The government will require the payment of income tax on a range of common income sources, ranging from salaries and wages to dividends and interest. Certain kinds of income, however, can be tax-free as long as they are subject to certain restrictions and conditions.
What Is a Contribution After Tax?
A contribution made to a retirement or investment account after taxes have been paid on the earnings is known as an after-tax contribution.
What Exactly Is the GST (Goods and Services Tax)?
An indirect tax on the provision of goods and services is known as the GST, or Goods and Services Tax. Every value addition is subject to this multi-stage, destination-oriented tax, which replaces a number of indirect taxes like VAT, excise duty, service taxes, etc.
Explain in Detail: What Is a Franchise Tax?
Some states require businesses to pay a "franchise tax" fee to operate within those states legally. In exchange for this payment, the state grants the company a charter and the right to conduct business within the state, hence the name "privilege tax." Depending on the state, even out-of-charter businesses could be required to pay this tax.
An Overview to the Tax Credits That Can Get You a Refund
When combined with other tax deductions and credits, refundable tax credits might result in a tax refund exceeding the amount originally owed. In other words, a refundable tax credit can result in a situation where the taxpayer owes the federal government money. The Earned Income Tax Credit is an illustration of a refundable tax credit.
Explain in Detail: What Is a Progressive Tax?
People with higher incomes are expected to pay a more significant percentage of their income in taxes under the progressive tax system. There are tiers and brackets for income tax. When a taxpayer's annual income reaches a certain threshold, they are subject to a higher rate of tax than was previously applicable. Taxpayers with higher incomes are subject to higher tax rates, whereas lower-income citizens pay lower taxes. The government utilizes a method of taxation that is progressive.
Explain: What Was a Tax Anticipation Bill (TAB)?
There used to be a type of short-term financial obligation backed by the U.S. Treasury called tax anticipation bills (TABs). It was traded during times when government spending needed to exceed tax revenue. No other TABs are expected from the Treasury any time soon. Instead, the Treasury issues cash management bills today to raise any necessary short-term funding.
Find Out: Will You Pay Taxes During Retirement?
Pension income and tax-deferred investment account withdrawals, such as traditional IRAs, 401(k)s, 403(b)s, and other retirement plans or tax-deferred allowances, must be taxed in the year of withdrawal. Taxes owed reduce the amount of money available for spending.