Taxation in the usa

Taxes are compulsory contributions done by the American citizens and residents to federal, state and local governments. This money is used by the government to provide services to the people living in America. Taxes are collected by Internal Revenue Service (IRS) which is a department in the United States Treasury.

Taxation in the USA has a tax code, which is referred to as Internal Revenue Code of 1986. It is probably the most complex in the world. The main aim of the Internal Revenue Code of 1986 is to raise revenues. The code is also used for other purposes, for fulfilling the federal government's political, social and economic objectives.

Payments are made to four levels. They include:

- the Federal government;

- the Local government, which includes districts, municipalities, counties as well as townships;

- the Regional government which includes transit districts;

- the State government.

There are different types of taxes namely income tax, sales tax, property tax, payroll taxes, custom duties on import goods and estate and gift tax.

The money you get from wages and self employment is called “Taxable Income”. A certain amount of this money is withheld from your paycheck. The amount of tax you pay depends on how much you earn. The rate of income tax depends on how much an individual earns. Each tax year is from January 1st to December 31st. The last day to file your income tax return is April 15th.

Social Security taxes provide benefits and services to retired workers, disabled workers, deceased workers and their families.

Medicare Taxes pay for the services required by the people over the age of 65 years. To enjoy these Social Security benefits and Medicare benefits a person needs to work for about 10 years.

Sales taxes are local and state taxes which are added to the amount while buying items. This tax depends on the cost of the item. These taxes provide services to the police, firemen and maintenance of roads.

Property Tax is to be paid for your property like house and land. This tax provides support to government schools and other services.

Comprehension

1. Agree or disagree with the statements.

1. Taxation in the United Kingdom involves payments to four different levels.

2. Her Majesty's Revenue and Customs (HMRC) is responsible for the collection of taxes and the payment of some forms of state support.

3. Central government revenues come primarily from grants.

4. The financial year in the UK starts on 6 April in one year and ends on 5 April in the following year.

5. National Insurance contributions are paid only at a fixed rate.

6. P60 shows how much you have earned during the year and how much tax you have paid on these earnings.

7. The USA Internal Revenue Code of 1986 is the most complex in the world.

8. The rate of income tax depends on how much an individual earns.

9. Property Tax depends on the cost of the item.

10. To enjoy the Social Security benefits and Medicare benefits a person needs to work for about 15 years.