Help With Income Tax And Payroll Software
There are many websites on the Internet today that gives much needed income tax help for those who have no idea of what's going on during tax time. Income tax is a tax paid on income, unfortunately no matter how little it is. It's paid by employees and people who are self-employed and may also be payable if you are not working but you have an income, such as a retirement pension or an occupational pension. Not all types of income are taxable and it will seldom be the case that all of your income is taxed. There is no minimum age at which a person becomes liable to pay income tax. What matters is your income. If this is below a certain level, no tax is payable. There is actually no single definition in tax law of income. Income tax law divides various types of income into different schedules. If an item comes within a schedule it counts as income and income tax must be paid on it. The way the tax must be paid will depend on which schedule it falls into..
These are the five main steps in calculating income tax:-
ONE: Find the total of all your income for the period, including wages or self employed income, social security benefits, income from property rental, interest from bank accounts etc
TWO: remove any tax exempt income. See if you can claim any tax relief on any of the money you have spent in the tax year. This is usually for the self-employed people to buy items for their business. Deduct this tax relief. That leaves income on which tax may be payable.
THREE: See what tax allowances you are entitled to. Youll be entitled to your personal allowance, plus age related additions if appropriate. Deduct these allowances at this stage of the calculation.
FOUR: Multiply the taxable income by the correct tax rate. This will give you the tax to be paid that year, unless you are entitled to married couples allowance for over 65s.
FIVE: If entitled deduct the percentage rate for married couples allowance for over 65 year olds.
Some income is exempt from income tax, which means that tax is never paid on this income. This income should therefore be put aside before any tax calculation can be done. Examples of income which is exempt from tax include premium bond prizes, housing benefit, child benefit and profit-related pay. It is therefore necessary to check whether any income is exempt from tax before doing a tax calculation. For any help or assistance try the internet. Of course the IRS can give you income tax help and answer any questions you may have
These are the five main steps in calculating income tax:-
ONE: Find the total of all your income for the period, including wages or self employed income, social security benefits, income from property rental, interest from bank accounts etc
TWO: remove any tax exempt income. See if you can claim any tax relief on any of the money you have spent in the tax year. This is usually for the self-employed people to buy items for their business. Deduct this tax relief. That leaves income on which tax may be payable.
THREE: See what tax allowances you are entitled to. Youll be entitled to your personal allowance, plus age related additions if appropriate. Deduct these allowances at this stage of the calculation.
FOUR: Multiply the taxable income by the correct tax rate. This will give you the tax to be paid that year, unless you are entitled to married couples allowance for over 65s.
FIVE: If entitled deduct the percentage rate for married couples allowance for over 65 year olds.
Some income is exempt from income tax, which means that tax is never paid on this income. This income should therefore be put aside before any tax calculation can be done. Examples of income which is exempt from tax include premium bond prizes, housing benefit, child benefit and profit-related pay. It is therefore necessary to check whether any income is exempt from tax before doing a tax calculation. For any help or assistance try the internet. Of course the IRS can give you income tax help and answer any questions you may have
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