Tax Facts and Tips for Senior Citizens

Tax Facts and Tips for Senior Citizens

A tax is simply a mandatory administrative fee or any other sort of monetary charge paid to a taxpayer by a government agency to fund various public needs and government expenditure. A taxpayer may pay a tax in one of two ways. He may choose to pay it directly to the government or make payment arrangements with his Accountant or tax preparer. The second option is usually pursued by people who are not aware of tax laws and have to rely on the expertise of tax advisors or accountants. Evasion of or refusal to pay tax, and attempts to reduce a tax burden, is punishable by severe criminal law.

A large portion of the U.S. tax dollars collected each year goes to government levies taxes such as income and property taxes. These are fees that are due at the end of every year. Many people choose to save their receipts and do not spend money earmarked for these particular taxes. Others decide to spend the money and earn a bit more cash from their savings so they can be sure to pay their taxes in full.

Taxation also includes sales tax, which is charged by local governments for the retail price of goods purchased in a state, province or district. Federal tax law includes the Medicare surcharge; another popular tax levied by the U.S. government is the IRS tax levy known as the payroll tax. Other common types of indirect taxes include: property tax, motor vehicle tax, sales tax, stamp duty, and local consumption tax.

Individual income taxes are levied on only the earnings of the individual. Corporations and unincorporated businesses are both chargeable. Business tax is collected by conducting business affairs on an international level. Consumption tax is levied for the purchase of goods and services within a state. Excise tax is charged for the production or processing of goods within a state. A major portion of U.S. tax collections come from indirect taxes.

Income tax forms are available in many different formats such as the standard, electronic and printable versions. The standard tax form is considered the most popular due to its simplicity and easy readability. An individual may choose to file their taxes using the standard tax form but some prefer to file their taxes using the electronic format. The electronic tax form has become more popular due to the ease of completing, reviewing and filing taxes online.

Tax brackets are determined based on the individuals highest earning paying tax slab or level. Tax rates are progressive which means that taxes rise at higher tax rates. Some tax breaks that were created by Congress include the Earned Income Credit (EIC), Personal Excess Payments, charitable contributions, child care benefits and health insurance. There are several other federal, state and local tax deductions that are specific to U.S. citizens who are aged eighteen or older.

Brittany Walton