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 tax (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

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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

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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

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Capital Gains Tax

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

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Sales Tax

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

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Gross Receipts Tax

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

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Value-Added Tax

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

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Excise Tax

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,

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Property Tax

In the United States, property taxes, which are generally assessed on immovable assets like land and buildings. They are a crucial source of funding for state and municipal governments. In the United States, property taxes account for more than 30%

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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

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Estate and Inheritance Tax

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

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Wealth Tax

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

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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

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Statutory Employees

Statutory employees, as defined by the IRS, are typically certain types of independent contractors who are treated as employees for tax withholding purposes. They can deduct business expenses related to their work on Schedule C of Form 1040, just like

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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.