What Is Income Tax?
Income Tax is a tax on the money people earn. Usually, the tax is a percentage of your earnings, and is due every year on April 15. Income taxes are paid both to the State and Federal governments. These taxes are used for funding the operations of the government, from national security to local education.How Much Income Tax Will I be Paying?
The amount of tax you pay is generally a function of your income minus any deductions that the tax law allows. The amount of taxes you have to pay is set by legislators. The taxes are collected by the Internal Revenue Service (IRS).What Happens if I Don't Pay all of My Taxes? What if I Only Pay Part of Them?
You are required to pay taxes by law. If you don't, the government can demand the money you owe and even put you in jail for tax evasion. If you underpay your taxes, you'll probably have to face an audit.What is an Income Tax Audit?
When the IRS thinks that you haven't paid your fair share of taxes, they may perform an "income Tax audit" of your tax return. They usually come to this conclusion when they think either you 1) haven't reported all your income, or 2) made deductions you shouldn't have.In an income tax audit, you meet with an IRS officer who asks you about your tax return. You'll have to convince the officer that you fully reported all your income and that all the deductions you declared were appropriate. If you succeed, your tax return will be closed and you have nothing to worry about. If you don't succeed, then you may be subject to additional taxes and monetary penalties. Therefore it is very important to keep your expense records that substantiate the deductions that you claimed on your tax return.
