The Basics of Taxes in the United States

Types of Taxes

In the United States, there are several kinds of taxes. Our tax advisors at Feinstein Tax and Accounting have simplified four important types of taxes to remember!

• Income Tax: Income tax is collected from anyone in the U.S. who draws an income. This includes wages and salaries from dividends, capital gains, tips, employment, investments, etc.
• Payroll Taxes: Payroll taxes are withheld from an employee’s paychecks by the employer. It’s sent directly to the government.
• Sales Taxes: Sales taxes are collected at the point of purchase. This includes both goods and services. The purchaser pays the sales tax and the retailer pays a wholesale price that is not taxed.
• Property Taxes: Property taxes are collected from homeowners. It is based on the assessed value of the property or home. Most property taxes are annual.

Tax Collection in the U.S.

The bulk of our taxes as U.S. citizens are taken through income tax withholding. If you’re a hired worker, then you pay out of every paycheck throughout the year, rather than paying one lump sum. You’re able to reduce your taxable income by calculating any of the various contributions below.

• Contributing to a retirement fund
• Losses
• Mortgage interest deductions
• Carry-forward deductions
• Charitable contributions

Different Tax Brackets

In the United States, our federal income tax is progressive. This means that your tax rates increase as your income increases. The tax bracket that you fall into will determine how much tax you pay. To understand which tax bracket you would fall into, contact our tax advisors at Feinstein Tax and Accounting.

Tax Refunds in the U.S.

Another important basic of taxes in the United States is receiving a tax refund. A tax refund is when the government owes you money because you overpaid your taxes throughout the year. If you think you may be owed a tax refund, contact our tax advisors at Feinstein Tax and Accounting!