Some examples of direct taxes include income taxes, taxes on assets and real property and personal property taxes. These are taxes that a person must pay directly to the entity collecting the tax. The taxpayer is not able to shift the burden of these taxes onto another individual or group.Continue Reading
The income tax is an example of a direct tax because the person who owes the tax must pay it out of his own pocket. Property taxes must be paid by the property owner to the local municipality and therefore qualify as direct taxes also. Taxes on assets, which include estate taxes that the heirs to an estate must pay if the estate's value is over a certain amount, are also considered direct taxes.
Direct taxes contrast with another class of taxes known as indirect taxes. With an indirect tax, a person pays the tax to another organization or group that then turns the taxes over to the government.
The most prominent example of an indirect tax is the sales tax. When people purchase goods in certain states, they are required to pay a sales tax. They do not pay the tax directly to the state, however. The merchant collects the tax from the purchaser and then turns the money over to the government.Learn more about Taxes
The ad valorem tax in Texas is a tax on tangible personal property and real estate that is determined according to the value of the property. It applies to the property of people and corporations but not to property owned by municipalities or other government entities.Full Answer >
The main sources of government income are income, sales and property taxes and fees. State, county and local governments also receive grant money from the federal government.Full Answer >
A tax return is the tax form on which one files income taxes with the Internal Revenue Service, explains Investopedia. The term "tax return" can also refer to the process by which the government refunds excess taxes, although this is more commonly known as a "tax refund."Full Answer >
Use a tax organizer to save documentation about income and deductions, to ensure your taxes are accurately filed, recommends Home Storage Solutions. The site recommends that you create multiple filing systems to store minor and major receipts and other documentation necessary to complete taxes. Label and organize the documents into sections such as medical documents, child care costs, business deductions and student loan payments. Consider using a receipt scanner if you have many receipts.Full Answer >