Money and taxes are infinite partners. Each country has their own tax system and citizens must be aware of their respective system. Although the tax system varies by country, the truth still remains that wherever money goes, taxes come along. Absolutely we are happy when we earn huge figures and we tend to completely disregard the facts of taxation. Perhaps it dominates our lives \”discreetly\”, I should say. Food, water, electricity, and transportation are only among the common yet endless necessities that are charged with taxes- and salaries by the way.

Understanding Taxes

When we get our paychecks, it\’s always interesting to see our net pay. Alas, taxes cut through our earnings. We only get a portion of the whole pie. We notice several deductions from our gross monthly paycheck. Oftentimes we do get frustrated. However knowing the real essence of these deductions will somehow ease our frustrations.

Who are Obliged to Pay

Individuals who work full-time or part-time will earn enough money that are taxable by the IRS. When an American works oversees, he is still entitled to pay taxes to his native land plus the country that he works for.

Understanding Tax Brackets

Tax brackets are the divisions at which tax rates among individuals vary. An important distinction of these brackets is based on the gross income of an individual or a company. Imagine there are three brackets of taxation: 10%, 20%, and 30%. When you earn $1 to $10,000, the tax cuts though your income by 10 percent. 20 percent deduction applies to income that ranges from $10,001 to $20,000. While you earn above $20,000, you are likely to be deducted 30 percent from your earnings.

The bigger your income, the larger taxable amount will be deducted from your gross revenue.

Importance of Filing Accurate Tax Returns

As we see, taxes definitely involve complex figures. There is a law on taxation that entails individuals to pay due taxes accurately otherwise penalties are applied. To avoid the inconvenience of dealing with IRS problems, it is highly recommended to hire the services of a tax attorney or a certified accountant. Besides, nobody would want to be charged of tax problems.

Warning!

Failure to pay taxes is an open invitation to the IRS to haunt you anytime. Underpayment of taxes will only accumulate your financial debts due to the penalties and interests provided by law. These are calculated based on the time elapsed from the deadline to the actual payment. Moreover, when no corresponding action is taken, the IRS may take legal action against you. Remember, the IRS can truly be intimidating. These tax collectors can drain you financially by mortgaging or levying your properties.

Understanding the Essence of Tax Deduction

Do you ever wonder who sponsored the construction of the pavement street on your sidewalk or the smooth highway that you drive through everyday? Well, stand in front of a mirror and point your fingers to the person you see. Certainly you must be credited for all these public amenities surrounding you. Diligent taxpayers like you are attributed for the construction of all communal facilities that benefit the whole society.

The taxes you pay are basically used for public consumption. The government generates money to support their existence. Perhaps you’re asking why support the government anyway? Simple: visualize your state without a governing body, without laws, and without infrastructures. What do you see?

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