1:15
Was she a natural ginger or a fake ginger? You can’t always tell
Warning
Info
Warning
Info
LSDefine
Simple English definitions for legal terms
Income Tax
Read a random definition: epistulae
A quick definition of Income Tax:
Income tax is a type of tax that people and businesses have to pay to the government based on how much money they make. It was first allowed by the Sixteenth Amendment to the U.S. Constitution in 1913. Everyone who lives in the United States has to pay federal income tax, but not everyone has to file a tax return. The amount of tax you pay depends on how much money you make. Corporations also have to pay income tax. The government uses the money it collects from income tax to pay for things like schools, roads, and other important services.
A more thorough explanation:
Definition: Income tax is a tax that individuals and corporations have to pay on the money they earn. The government uses this tax to generate revenue for the federal budget.
For example, if you work and earn money, you have to pay income tax on that money. The amount of tax you pay depends on how much money you earn. Similarly, if a corporation earns money, it also has to pay income tax on that money.
The income tax law was established in 1913, and it is embodied in Title 26 of the United States Code. All residents and citizens of the United States are subject to the federal income tax, but not everyone has to file a tax return. The requirements for filing are found in 26 U.S.C. § 6011.
One important term to understand is "gross income," which means all income from whatever source derived. Other important definitions like "taxable income" and "adjusted gross income" can also be found in 26 U.S. Tax Code Part I.
Individuals and corporations can be exempt from paying income tax if they meet certain criteria. For example, in Cheek v. United States, the Supreme Court held that if a person truly believes that the tax laws are being unconstitutionally enforced and that their actions are lawful, they may not be guilty of willfully violating the tax code.
Another important concept is the Internal Consistency Test, which states that a tax formula used by a state must not result in an individual or corporation being taxed for the same portion of their income by multiple states. This test was upheld in Comptroller of Treasury of Md. v. Wynne.
Overall, income tax is an important source of revenue for the government, and it affects both individuals and corporations.