What is Tax and Why it is Important to Know?

Tax laws could be complex and overwhelming for some and to make it worst, tax software available does not make them less too. Luckily, there are principles and rules that can help in having better understanding of what taxes are about and also, the associated rules with it. With this in mind, if you are selling filtro prensa, propane gas and other related products as your business, you’d be able to file taxes accurately and avoid fines and penalties.

Importance of Taxation

The US has a huge budget for the maintenance of hospitals, wage of government employees, pensions and roads. All of it are consuming massive resources. By taxing businesses and individuals, it can help in raising financial resources for paying the civic and social needs.

The President of the US and the Congress as well are in charge of writing and approval of tax laws of the country. Internal Revenue Service will then enforce the law, collect tax, process tax return, issue tax refunds and turn the money collected to US Treasury. It is their department that is assigned to pay for government expenses.

The President and Congress are additionally in charge for preparing federal budget. The government should raise more money that come in form of taxation or by increasing national deficit when the government spent too much. The national deficit is then created when a country needs to borrow in order to pay for services and programs.

Everyone is Taxed

For everyone who makes income or profit, you’ll be eligible to income tax. So whether you are an organization, estate, person and company, you will not be exempted. Both organizations and people should report their incomes onto their tax returns and then calculate their taxes due.

There are organizations though that are exempted for taxation but still, need to file returns. Their tax-exempt status may be revoked in the event that the organization failed to meet the criteria. People can be exempted too for filing tax returns assuming that they are earning less than the given limit that are adjusted for annual inflation. The tax amount owed will be based on the amount you or your business is generating. It is all up to you in taking control of your tax situation to reduce it.