Internal Revenue Service: What is it?
A government agency in the United States, the Internal Revenue Service (IRS) is the agency responsible for collecting income taxes on an annual basis from residents who work and from businesses. While most citizens must pay every year, some businesses and freelancers need to pay on a quarterly basis after exceeding a threshold. This agency is a part of the United States Department of Treasury.
These income taxes are based on calendar year, and payments must be submitted by April 15 in most cases. The taxes owed are based on a sliding scale as those who make more money generally need to pay more in taxes. Though the tables do change every year, it’s generally expected that if you make more, you’ll pay more. Some citizens can be refunded money if they pay too much during the year, and citizens can also be required to pay extra if they did not pay enough during the year.
Following the logic that the more one earns, the more they pay, it seems like those who make missions need to pay even more than others. However, it is easy for those who earn extremely high revenues to use write-off strategies to get tax breaks and even be refunded after it is all said and done. Because of this, it is said that the middle class tends to suffer the biggest burden during tax time.
Prior to the founding of the IRS, there was the Bureau of Internal Revenue founded by President Lincoln in 1862 with Congress. Income tax was meant to pay for the expenses of the civil war and was supposed to be a temporary design, repealed in 1872 and reenacted in 1894.
In addition to paying income tax every year, some states also impose additional taxes for the state that need to be paid to the correct agency. In the states that impose some form of state tax, this tax will be held from a citizen’s paycheck every year in addition to what is withheld to pay for federal income tax. Because the state tax is much less than what one needs to pay for federal taxes, the amount that is taken out from the paycheck generally does well to cover the requirement. Because of this, it is common for small refunds to be provided in the cases of overpayment each year.
Citizens can download tax forms from the IRS website or hire an accountant when uncomfortable with filing their own taxes.