The term income tax refers to a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. By law, taxpayers must file an income tax return annually to determine their tax obligations. Income taxes are a source of revenue for governments.
Note: Income tax isn't income. It is the amount of tax that you (and if married, your spouse) paid on your income earned from work. Your income tax amount shouldn't be the same as your adjusted gross income.
What is income tax? Taxes levied on the earnings of companies and individuals are referred to as income taxes. Earnings subject to income taxes can come from diverse sources, including wages, salaries, dividends, interest, royalties, rents, gambling winnings, and product sales.
Why Do We Pay Taxes? Taxes are the primary source of revenue for most governments. Among other things, this money is spent to improve and maintain public infrastructure, including the roads we travel on, and fund public services, such as schools, emergency services, and welfare programs.
Who Are The Tax Payers? Any Indian citizen aged below 60 years is liable to pay income tax if their income exceeds 2.5 lakhs. If the individual is above 60 years of age and earns more than Rs. 3 lakhs, he/she will have to pay taxes to the government of India.
In general, it is illegal to deliberately refuse to pay one's income taxes. Such conduct will give rise to the criminal offense known as, “tax evasion”. Tax evasion is defined as an action wherein an individual uses illegal means to intentionally defraud or avoid paying income taxes to the IRS.
Together with payroll taxes (used to fund social programs like Social Security and Medicare), income taxes amount to roughly 80 percent of all federal revenue, and are the essential fuel on which our government runs.
What income is subject to income tax? Individuals must pay taxes on income, including wages, salaries, tips, commissions, business income, rents, dividends, alimony, capital gains, distributions from traditional IRAs, unemployment benefits, and Social Security benefits.
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The most significant consequence would be a massive inflation. The government requires money to carry on its business and if it wasn't collecting dollars via taxes, it would have to create them by borrowing or by printing them.
Individuals with Net taxable income less than or equal to Rs 5 lakh will be eligible for tax rebate u/s 87A i.e tax liability will be nil of such individual in both – New and old/existing tax regimes. Basic exemption limit for NRIs is of Rs 2.5 Lakh irrespective of age.
College and Other Expenses
65 years old
As long as you are at least 65 years old and your income from sources other than Social Security is not high, then the tax credit for the elderly or disabled can reduce your tax bill on a dollar-for-dollar basis.
For example, in the year 2021, the maximum earning before paying taxes for a single person under the age of 65 was $12,400. If your income is below the threshold limit specified by IRS, you may not need to file taxes, though it's still a good idea to do so.
For example, for the 2021 tax year (2022), if you're single, under the age of 65, and your yearly income is less than $12,550, you're exempt from paying taxes. Ditto if you're married and filing jointly, with both spouses under 65, and income less than $25,100.
If you're 65 and older and filing singly, you can earn up to $11,950 in work-related wages before filing. For married couples filing jointly, the earned income limit is $23,300 if both are over 65 or older and $22,050 if only one of you has reached the age of 65.
Older people can earn a little bit more income than younger workers before they need to submit a tax return. People age 65 and older can earn a gross income of up to $14,250 before they are required to file a tax return for 2021, which is $1,700 more than younger workers.
Earned income does not include amounts such as pensions and annuities, welfare benefits, unemployment compensation, worker's compensation benefits, or social security benefits.
Full Retirement and Age 62 Benefit By Year Of Birth
|Year of Birth||Full (normal) Retirement Age||Months between age 62 and full retirement age|
|1958||66 and 8 months||56|
|1959||66 and 10 months||58|
|1960 and later||67||60|