Concept explainers
Discuss the basic principles of income taxes and determine your filing status.
To discuss: The basic principles of income taxes and person X’s filling status
Explanation of Solution
The basic principles of income taxes and person X’s filling status:
Every individual has a tax bases and tax rate. That is base multiplied with rate. The tax’s name will denote the tax base and the tax base for income tax is denoted as income for the sales tax. Here the base is the sales. Income is common to the tax purpose and accounting purpose. There are some concept worked in the tax calculation and filling. The standard deduction and itemized deduction are the two important parts.
The main concepts are exclusion, deductions, credits and rates.
The concept of tax rates is progressive means the tax rate will increase if income increases. The taxes are classified into various individual characteristics.
- Single
- Joint
- Married filing separately
- Head of households
For example,
Person X has an income of $38,700 so the taxable payable will be $4,345.5 as he comes under the filling status single.
Slab rate for different categories for the year 2019:
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