Income Tax Preparation Question
Any income earned through employment, self-employment, or investments is subject to taxation at the Federal, state, and sometimes county levels. Other sources of taxable income include lottery winnings, alimony payments, and gambling proceeds.
Your tax deductions reduce your gross income amount before taxes are calculated. Typical deductible expenses may include:
The Internal Revenue Service (IRS) offers a deduction if you have been unemployed for at least 30 consecutive days during the tax year. This includes payment of state unemployment insurance, union dues, and out-of-pocket job expenses such as gas or car maintenance costs. In addition to employment issues, there are other deductions based on elections to several types of income.
Tax brackets determine the percentage of tax owed on income. Tax rate refers to the dollar amount paid per dollar earned. This can be the same or different, depending on income.
Tax credits directly reduce the amount of tax owed, while tax deductions reduce your taxable income.
You will file a tax return if you had any Federal or state income tax withheld, and the amount of money you owe is greater than zero. You may also be required to make estimated payments throughout the year.
