Income taxes can be tricky.
Many people hire a tax professional or use an online service.
Are you familiar with how income taxes work?
Click below to read full article on Income Taxes:
Income. The IRS estimates taxpayers and businesses spend 8.1 billion hours a year on filing. If one company did this, it would take four million full time employees. It would be one of the largest industries in the United States. As complex as the details of taxes can be, the income tax process is straightforward. A majority of Americans hire a tax professional to assist in their annual filing. The tax process starts with income, and generally, most income received is taxable.
Gross income includes work, investments, interest, pensions, as well as other sources. The income from all these sources adds together to arrive at the taxpayers’ gross income. There are many things not included in income like child support payments and gifts. From gross income, adjustments are subtracted. There are many adjustments that someone can include. The result is the adjusted gross income. From adjusted gross income, deductions are subtracted. With deductions, taxpayers have two choices: the standard deduction or itemized deductions, whichever is greater. The standard deduction amount varies based on filing status, as shown on this chart: