What Is Federal Income Tax?
Federal Income tax is a federal tax that is levied by the U.S federal government on the annual income of individual people, companies, trusts, and other legal entities. It is calculated according to the taxable income and it is progressive tax whereby those who earn higher are taxed at higher rates. This tax is administered and collected by the Internal Revenue Service (IRS). Federal income tax provides financial support to basic government activities that include defense, medical plans, Social Security, infrastructure, research and public services which provide a stable economy of the country. Taxpayers are required to file tax returns every year in which they report the income earned and also claim deductions and also calculate the amount of tax payable or due. What Is Federal Income Tax