Taxation 101
Companies and individuals must pay a certain amount of tax to the government each year. Keep in mind that every dollar you pay in taxes was first earned as income. Most taxes fall into one of three categories: taxes on your income, taxes on your purchases, and taxes on your assets. The point of collection, or when you make your tax payment, is one of the key distinctions between the various tax kinds given below.
Personal taxes (Income tax)
Individual income taxes (or personal income taxes) are levied on earnings, salaries, investments, or other sources of income earned by an individual or household. Many individual income taxes are “progressive,” which means that the tax rate rises as the taxpayer’s
Corporate Income Taxes
Governments at the federal and state levels levy a corporate income tax (CIT) on business profits, which are calculated as revenues (what a company makes in sales) minus costs (the cost of doing business). Businesses in the United States are
Payroll Tax
Payroll taxes are levied against employee wages and salaries to fund social insurance schemes. The majority of taxpayers will be familiar with payroll taxes by looking at their paystubs at the conclusion of each pay period, where it is plainly
Capital Gains Taxes
In general, capital assets encompass anything that is held and used for investment, pleasure, or personal use, such as stocks, bonds, residences, vehicles, jewels, and works of art. A “capital gain” is the consequence of any growth in the value
Sales Taxes
Sales taxes are a type of consumption tax paid on products and services sold at retail. If you live in the United States, you are probably already aware of the sales tax because you have probably noticed it printed at
Gross Receipts Taxes
Regardless of profitability and without accounting for business expenses, gross receipts taxes (GRTs) is levied on a company’s gross sales. This is a significant distinction from other taxes that companies must pay, such as those that are calculated according to
Value-Added Taxes
A consumption tax known as a value-added tax (VAT) is imposed on the value contributed throughout each stage of the production of a product or service. Each business in the production chain is required to pay VAT on the value
Excise Taxes
Excise taxes are levied on a specific commodity or activity in addition to a general consumption tax, and they account for a very tiny and volatile portion of total tax receipts. Excise taxes on things like cigarettes, alcohol, soda, gasoline,
Property Taxes
In the United States, property taxes, which are generally assessed on moveable assets like land and buildings, are a crucial source of funding for state and municipal governments. In the United States, property taxes account for more than 30% of
Tangible Personal Property (TPP) Taxes
Property that can be moved or touched is referred to as tangible personal property (TPP), and examples include commercial machinery, merchandise, furniture, and automobiles. TPP taxes account for a small portion of all state and local tax revenues, but they
Estate and Inheritance Taxes
The worth of a person’s possessions at the time of their death is subject to both estate and inheritance taxes. In contrast to inheritance taxes, which are paid by persons who inherit property, estate taxes are paid by the estate
Wealth Taxes
Wealth taxes are often levied on an individual’s net wealth (total assets minus any debts payable) that exceeds a specific threshold each year. For instance, a person with a net worth of $2 million would have $2.5 million in assets
I.R.C. § 199A – Qualified Business Income
The Tax Cuts and Jobs Act which was enacted on December 22, 2017, created a new provisioncalled Qualified Business Income (QBI) under Sec. 199A.Sec. 199A(a): Effective for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026, ataxpayer
I.R.C. § 959 – Previously Taxed Earnings and Profits (PTEP)
The term PTEP refers to earnings and profits (E&P) of a foreign corporation attributable to amounts which are, or have been, included in the gross income of a U.S. shareholder under Sec. 951(a) or under Sec. 1248(a). Sec. 959(a)(1): Distributions
Note: Always seek advice from a CPA or the IRS if you’re unsure of what tax you or your company should pay or what form is necessary. Post a job in our free marketplace to find a CPA, an Enroll agent, or a tax attorney.