separate returns then your tax due will be more. And the tax due also varies according to the income and the position of the taxpayer.

Standard Deduction: In this announcement, taxpayers will find a slight bump in the standard deduction since it rises to $6,300 for individuals and also for married couple who wants to file separate returns and $12,600 for the married couples who want to file joint returns. And also for the head of the households the standard deduction rises to $9,250.

Itemized Deductions: Itemized deductions will rise for the individuals whose income is $258,250 or more and $309,900 for the married couples who filed the returns jointly.

Personal Exemptions: The personal amount also goes up for the year of 2015. It rises to $4,000, up from $3,950 of 2014. This exemption acts as a fillip for millions of people.

Here are the some updates of the family-related tax items.

• Earned Income Tax Credit (EITC): If the taxpayers filing jointly for one child the amount will be $3,359, for two children it will be $5,548 and for three or more children it will be $6,242 and for no children it will be $503.

• Child & Dependent Care Credit. The value used to decide the sum of credit that might be refundable is $3,000. Remember that this amount is not the actual credit amount. This is the value of the operating cost that is used to decide the credit.

• Kiddie Tax: For the year 2015, the Kiddie tax is $1,050.

• Adoption Credit: For adopting a child with some special care $13,400 credit is allowed and the maximum credit is allowed for any kind of adoption is $13, 400.

These are the updates of the 2015 Income Tax brackets. IRS announcement also includes tax returns on education, health and retirement plans.

Learning About Income Tax Forms

income tax formsIn the past, when individuals had to file income taxes, they would either wait in the mail for their income tax forms to come from the IRS or picked up copies of standardized forms from their local post office. Now these forms are made available online so that you can download and print it out or file your forms electronically. Even with the advancements made to accommodate the world of technology, you still need to understand what these forms are and the difference between each form.

The basic forms for individual tax returns are 1040, 1040A, and the 1040 EZ forms. Being misinformed when it comes to filing income tax forms and which forms apply to your tax situation is a waste of your time and effort that could be spent on other things. In order to avoid this, examine your tax situation and learn about each form, so that if your situation changes, you will file the correct form.

The 1040 form is what was once considered the “long form.” This is because individuals that filed with this form, typically were either self-employed or itemizing their deductions. The attachments that are required to be filed with this form are also known as schedules, this is what made filing taxes for many individuals the least anticipated task of the year. The 1040A and 1040EZ are simplified forms that can be interchangeable with one another depending on your specific situation. The 1040EZ is for individuals that do not have dependents to claim and that are not required to file 1040, otherwise if you are claiming dependents then you would file the 1040A unless you fall under other circumstances that require you to file 1040.

Most individuals will know if they have to file the long form. If you receive 1099 as an independent contractor or you are self-employed, you would need to file the Schedule C which can only be filed on 1040. This is where you report your business profit and loss based on earnings and expenses. Other schedules that you may encounter, include Schedule E which applies to individuals with rental properties and Schedule D which is for reporting capital gains and losses.

The 1040EZ allows individuals that make under a certain income threshold, without kids an easier way to file taxes. Keep in mind that if you receive any self-employment income or 1099 you cannot report this information on 1040EZ. This is for W-2 employees only to file their taxes that meet the requirements. Your filing status may also have a bearing on whether you can file 1040EZ. If you are married filing separately, innocent spouse or head of household then you can only use 1040 or 1040A. Typically, with the head of household you have dependents to claim, therefore you would need to file 1040 or 1040A. Certain tax credits that may benefit you cannot be filed on the 1040EZ either. In order to claim certain tax credits, you would need to file 1040 or 1040A.

Understanding the proper form to file not only saves you a lot of wasted time and effort, but it also ensures that you are maximizing your refund potential. By filing the wrong income tax forms, you may lose out on credits and deductions that could benefit you.

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