Most people in the United States must file their tax returns with the Internal Revenue Service (IRS) each year. However, tax law is complicated. Tax attorney spend a lot of time studying local, state, and federal tax codes, and it often takes years of practice to gain a thorough understanding of the law.

Among the many complicated issues, people preparing their taxes must know how to ask for exemptions and deductions if they want to avoid an audit. In addition, they must know how to deal with an audit if necessary.

 

About federal personal taxes

Federal personal taxes must be reported and paid each year to the IRS. That said, very important legal questions arise regarding what income generates taxes and what income does not generate them. In basic terms, the IRS classifies the following as income:

• Profits.
• Commissions.
• Tips.
• Dividends.
• Capital gains.
• Unemployment benefits.
• Alimony for the spouse.
• Social Security benefits.
• Distributions from Individual Retirement Accounts (IRAs).

It is interesting to note that income is not always taxed at the same rate. The United States applies a progressive income tax system. This means that the lowest income levels are taxed at a certain rate, while the highest income levels will be taxed at a higher rate. For example, if a person earns $ 60,000 a year, he may be taxed at a rate of 10% on the first $ 20,000 he earns. The next $ 20,000 may be taxed at a rate of 20%, and so on. Deductions and tax credits can be used to decrease an individual’s tax burden. A deduction is an expense that can be subtracted from an individual’s taxable income. Some of the more typical deductions include:

• Dental and medical bills.
• Property taxes.
• Student loan interest.
• University fees.
• Mortgage interest.

Tax credits are similar to deductions and can be used as a way to reduce an individual’s tax burden. Some of the tax credits apply to individuals who care for dependents and individuals who purchase a home for the first time.

 

How can a lawyer help you?

Many people are confused and overwhelmed by tax laws, and that’s where an attorney can help. An attorney can search for deductions, credits, and exemptions that you may choose to reduce your total tax account. An attorney can also give you advice so that your tax return is in perfect compliance with the law so that you do not make tax mistakes that could result in an IRS audit.

A tax attorney can also help people who make tax mistakes and people who file their taxes late or simply don’t file it. Those who are the target of an IRS audit can also benefit from speaking with an attorney who can advise them of their rights and options and what steps to take.

 

What is a federal income tax?

The federal wage tax, or income tax, is simply a comprehensive tax that the government charges people based on the amount of money they earn each year. The Internal Revenue Service (IRS) is responsible for collecting taxes. It not only applies to individuals, but also to companies, small businesses, trusts or other things. Capital gains, hourly wages, fees, and all other kinds of income are grouped together for the purposes of this tax, and must be paid according to total income, not just according to a single portion of the earnings of a person.

 

How is income tax collected?

Generally speaking, income tax is collected directly from the wages of each person, based on the paperwork that has been completed at the beginning of work. Workers will never see this money, although their pay stubs will account for the amount of money that will be withdrawn. At the end of each tax year, individuals calculate earnings and give that calculation to the IRS. In many cases, people owe less than what was collected from their salary, so they will be entitled to a tax refund, which will be delivered by check or via a deposit in their bank account.

 

State and federal taxes

One precision that must be made is that the federal income tax is different from the state income tax. Most residents of the United States must pay both types of taxes. Federal income tax applies to everyone who has earned enough money to qualify. The state income tax can be calculated at the same time as the federal tax, but is paid separately. Also, states have no obligation to collect income taxes. For example, neither Florida nor Texas collects income tax, although its residents must still file federal income tax returns anyway.

 

Do I have to pay my taxes on time?

The Tax Day in the United States is April 15. Although you can send your tax return earlier if you want, the maximum deadline is April 15. For most people, who should receive Form 1099 or Form W2, this means they will have months to fill out the papers and file them.

If something prevents you from filing your tax return on time, the IRS sometimes grants extensions. For example, filing form 4868 with the IRS could give you an extension for the next four months, which means you don’t have to file your return until August 15. Then you can ask for another extension, but you will be asked for a good reason before giving it.

However, keep in mind that asking for an extension will mean that you may have to pay interest based on the taxes you owe. This may not matter if you expect a return, but it can be very important in other cases. Interest rates typically fluctuate between 0.5% and 1%.

 

Tax debt relief services

What are the penalties for unpaid taxes?

Penalties accumulate the longer you take to pay off your debt. Your debt will accrue interest, generally half a percentage of the amount owed. As time goes by, this can add up to 25% interest on the amount owed. If a tax lien is issued and your debt is not paid, the penalty will increase to 1%. Many taxpayers find themselves paying thousands of dollars more than their original outstanding balance. Community Tax can help you avoid these penalties.