ISSN: 1758-4272

International Journal of Clinical Rheumatology

Accounting For Income Taxes (Accounting Income Taxes)

  Income Tax simple definition: Wondering what is income tax and how does it work? Income tax in India is a tax paid by individuals or entities depending on the level of earnings or gains during a financial year. The Government of India decides the rate of income tax as well as income tax slabs on which individuals are taxed. Those under higher income slabs are taxed at higher rates. The taxable income slabs are changed from time to time, keeping in mind the price levels. Taxes levied on the earnings of companies and individuals are referred to as income taxes. Earnings subject to income taxes can come from diverse sources, including wages, salaries, dividends, interest, royalties, rents, gambling winnings, and product sales. In the United States, income tax is one of the biggest sources of revenue for the federal government. The U.S. income tax system is a voluntary system. Not in the sense that paying income tax is optional, but rather the federal government depends on each taxpayer to voluntarily report all of their earnings on a tax return and compute the appropriate tax themselves. The IRS enforces tax laws and ensures that everybody pays tax properly. The agency gets a copy of a person’s W-2 form each year, and if she does not file a return, the agency can easily calculate her tax and send her the bill. The IRS can also charge interest and penalties to people who pay tax late, and file lawsuits against tax evaders.

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