Income tax is a kind of tax paid by those who are employed and self-employed which is based on their income. Income coming from pension or savings can also be covered by income tax. Personal income tax is often filed at the end of the year. Usually a taxpayer would have to prepare two forms: for those who have not paid enough and for those who have exceeded the amount to pay.
Aside from employment salaries, other sources of income which are subject to tax are individual salaries coming from investments, property, and trade. An individual’s income tax would rise along with persons reported income, making it a progressive tax. A progressive tax refers to a tax rate that increases when the taxable base increase.
To calculate your income tax, gather all possible sources of income, not only from earnings as an employee. Do not include housing benefits, tax credits, maternity or disabled living allowances. You could always check with IRS, their website or the local taxation department about what income are tax-free and taxable.
Read the rest of this entry
