Income Tax

A:

For tax purposes, lottery winnings count as regular individual income, just like wages, with the rate is based on the taxpayer's total earnings. A lottery jackpot will probably be taxed at the highest federal individual tax rate, which in 2014 was 39.6 percent, according to the Tax Foundation.

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  • Why do people pay taxes?

    Q: Why do people pay taxes?

    A: People pay taxes in order to facilitate the running of government with regard to payment of salaries and running of programs aimed at bringing development to the country. Payment of taxes is both a civic duty and a requirement of the law as articulated in the United States Constitution under the tax code, Article 1 Section 8.
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  • What is the tax rate on lottery winnings?

    Q: What is the tax rate on lottery winnings?

    A: For tax purposes, lottery winnings count as regular individual income, just like wages, with the rate is based on the taxpayer's total earnings. A lottery jackpot will probably be taxed at the highest federal individual tax rate, which in 2014 was 39.6 percent, according to the Tax Foundation.
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  • What is the purpose of a W-9 form?

    Q: What is the purpose of a W-9 form?

    A: The W-9 form is a sheet generated by the Internal Revenue Service to obtain a legal and accurate tax identification number from an individual or corporation required to file an information return to the IRS. The IRS requires citizens and businesses to file certain financial information, which is used to determine the amount of taxes owed and to gain other information, such as income accrued and real estate transactions.
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  • What is the minimum income requirement to file taxes?

    Q: What is the minimum income requirement to file taxes?

    A: The minimum income requirement for filing a tax return is the standard deduction for that year plus the deduction for one dependent. Because the exact amount for these deductions changes each year, so does the minimum income requirement.
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  • What is a pay stub?

    Q: What is a pay stub?

    A: A paycheck stub is the portion of a paper paycheck that the employee keeps after cashing their payroll check. Information typically included on the paycheck stub includes the number of hours worked, the amount paid to the employee, a breakdown of taxes paid and a list of various deductions.
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  • Is severance pay taxable?

    Q: Is severance pay taxable?

    A: According to Forbes, severance pay is taxable in the year in which the employee receives it. Prior to an employee receiving a severance check, the employer should take out appropriate state and federal taxes. Severance pay is reported on the employee's W-2 form, according to Turbo Tax.
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  • What is the purpose of income taxes?

    Q: What is the purpose of income taxes?

    A: The first income tax in the United States was implemented in 1861 to help the federal government cover the costs of the Civil War, according to the Library of Congress. This tax was repealed 10 years later, and after several variations was eventually replaced by the 16th Amendment to the U.S. Constitution, which allowed the government to collect an income tax as a source of federal revenue.
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  • Can you deduct your tax preparation fee?

    Q: Can you deduct your tax preparation fee?

    A: Tax preparation fees can be deducted in several possible places on a tax return, according to the Internal Revenue Service. Most individuals claim tax prep expenses on Schedule A as a miscellaneous deduction, which is subject to a 2 percent limit.
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  • What percentage of a paycheck goes to taxes?

    Q: What percentage of a paycheck goes to taxes?

    A: Most U.S. taxpayers with a traditional salary pay 6.2 percent of each paycheck as taxes for social security and 1.45 percent for Medicare, according to the California Tax Service Station. Additional amounts may be deducted from each paycheck for federal withholding or for state fees such as unemployment insurance.
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  • What is the IRS anonymous tip line?

    Q: What is the IRS anonymous tip line?

    A: The Internal Revenue Service allows citizens to anonymously report suspected tax fraud activity by filling out and mailing in the appropriate forms. The IRS does not accept reports of suspected tax fraud over the telephone. Citizens can call the IRS tax fraud hotline at 1-800-829-0433 to hear recorded reporting instructions.
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  • What is the formula for calculating income tax?

    Q: What is the formula for calculating income tax?

    A: The formula for calculating income tax is the product of the total amount of taxable income multiplied by the tax rate, according to the Internal Revenue Service. The formula to account for multiple marginal tax rates requires multiplying the total amount of money earned in each successive bracket by the tax rate and adding the values together.
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  • How does the IRS notify you of an audit?

    Q: How does the IRS notify you of an audit?

    A: According to the IRS website, the IRS notifies taxpayers of an audit by mail or by telephone call. If notified by telephone, the taxpayer also receives a letter in the mail from the IRS stating the intent to perform an audit. The IRS never notifies taxpayers of an audit using email or any other type of communication.
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  • When does the IRS send out refund checks?

    Q: When does the IRS send out refund checks?

    A: In 2014, the first date the IRS began processing and issuing refund checks was January 31st. Most refunds are issued within 21 calendar days from the date that the IRS acknowledges acceptance of the tax return.
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  • How much money can you make without filing taxes?

    Q: How much money can you make without filing taxes?

    A: According to efile.com, the amount of money a person can make without filing taxes depends on filing status and age. For tax year 2013, a single person under 65 years old had to make in excess of $10,000 before filing taxes, while someone over 65 years old needed income over $11,500 to file taxes. Dependents have a lower tax filing threshold of $6,100 if they're under 65 years old, single and not blind.
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  • Do senior citizens have to file taxes?

    Q: Do senior citizens have to file taxes?

    A: According to the Internal Revenue Service, anyone who has enough taxable income is required to file an income tax return, even senior citizens. Older taxpayers, however, do have a slightly higher threshold for filing.
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  • How do you get your W-2 online?

    Q: How do you get your W-2 online?

    A: Any employer can request a wage and tax statement form, or a W-2 form, from the online ordering website of the Internal Revenue System. The employer can then file the W-2 and the W-3 forms electronically on the Social Security Administration's website. Employees who want to get a copy of their W-2s online can ask their company or employer to make it available online or use the company's payroll services.
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  • Do you have to pay taxes on gambling winnings?

    Q: Do you have to pay taxes on gambling winnings?

    A: According to the Internal Revenue Service, gambling winnings are fully taxable and must be reported to the IRS. This includes money won from the lottery and horse racing as well as casinos. It is the taxpayer's responsibility to claim all winnings.
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  • What tax benefits come with marriage?

    Q: What tax benefits come with marriage?

    A: Married couples are able to file joint income tax returns with the IRS and state taxing authorities. As of 2013, joint filing provides married taxpayers with a standard deduction of $12,200, or twice that of individual filers. Another tax benefit of marriage is that it creates a “family partnership” under federal tax laws, which allows the couple to divide business income among family members.
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  • What happens if two people claim the same child?

    Q: What happens if two people claim the same child?

    A: In some cases, an attempt to claim a child as a dependent when another person has already claimed him results in rejection of the electronic submission, according to About.com. If the IRS accepts the return or the second parent mails a return claiming the same child as a dependent, the IRS is likely to require an audit over dependents.
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  • What are the penalties for filing taxes late?

    Q: What are the penalties for filing taxes late?

    A: Penalties for filing IRS taxes late include a failure-to-file penalty, a failure-to-pay penalty if a taxpayer owes taxes or losing a refund if taxes are not filed within three years. IRS penalties accumulate monthly due to interest on unpaid taxes, and the penalty reaches a maximum at 25 percent of the total unpaid taxes.
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  • Are stipends typically taxed?

    Q: Are stipends typically taxed?

    A: According to the Internal Revenue Service, stipends are typically taxed. Even though a payment or remuneration may be classified as a stipend or other type of fee, it must still be reported as wages or income on an individual's tax return.
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