Benjamin Franklin once said, "In this world, nothing is certain but death and taxes."
Taxes are an inevitable necessity for all governmental levels. Tax law is the system of statutes and regulations explaining and defining government levies on economic transactions.
In the US, tax law refers to the tax code which constantly expands and changes. It is a legal specialty in the US which allows a Tax Attorney to focus on both domestic and international tax issues.
Examples of Taxes
An excise tax is an indirect tax - either ad valorem or specific - applied to a merchant, producer, or intermediary. Excise taxes are applied primarily to high-profile products such as: gas and oil, alcohol, tobacco, and firearms. They're also applied to ineligible retirement fund transactions.
Income taxes are taxes levied on personal income earned on an annual basis. Income taxes can be levied on the federal, state, and local level. Income taxes are paid on a progressive system, with higher rates corresponding to higher income brackets.
Social Security Tax
Social security tax or Federal Insurance and Contributions Act (FICA) is paid on earned income and only up to a certain upper wage cap called the "Social Security Wage Base". The wage base increases every year, and for 2008, it is $102,000. This is the maximum earned gross income on which Social Security may be levied.
Medicare tax is levied on a person's income and goes to pay for the Medicare program. Medicare is a national health insurance program for the disabled and elderly.
Estate and Inheritance Taxes
This family of taxes is paid on the death of a person. Estate taxes are paid by the representatives of the estate (the executor) and are paid on the whole value of the estate. Inheritance taxes are paid by each individual beneficiary based on the value of the portion of the estate inherited.
A gift tax is levied on a person who gives money or assets to another without the expectation or receipt of fair compensation. The donor is expected to pay the gift tax, although by special arrangement the receipient may elect to do so instead. Exceptions are made when the gift is to a spouse who is a US citizen, or a gift worth up to $12,000 per individual. The gift may be worth up to $24,000 for a married couple. The recipient will be liable for taxation if he or she makes a profit from the gift.
Sales tax is a consumption tax, or a tax on the purchase of goods or services. This tax is added onto the retail price of a product or service and is collected directly by the seller or vendor from the buyer. The sales tax is usually a percentage of the sale price and is set by state and local jurisdictions. Unlike other countries, the US does not currently collect a national sales tax.
This is not a comprehensive list of taxes collected and enforced by the IRS. There are many other types and categories. If you have any questions or issues regarding taxes in the US, speak with a local tax attorney. Tax laws are complex and constantly changing, tax lawyers make sure you, your family, and your property are protected
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Taxpayers should calculate their itemized deductions and compare that to their standard deduction before deciding which to use.
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