Income taxes are levied by the Federal government, most states, and some local governments. Federal governments usually attempt to assure the collection of income taxes by requiring certain pay-as-you-go procedures (e.g., withholding requirements for employees and estimated tax prepayments for other taxpayers). The responsibility for administering the federal tax rests with the Treasury Department. Administratively, the IRS is part of the Department of the Treasury and is responsible for enforcing the tax laws. The income tax base is the amount to which the tax rate is applied. In the case of the Federal income tax, the tax base is taxable income. Taxable income is gross income reduced by certain deductions. The tax rates are applied to the tax base to determine a taxpayers liability. The tax rate is progressive. A tax is proportional if the rate of tax remains constant for any given income level. For example, Susan is a single taxpayer, and has $12,000 of taxable income. She pays a tax of $1,200, or 10%. If, however, Susans taxable income is $40,000, her tax will be $4,800. This will be average tax rate of 12%. The tax is progressive since higher rates are applied to greater amounts of taxable income. If a taxpayer believes that an overpayment of Federal income tax was made, a claim for refund should be filed with the IRS. A claim for refund, therefore, is a request to the IRS that it return to the taxpayer the excessive income taxes paid. A claim for refund generally must be filed within 3 years from the date the return was filed or within 2 years from the date the tax was paid, whichever is later. Income tax returns that are filed early are deemed to have been filed on the date the return was due. About the Author:
Eric has been a software developer for over 40 years and currently ownes and operates I-Tax Software. He enjoys photography, travel and hot spicy foods.
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