If you work for a company, the company will probably be withholding taxes from your paycheck and sending that money to the IRS on behalf of the government. They do this to avoid owing penalties or interest at the end of the year. If you're self-employed, you are responsible for figuring out how much you owe (in other words, estimating your taxes) before April 15th.
The Internal Revenue Service (IRS) recently released data on who pays income taxes in the United States. The data is from tax year 2015, the most recent year for which complete data is available.
In 2015, there were approximately 143 million individual income tax returns filed with the IRS. Of those, about 50 million (35%) had no tax liability. This means that they either had no income to tax or they qualified for enough deductions and credits that their tax liability was zero.
Approximately 53% of all taxpayers paid federal income taxes at marginal rates between 10% and 15%. Roughly 4% of taxpayers paid federal income taxes at marginal rates above 35%.
The remaining 13% of taxpayers fell into a few different categories: those who paid no federal income taxes because their incomes were too low, those who paid Alternative Minimum Tax, and those who had refundable credits that exceeded their liability.
So, who pays income taxes in the United States? In short, a little over half of American taxpayers do. However, the vast majority of the tax burden is shouldered by a relatively small number of people.
Why do we pay income tax?
There are a few different reasons why we pay income tax. The first reason is that it is a requirement of the government. The second reason is that it is used to fund public services. The third reason is that it is used to stimulate the economy.
The first reason we pay income tax is because the government requires it. The government uses the money from income taxes to fund public services, such as roads, schools, and parks. Income taxes are also used to Stimulate the economy. When people have more money in their pockets, they are more likely to spend it, which helps businesses and creates jobs.
How much money do we make?
In order to come up with an answer to the question of how much money do we make, the IRS looked at a variety of factors. They considered our gross income, which is the total amount of money we earn from all sources before taxes and other deductions are taken out. They also looked at our adjusted gross income, which is our gross income minus certain adjustments, such as IRA contributions or alimony payments.
The IRS also took into account our filing status and number of dependents when determining how much money we make. For example, if we are married and filing jointly, our incomes will be combined and taxed at a higher rate than if we were single filers. If we have children or other dependents, we may be eligible for certain tax breaks that can lower our overall tax bill.
In addition to our income, the IRS also considered our assets when determining how much money we make. They looked at things like savings accounts, investments, and property ownership. The value of these assets can increase or decrease over time, so the IRS uses something called fair market value to determine their worth for tax purposes.
Based on all of these factors, the IRS came up with an estimate of how much money each of us makes every year. This information is important because it helps them determine how much taxes we owe. It also helps them figure out whether we qualify for certain tax breaks or credits.
Who has to pay income tax?
The IRS uses a few different methods to determine who has to pay income tax. The first is by looking at the taxpayer's filing status. There are five different filing statuses: single, head of household, married filing jointly, married filing separately, and widow(er) with a dependent child.
The second method is by taking into account the taxpayer's taxable income. This includes money earned from wages, salaries, tips, interest, dividends, capital gains, pensions, IRAs, and other sources.
Those who have a filing status of single or head of household and a taxable income of less than $12,200 do not have to pay any federal income taxes. For those who are married filing jointly or qualifying widow(er)s with a dependent child and have a taxable income of less than $24,400 also do not have to pay federal income taxes.
If a taxpayer's taxable income is more than these amounts but less than the standard deduction plus the personal exemption amount (which vary depending on the taxpayer's filing status), then the taxpayer may still not owe any federal income taxes depending on their deductions and credits.
It is important to note that even if you do not owe any federal income taxes for a particular year, you may still be required to file a tax return. For example, if you had significant amounts of self-employment income or made estimated tax payments during the year, you will need to file a return in order to get a refund of any over
The IRS's findings on how they calculated our income tax
The IRS recently released findings on how they calculate income tax. Here's a breakdown of their findings:
The first thing the IRS looks at is your filing status. This includes whether you're single, married, or head of household. They then look at your taxable income and apply the appropriate tax rate.
The next thing the IRS looks at is any deductions or credits you may be eligible for. This includes things like the standard deduction, personal exemptions, and child tax credits. After applying these deductions and credits, they come up with your final tax liability.
So who pays income tax? Ultimately, it depends on your taxable income and filing status. The higher your income, the more likely you are to owe taxes. And if you're married filing jointly, both spouses are responsible for the taxes owed.
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