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IRS/Tax

IRS/Tax Laws

Federal Tax Laws are important, but so are State Tax Laws.

State tax returns are as important as Federal Tax returns are and they are required to be filed around the same time as the Federal Taxes.

Although several state tax codes are the same as Federal tax codes, there are usually some key differences between the codes in the different states which is important to take note of, before the tax process begins.   

It is the duty of Congress to write the Internal Revenue Code (IRC), which is also known as the Tax Code, which is involved in directing the process through which taxes are collected, tax rules are enforced and tax refunds are issued.

The Internal Revenue Service (IRS) refers to the government agency, within the Department of Treasury of the United States that implements the following functions.

They make use of revenue rulings, procedures and letter rulings in offering guidance.

They interpret the tax laws through their edicts and regulations, which provide guidance to the application of tax laws.  

However, the federal courts own the final say concerning how the tax code is interpreted, regardless of what the IRS interpret it to be.

The taxes collected from individuals and companies based on their income, sales, real estate and payroll are usually distributed by the Federal Government, according to the budget of the country.

These taxes are then used to finance programs such as Education, Welfare services, National defense, Social security and so on.

Types of Tax Incomes

There are two types of Income, from which taxes can be removed. They are Earned and Unearned Income.

Earned Income refers to wages, tips, commissions, sick pay, bonuses, unemployment benefits as well as other no cash benefits, while Unearned income depicts incomes such as interest, business, and farm income, rents, alimony, winnings from gambling, assets, profit from sales, and so on.