As a member of the working class in the United States, you are required by law to pay income tax or state income tax, which is determined as a certain percentage of your monthly salary.
As you may know, taxes are the driving factors which allow the government to pay for infrastructures, public transportation, and many more. It is your duty as a citizen to promptly file your income tax return, and pay state income tax as deemed by your tax rates.
First of all, how do you file for your income tax? These days, you can file for your income tax returns online, or you can do so by getting the forms, completing them, submitting the other needed documents, and mailing them.
Complete your tax return as soon as you receive your W2 and 1099 forms so you can determine whether or not you’ll be getting a refund; filing early is the best way to get your tax refund quickly, since most people wait until the deadline!
What are the documents you need to include when filing for income tax return? In order for the state to determine how much is to be deducted from your income, they will check any tax-deductible expenses that you have. If you are a home business owner, you can be eligible to write off specific expenses from your income tax. This may include phone bills, car usage, travel expenses, and other items as long as they are used in your business. These are all part of the income tax preparation.
Now, how do you know what your income tax rates are? You can actually check this online, as there are several sites that offer a calculator that helps you determine to which tax rate bracket you belong to. These sites also include a sample computation of your income tax for easier understanding. Note that tax rates can vary from year to year, so be sure you check them to be well-informed.
For example, if you are single, and you earn about $100,000 per year as your taxable income, you would belong in the 25% tax bracket as of 2007. By calculation, your income tax for that year will amount to $22,111. If you are married but are filing your income tax separately from your spouse, your income tax for that same year will fall under the 33% bracket. So from your $100,000 income, your tax will be $22,600.
How about for people who do not meet the minimum taxable income requirement to be included in a specific tax bracket? Should they also be paying income tax? The solution to that can be found in the Earned Income Tax Credit or EITC, which is also referred to as the Earned Income Credit (EIC).
Simply put, this means that qualified persons who fit the criteria can receive tax refunds. This is applicable for low-income families and low-income workers. Earned Income Tax Credit can be applied for by filing an income tax return, even if unqualified.
The United States Internal Revenue Service (IRS) offers a free EITC Assistant online, to help you find out if you are eligible for EIC, just by answering some questions. You can learn more about this option if you visit the IRS site today.