Categories: Income

Federal Income Tax: Understanding Your Tax Obligation in Forex Trading

Federal income tax applies to the income earned by individuals, corporations, trusts, and other entities. Taxpayers are required to file an annual income tax return to determine their tax liability. The income tax rate for individuals is progressive, meaning the tax rate increases as income increases. The government also collects a variety of taxes on businesses, such as payroll taxes, capital gains taxes, estate and gift taxes, and excise taxes. All taxpayers must pay federal income tax, however, certain people may qualify for certain credits and deductions to reduce their tax liability. Understanding the rules of the federal income tax system can help taxpayers make financial decisions that minimize their tax burden.

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