Do You Really Understand Federal Income Taxes

Regardless of how you or I personally feel our dollars that are generated from the federal income taxes support many vital public services. Many of our federal programs such as schools, public utilities, healthcare and retirement programs like Medicare and Social Security wouldn’t be functioning without them. Federal income taxes are collected from income earnings of entities and individuals yearly. However, there is an exception to paying the tax if a person does not meet the lowest earning requirements. Many people rightfully feel that tax codes are too complex and complicated and as a result hire professional tax preparers to ensure that the filing process is easy yet accurate. Over the years there have been many improvements to make make filing quicker and smoother by implementing shorter tax forms, clear directions and web-based filing programs.

The federal income tax system that we currently use stems from a very archaic taxation system. The very early taxation systems were primarily based on livestock, grains and barter services because they did not have money as we know it today. Due to the nature of the tax system necessary for managing the taxes levied the tax burden was literally very heavy, particular for the individuals who were unable to carry their share of the tax load. A common punishment for those who were unable to pay their taxes was to be sold into slavery to pay their taxes or put in prison.

Thankfully the use of slavery or torture is no longer a option for individuals who are unable to pay their tax, however imprisonment is still a common form of punishment for deliberate avoidance of paying taxes. While it may seem that the IRS may want to ruin people’s lives they really prefer to present a payment plan to pay back taxes in a manageable and responsible way. The IRS recognizes that most accruing tax debts are the result of accidental mistakes in calculations and do not warrant the maximum penalty. When using a payment arrangement the back taxes are usually paid off fairly quickly, which is a win-win for everyone.

Most countries have a formalized system that collects taxes. The three most common systems are progressive, proportional or regressive. In recent history many more taxpayers are filing their federal income taxes utilizing quick and easy online filing software. This convenient option favors taxpayers but also favors the IRS as well. The new online filing programs cut down on the paperwork load and processing returns and refund checks much quicker than the paper system. Many people are happy to know that the anxiety surrounding filing taxes can be minimized by filing federal and state income taxes at the same time.

Chris Rivers offers a FREE tax guide which gives you insider tips and secrets to save you money on every type of tax such as sales tax, income tax, real estate taxes, estate taxes and many more.

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