Income tax is a tax that the government imposes on both individuals and businesses. These funds go to support our government infrastructure.
Why It's Important
Because it's tax season, I thought it would be appropriate to discuss income taxes. You probably get them taken out of your check every payday but do you really know how it works? When you start a job, you fill out a W4 and a state tax form (i.e. NC-4). On this form you are declaring how many exemptions you would like to take to therefore lower the amount of income tax taken out of each check. If you put 0 exemptions, you will have the maximum amount taken out every pay check. This money is then forwarded to the government by your employer. Every year, employees and businesses file tax returns to see what their tax obligation to the government is. If they paid too much throughout the year, they get a refund. If they didn't pay enough, they end up owing. I wrote a couple of articles on taxes and filing that you can read to learn more:
It's Tax Season!