The Federal Income Tax of the United States is a levy that is applied to the taxable income of residents and citizens. Other entities are taxed as well including partnerships, estates, and trusts. And of course it's not even as simple as that, and thus the boom in expensive tax preparation services.
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The term 'income' is broadly defined, and all of it is subject to taxation. All income, regardless of its source, is lumped together and referred to as gross income. For instance commissions, wages, fees and the like count as services for which you are compensated. Other earnings to which the Federal Income Tax applies include interest, royalties, rents, dividends received, income from business, alimony received, life insurance income or annuity payments, discharge of debts, endowment contracts, pensions, and the list goes on. Taxation applies to income resulting from any illegal activities as well.
So basically if you work, then what you make is taxed. Other income that you may receive like lottery winnings or large gifts, that's taxed too.
The total amount of tax that you owe, a.k.a. your federal income tax liability, is calculated using the IRS form 1040, which in 2007 showed the total amount by combining lines 57 and the amount on line 52. Your total was line 35 plus line 32 if 1040A is the form you used. On IRS form 1040-EZ the amount you owe is on line 10.
State Income Tax
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