Income Definition In Taxation

Taxes have been called the building block of civilization.

Income definition in taxation. Taxes have been called the building block of civilization. Income tax levy imposed on individuals or family units and corporations. A charge imposed by government on the annual gains of a person corporation or other taxable unit derived through work business pursuits investments property dealings and other sources determined in accordance with the internal revenue code or state law. Income tax is used to fund public services pay government.

Taxation imposition of compulsory levies on individuals or entities by governments. Individual income tax is computed on the basis of income received. Taxes are levied in almost every country of the world primarily to raise revenue for government expenditures although they serve other purposes as well. The term taxation applies to all types of involuntary levies from income to capital gains to estate.

It is usually classified as a direct tax because the burden is presumably on the individuals who pay it. Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. For individuals income is most often received in the form of wages or salary. ˈincome tax return noun an official form that has to be completed with information about one s income and expenses and sent to a government department.

To calculate taxable income which. A charge imposed by government on the annual gains of a person corporation or other taxable unit derived through work business pursuits investments property dealings and other sources determined in accordance with the internal revenue code or state law. An income tax may be a flat tax which means that all citizens pay the same percentage of their incomes to the government most of the time however an income tax refers to a. A tax on a person s individual income from wages and salary gambling winnings and some other sources.

Importantly capital gains are usually excluded from income taxes and are subject to their own system of taxation. Learn more about taxation in this article. Gross income refers to an individual s total earnings or pre tax earnings and ni refers to the difference after factoring deductions and taxes into gross income.