Tax is an amount paid by the individuals or organizations to a government through particular bodies concerned with tax dealings. Generally, Taxes are imposed in several cases but most commonly to mitigate inflation or raise government revenues.
Taxes are a major source of a government’s revenue. Therefore, it’s given great attention. The quantity of taxes collected is mostly tied to the tax rate, which decides how much inflow is expected. Every government needs funds to keep itself afloat and functional, so this is the reason why they keep changing the tax rates from time to time.
The money amassed through taxes is spent on public welfare, which is the ultimate reason behind the imposition of taxes.
Individuals’ misperceptions about taxation
As there is an adage that is rather humorous yet reflective of taxes’ essence. It goes like this that everything is temporary except death and taxes. This asserts the significance of taxes and binds It with the inevitable reality. Being completely aware of the essentiality of taxes for society, people always try to dig out ways to thwart the taxes.
There is a negative connotation attached to the word tax as people deem it as a forced means to snatch their money which they never want to give on their own as it’s a deeply loved thing; nevertheless, they are always bound to pay tax until and unless they resort to tactics of evading it. There’s a way to know how much time you’ve to pay. With the help of paystubs – employers can easily understand the taxes on their wages.
Types of Individuals taxation
As the name itself implies, individual taxes are levied or imposed on the individuals by the government. These taxes are generally charged on salaries, wages, etc., which the individuals earn. Broadly, there are two types of individual taxes; the first one is individual income tax, and the second one is personal tax.
Most of the time, two kinds of taxes are regarded as interchangeable and no different. When an individual pays off the liable tax, the excess amount is called disposable income. Overall, there are four types of taxes; income tax, property tax, excise tax, and sales tax.
Individuals’ Tax slabs or Tax rate brackets
The tax rate charged by the government varies based on the extent of income. The higher an individual’s income is, the higher tax they will be charged. Tax slabs or tax rate brackets are technical terminology that explains how much tax rate is set on a certain amount of income. Seven different tax rate brackets start from 0 to 10,275 dollars, are liable to 10% of tax and end at the income of 539,901 dollars, which is sensitive to the highest individual tax rate, i. e 37%.
The emphasis of this article will be on individual taxation and the most recent developments in the area. Over time, the developments and changes continue to emerge and happen in individuals’ taxes. The following are the latest developments.
Current Development in individuals’ taxation
- Remote worker’s taxation policy
During the coronavirus pandemic, many businesses allowed their employees to perform their work from home without the worry of venturing out of the house in such gloomy times. This was the step taken keeping in view the situation as the cases of covid victims were growing in alarming numbers.
Hence, firms wanted to safeguard their employees and keep their businesses operating, which led them to bring around a new concept of remote work. This concept explains working from anywhere other than the employer’s premise.
As a result, some states in the USA announced a new policy of independent contractors taxation focused on taxing individuals earning in other states where they are non-locals. This tax reform is still existing and is the most recent one.
Here arises a pressing question: doesn’t an individual have to pay twice taxes? So, for this, a reliable measure has been taken, and it is filing for refunding taxes. It allows individuals to file for getting refunded their taxes which they pay in two different states or places.
- Gross Income defined
To be able to calculate the taxation of fringe benefits under Sec fairly. 61.1, The IRS has issued the standards for industry fare level of non-commercial flights provided by employers.
As the amount collected through taxes is a big chunk that contributes overall to the revenue of a government, this is why taxes are given close attention, and therefore, these are changed and revised from time to time.
When the menace of Covid manifested, the government of the USA felt the imperative need to impose the remote workers taxation as the employees were no more physically present on their employer’s premises and started to work from home or other places where they felt secured and safe.
At such a time, the government of the USA came up with tax reform for levying the employees working in other states, not in their residential states. Besides, to define the gross income properly so that no flaw may incur during the taxation, a reform in the Second 61.1 has been brought.
Several developments have been made in the taxation of individuals throughout the past few years, especially during the pandemic, which has changed the whole landscape of the world. These are the notable developments that have happened recently concerning individual taxation.