Tax return : the basics

Congress first imposed the first federal income tax in 1862 to raise money for the Union in the Civil War. A 3% tax was fixed on incomes above $600. Those with incomes above $10,000 had to pay 5% in taxes.

After many changes and appeals, the states ratified the Sixteenth Amendment to the United States Constitution, which made possible modern income taxes. For the first time, Form 1040 appeared. People earning above $3,000 had to pay 1% tax on net personal incomes, and those with incomes above $500,000 had to pay 6% surtax.

Today more than two-thirds of the nation pays taxes. People earning less than $20,000 pay no income tax as a group. Payroll taxes for Social Security, Medicare and Unemployment Insurance amount to 7-10% of every dollar. Personal and corporate income taxes are major earners for federal taxes.

Income tax can be calculated in two ways. First of all gross income minus any applicable deductions is calculated, and on this a marginal tax percentage is applied as per the taxpayer’s income bracket. Then, applicable tax credits are subtracted, which gives the income tax owed.

Refundable tax credits are given if these calculations are in the negative or if the federal withholding tax is greater than the income tax that is actually owed. The taxpayer then gets a tax refund. He could receive one even without paying any federal income tax.

The newer Alternative Minimum Tax (AMT) is based on gross income. This was introduced to prevent people from using loopholes in the tax laws. It is calculated without taking into account certain tax preference items. It also has exemptions and deductions. This higher income base is taxed in two rate brackets of 26% and 28%; this depends on the taxpayer’s income. Unfortunately the addition of unrealized gain on incentive stock options made it difficult for people who could not come up with cash to pay tax on gains that weren’t realized. The modified AMT takes into account this problem.

American salaried people usually pay progressive income tax. Non-resident Americans have to pay taxes as per the flat rate. They also have fewer allowed deductions.

If you have all the documents, it is easy to file taxes yourself. However if you are in the higher tax bracket, you may need a consultant to help you. The IRS also helps in filing your returns; call the IRS customer service representatives toll-free at 1-800-829-1040.

The IRS website (www.irs.gov) gives you extensive information. You could also go to websites like About Taxes (www.abouttaxes.org), Complete Tax (www.completetax.com), or World Wide Web Tax (www.wwwebtax.com). Do keep in mind that a little bit of care in documentation goes a long way to filing a tax return without any ensuing problems!

Tax Returns provides detailed information on Tax Returns, Income Tax Returns, Tax Return Filing Preparations, Federal Tax Returns and more. Tax Returns is affiliated with Free Tax Filing.

With a view to make return filing easier, the Central Government of India has notified on 1st June, 2006 a new income-tax return form ” Form 2F” for Assessment Year 2006-07.

This Form has been designed in a manner so that it is easy to understand and can be filled up with little or no help.

This Form can be used by resident individuals and HUF who do not have -

(i) profits and gains of business or profession; or

(ii) capital gains; or

(iii) agriculture income; or

(iv) more than one house property; or

(v) any claim for relief under section 89 in respect of arrears or advance of Salary.

However Individuals/HUF having long-term capital gains from transactions in securities on which securities transaction tax (STT) has been paid can also use this form.

This Form is applicable with immediate effect. However to allow sufficient time to taxpayers to familiarize with this Return form, the existing one page Saral Form :2E can also be used up to 31.7 2006.

The salient features of the new form are-

(i) It has been expanded to four pages so that there is sufficient space to fill in the details.

(ii) No annexures are required to be attached with this Return form. If enclosed, same shall be returned by the official receiving the return.

(iii) Detailed explanatory instructions have been provided to fill this Form.

(iv) Cross-referencing to the Instructions has been provided for most entries.

Schedule 5 of the new form seeks to have cash-flow statement for the Financial Year of which Income has to be reported. However for Assessment Year 2006-07 it is optional to fill this schedule. The main advantage of furnishing the cash-flow statement is that the information collected from the third party sources through AIR can be verified with the outgoings during the year. Therefore, this would substantially reduce the probability of scrutiny assessment or any other kind of intrusive investigation.

The Government proposes to encourage the taxpayers to follow a two-step procedure to file this Return. First, they should transmit this return and schedules thereto electronically (without digital signature) to web-site http://incometaxindiaefiling.gov.in/portal/ and thereafter file a paper Return. The date of such transmission and acknowledgement number given electronically by the Income-tax Department for such transmission has to be mentioned in the paper Return. However, in case the details of the Return are not transmitted electronically, the paper Return must necessarily be filed and will be treated as a valid Return.

The Income-tax Department would like to encourage taxpayers to use this Form so as to serve them better.

For more Indian Financial Information visit http://www.financeguideindia.com

April 15th - “The Day of Reckoning”! Every year, millions of Americans get ready to pay taxes to Uncle Sam, or get ready to collect a tax refund from Uncle Sam; when did this become the great day that it is for taxpayers, and when are we actually required to file a income tax return? Let’s take a look at the beginnings of the income tax date of April 15 and why it was chosen?

The first known income tax that Americans were legally required to pay was enacted during the early 1860s, and the Presidency of Abraham Lincoln. The Civil War was proving very costly to finance, and the President and Congress created the Commissioner of Internal Revenue and enacted a law requiring citizens to pay federal income tax. This could be considered the start of our modern day income tax. This income tax was based on principles of graduated or progressive taxation and of withholding income at the source. The commissioner was given authority to assess, levy and collect federal income taxes. The authority to enforce tax laws by seizure of property and income and by prosecution.

Originally, the deadline for completing and filing your individual income tax was not April 15th. In the beginning, it was first set for March 1st. Then, during 1918, Congress pushed the date out to March 15th. Then, in the great overhaul of 1954, the date was once again moved forward to April 15th, and this is where it remains today. Why April 15th? The main thought from most scholars say the reasoning is that the date gives the IRS more time to handle the work load and more time to hang on to your money before offering a tax refund. This date has only been set this way for a little over 50 years. That’s not very long, in historical terms, and it could possibly be changed again.

If you are an individual taxpayer, you are required to file either a return or an extension of time to file (Form 4868) by April 15th. Corporate and other legal entities are required to file their federal income tax return by March 15th, and if not, they also must file an extension of time to file. What this extension does not do, is to extend the amount of time you have to pay any taxes due the government. So, if you are unable to ready your personal or business financial information in a timely manner, and have no reasonable estimate as to the amount of tax you may owe, you can expect to pay some form of penalty.

In the years following WWII, the burden of tax responsibility was shared fairly equally by the corporate world and the individual taxpayer. Today, however, the shift has been toward more responsibility on the part of the individual, and less on the business backs. To demonstrate how special interests have begun to overtake American politics, during 1867, public opinion was so strong, and the outcry of the general public so loud, that the President and Congress abolished the income tax law in 1872, and from 1872 until 1913 almost all of the revenue for government operation came from the sale of liquor, beer, wine, and tobacco. Although the income tax did make a small come back in 1894, it was found unconstitutional in 1895 by the U.S. Supreme Court because it was not apportioned among the states in conformity with the Constitution.

An interesting time during the formation and eventual taxation of America occurred during 1918. Until that point in time, the vast majority of tax revenue for government funding came from alcoholic beverage sales and high tariffs. In 1919, Congress passed an amendment to the Constitution that made it illegal to manufacture or sell alcohol; what would replace the revenue? American federal income tax was the proposed solution, and we’ve been paying since. Although during the great years known as Prohibition, many “revenue agents” spent their days tracking down “moon shiners” not tax evaders, the American citizen, the individual taxpayer took on the heavy burden of supporting government revenue, and it has become heavier with each passing year. On a side note, although “moon shining” was illegal, the “moon shiners” still had to pay taxes on the moon shine so they were incarcerated for tax evasion and not “moon shining”. Taxes seem to always come into play when looking for a way to prosecute someone.

Then, during 1942, the Revenue Act of 1942 was passed and the “New Deal” era was begun. Since that point in time, government control, power, and expenditures has continued to increase at a phenomenal rate, and today the American taxpayer supports a trillion dollar giant known as the United States government. This ravenous beast consumes more than 10% of our earned income each year, and if the Social Security Administration has their way, will continue to consume even more of our weekly earnings. We can foresee no other relief in sight.

Currently, all the tax regulations for this country are the responsibility of the Internal Revenue Service, and there are four major divisions of this government office: the Wage and Investment, Small/Business Self-Employed, the Large and Midsize Business and the Tax Exempt and Government Entities. Each division has responsibilities as they pertain to their individual specialty.

There continues to be talk on the hill to change the way taxes are calculated and collected. The most common themes are the flat tax and the national sales tax. Until Congress actually has the courage to step up to the plate and change it, taxes will remain as cumbersome as always.

About The Author
Keith Hoyng is the web master and operator of http://www.quickcash2u.com which is a good source of financial, travel, remodeling, and much more information. Visit us at http://www.quickcash2u.com/TaxHelp.html.

According to a recent survey, most of us will spend our tax refund in less than 30 days. 38 percent of us will use the money within seven days or less and 40 percent of us will pay bills with our tax return.

Wait just a second. Seven days? Pay bills?

Mom, can I spend a few minutes convincing you to invest in yourself and your business this year instead of paying a bill that will come again next month anyway?

Putting the money towards a purchase that will pay you again and again is a way to gain massive leverage financially. Spending money wisely in your business will cause your income to grow exponentially over time. Then paying the bills won’t be such an issue. J

I’d like to tell you about some of the investments I’ve made this year and how these have grown my online business.

XSitePro
XSitePro is a complete website building tool for online marketers. It’s an easy “what you se is what you get” website builder, affiliate program manager, website organizer, Search Engine Optimization tool and more all in one. It’s now my absolute favorite program for building websites and I use it exclusively for all my new sites. XSitePro saves me time because it keeps my sites and my affiliate programs organized all in one place, makes adding content, Google AdSense ads and affiliate links super quick and easy. XSitePro is easy to learn and a must for anyone wanting to build multiple websites lightning fast.
I purchased XSitePro just two months ago and so far it has helped me earn approximately $740 in extra income.

Mom Masterminds
I joined Mom Masterminds over a year ago and I would not be making money online if it weren’t for the coaching, mentoring, exclusive resources and networking available there. The resources alone make it more than worth the monthly membership fee. And the value of having a group of dedicated, brilliant work at home Moms ready to brainstorm, network and partner with you is priceless. Without Mom Masterminds, I would never have had the courage and ability to create my first information product, affiliate program, and Internet radio show. Mom Masterminds is for the beginner who wants to avoid making common mistakes and dramatically shorten her learning curve as well as the more seasoned work at home Mom who wants to hit new income goals.

List and Traffic
Jimmy D Brown’s List and Traffic is a monthly membership site that reveals all the tricks and techniques that successful Internet marketers use to grow their traffic and their subscriber lists to massive proportions. What I love about List and Traffic (other than the ridiculously low price!) is how he explains things in such a simple, step by step fashion, that even this sleep deprived Mom of 4 can “get it” and immediately start applying the gems of wisdom to my own business.

What Am I Investing In Next?

The Reese Report
If you’ve been in the online business arena for any length of time, no doubt you’ve heard about John Reese. His Traffic Secrets product made him over a Million bucks in 24 hours- and that was just one of his many success stories! He publishes a monthly newsletter that includes a printable report and video tutorials that show you all the techniques he personally uses to build his online empire. The man is a marketing genius and after reading my very first issue, I was hooked. This isn’t for the beginner, but if you’re already familiar with marketing online and want to really take things to the next level, this one is for you.

One important thing I need to mention about these resources- they all come with an affiliate program, so that if you obtain them and make honest recommendations, you can pay for them out of your affiliate earnings!

Think about it Mom- if you spend your tax return on the bills, the money will be gone forever. But if you invest in your knowledge and then apply that information to your business, you will make huge strides in your financial future. Forever.

Carrie Lauth publishes a free newsletter that helps work at home Moms do business on the internet. Claim yours plus the free report: “How to build an online newsletter that earns you money” by going to: http://www.Business-Moms-Expo.com