5 Things You Should Know About Taxes
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Be aware of scams
Each year more scams appear, most commonly in the form of fictitious websites, email and phone calls. Generally speaking, the Real IRS will contact you via official letter if they are requesting your attention or money.
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Not filing is worse than not paying
This may seem counter intuitive, but not filing is actually worse, as it is perceived as attempting to conceal your tax obligations from the IRS. This is an entirely separate offense from not paying, and while you cannot be imprisoned for inability to pay, but you certainly can be for not filing.
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Your Effective Income Tax Rate
The IRS uses six marginal tax brackets to calculate who owes how much. Updates 2104 table here: http://www.bargaineering.com/articles/federal-income-irs-tax-brackets.html But these marginal tax rates do not apply retroactively to all income earned before that bracket kicked in. Using this table you can calculate your effective tax rate by dividing your total income tax by your total taxable income.
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Dividends are taxed twice
Many may not be aware, but business owners who how dividend paying stocks are effectively taxed twice. This happens because companies have already paid tax on the earnings that they use to pay their dividends which are then taxed individually upon receipt.
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Illegal Income is still taxable
As are as the IRS is concerned, illegal income is still income and therefore subject to taxes. Famous Chicago gangster Al Capone is a perfect example as he was not put behind bars for his bootlegging, smuggling and racketeering, but for tax evasion.
