posted by admin on Jul 29
Tax is a fee that the government imposes on any product or income. It is generally imposed on the citizen for a greater cause. The IRS Internal Revenue Service possesses the right to collect taxes on behalf of the Federal government. If tax is imposed on the cost of an item or on services, it is called indirect tax, whereas, when tax is imposed on corporate or personal income, it is called direct tax. The tax law is amended each year to bring any change to the structure of tax.
Types of tax
The different types of taxes that are levied on the citizens are as follows:
Personal property tax
Property tax
Corporation tax
Wealth tax
Income tax
Capital Gains tax
Retirement tax
Poll tax
Value added tax
Tariff
Excise
Changes in tax law 2010
You should be aware of the changes made in tax law, so that you can pay your dues on time.
Some recent changes in the US tax laws, 2010, are:
Roth IRA conversion: You can convert a traditional IRA to a Roth IRA and you can pay the tax for the conversion over two years, i.e. 2011 and 2012.
Estate tax is nil: For the year 2010, the estate tax is nil. However, this implies that in 2011, you will have to pay both estate tax and generation-skipping transfer tax (GSTT).
Reduction in federal gift tax rate: Though the gift tax still exists in the year 2010, it is applicable if the lifetime exemption amount exceeds $1 million. The tax liability has been reduced to 35% from 45%. So, you don’t need to pay gift tax during your lifetime, if you gift less than $ 1 million.
AMT exemption amount decreased: There is a significant reduction in the AMT or Alternative Minimum Tax. The AMT for 2010, are:
Married filing separately: $22,500
Married Filing Jointly: $45,000
Single/Head of Household: $33,750
If you know the changes in the tax law, 2010, mentioned above, you will be able to pay your taxes within the due date and avoid legal hassles in the future.