File tax
Origin of Tax System in the US
Taxes are imposed on the citizens by the government to raise revenues . The origin of tax system in the US can be traced back to the colonial periods when the colonists were used to tax heavily on almost every item. Situation has changed since the revolutionary war and the income tax on the modern context was first introduced during 1862."> In 1867, a flat rate of income tax was proposed and 1872 is year when everything regarding the income tax was restructured and re-scheduled to its entirety . Income Tax Act 1894 provides the basis of today ?s income tax policies. At that time, it was 2% of income in excess of $4,000 . Over the years and especially since 1913, the income tax acts have started to give rise to the complexity. Eighteen pages Income Tax legislation of 1913 has reformed into more than thirteen hundred pages in 1986 ! Maximum rate of tax was imposed during the World War I vide War Revenue Act of 1917 and it was as high as 67% compared to only 13% of 1916 .
Consequently, the maximum individual tax rate was reduced to 43% in 1924 and further to 25% in the year 1926 . Once again, in the year of 1932 the individual tax rate was increased to 63% and reached to 94% by the year 1944 . In place of those times flat rate system, now there exist six graduated bracketed system in which rate of tax varies as per the range of income. Present rates for those six brackets are 10%, 15%, 25%, 28%, 33% and 35% .
Categories of Taxes
Though, income tax constitutes a major part of the tax discussions, there exist other type of taxes also. Customs and excise tax, Capital stock tax, Excess Profits tax, Liquor tax (1934), Wage tax (1935), Energy tax, property tax, value added tax, sales tax, etc . are few to name.
How to file Tax?
Filing Tax is a complex operation. Because of the ambiguity in the tax laws, there are many opportunities of litigations . Peoples are not fully aware about all the exemptions, deductions and refund policies in vogue. Government has designed several forms in this regard to simplify the tax filing procedure. Taxes are to be filed in a specified form suitable for the purpose. Form 1040 is the US individual?s tax returns form. Besides 1040, one has to collect and manage various other forms . Form W-2 (Wage and Tax statement), Form W-4 (Employee ?s withholding allowance certificate), Form 720 (Quarterly Federal Excise Tax Return) etc . are few such forms. Instructions for filling those forms are available in a separate Inst form for each category . For example, form 1040 Inst is the instruction form for form 1040 .
Other articles
