Federal Income Tax Course 2014

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1916 Revenue Act

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All income, regarfless of how it was obtained, became subject to tax. The lowest tax rate was raised from 1% to 2% and raised the top rate to 15% on taxpaters with incomes in excess of $1.5 million. The 1916 act also imposed taxes on estates and excess business profits.

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War Revenue Act of 1017

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The exemptions were lowered and income tax rates were greatly increased.

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The Revenue Act of 1918

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increased lowest income tax rates to 6%. The top rate rose to 77%. The dedline for filing was pushed to March 15th and then in 1954 it was moved ahead to April 15th.

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The Social Security Act

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Roosevelt signed the program into law on Aug. 14, 1935. The law provides payment to aged, the needy, the handicapped, and to certain minors.

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The Revenue Act of 1942

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increased taxes and the number of Americans subject to the income tax, created deduction for the medical expenses and investment expenses, and reduced the personal exemption amount for each dependent from $1,500 to $1,200 for married couples. The top tax rate reached 94% during WW2 and remained under 91% until 1964.

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The Revenue Act of 1964

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Signed by pres. Lyndon Johnson on Feb 26th, 1964. Reduced the individual tax rate and the corporate rate. A minimum deduction plus exemption was created.

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Medicare

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In 1965 Mediacare was enacted by Congress. the program provides for the medical needs of persons aged 65 or older. Also, Medicade was created. These programs required funding so the tax rates had to be increased.

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Alternative Minimum Tax (AMT)

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it is an alternative tax system of calculating a taxpayer's liability that removes many so called "tax preference items'.

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The Patient Protection and Affordable Care act of 2010

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all individuals not covered by Medicaid or Medicare must obtain heath care coverage or pay a tax penalty.

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Income tax in US

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US imposes an income tax on individuals, corporations, trusts, and certain estates. The tax is imposed on income such as wages and realization of a gains on the disposition of property.

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Tax brackets

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depend on the filer's income and filing status. There are 7 tax brackets for ordinary income ranging from 10% to 39.6%. An individual pays tax at a given bracket only for each dollar withing that bracket's range.

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Tax rates

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Can be progressive, regressive or flat. The US income tax is a progressive tax.

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Deductions

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lessen the income tax liability by reducing taxable income. If an individual in 25% tax bracket can increase the amount of his deduction by $1,000 , his tax liability will reduce by $250.

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Short-term capital gains

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are taxed at the ordinary income tax rates

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Long-term capital gains

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have lower tax rates, with special tax rates in so,e circumstances.

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Who must file a tax return

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if the taxpapyer's income is less than his personal exemption and standaard deduction, he doesn't need tp file a tax return unless he is entitled to refund of federal tax withheld from his paycheck or some other tax credits.

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Income Tax

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the fed government taxes income as its main source of revenue. Graduated scale tax rate - people who earn the most money pay a greater percentage of income tax.

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Sales tax

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is levied on the purchase of such things as furniture, clothing and movie tickects. The fed government does not have sales tax, but states, counties and cities often rely heavily on sales tax.

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Use tax

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these taxes are levied on services such as teelphone, electric and other utilities, and for leases and rentals.

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Excise Tax (Luxury Tax)

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used by both the state and federal governments. Some examples of items subject to texcise tax are heavy tires, fishing equipment, airplane tickets, gasoline, beer and liquor, firearms, and cigarettes.

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Real Estate Tax

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Real estate tax is most local government's main source of revenue. Most localities tax private homes, land, and business property based on the property's value (ad valorem).

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Personal Property Tax

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some local goverments also assess tax on personal property such as boats, cars, airplanes, appliances, and furniture.

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Tolls and Permits

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These are use fees for such public services as highways, parking lots and peblic parks.

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Estate, Gift and Inheritance Taxes

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Estate tax is imposed on the entire estate of the individual. Inheritance tax is imposed on the transfer of property after the owner's death. The beneficiary of the property must pay the tax. A gift tax is levied on large gifts from one individual to other. Estate and gift tax is on the goverment level, and many states have some type of inheritance tax.

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Tariffs

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Tariffs are taxes that government levy on imports and exports. Usually paid by persom or vendor doing the importing and passed on to the consumer.

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Value Added Tax (VAT)

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is similar to a sales tax. Hoever it is a tax on the estimated market value added to a product or material at each stage of its manufacture, production or distribution. It is ultimately passed to the consumer.