Tax forms are filled and submitted to file and pay income taxes to the Internal Revenue Service or the appropriate state tax authority, where applicable, according to Investopedia. Tax forms are organized as worksheets in which the tax payer fills in categories regarding his income, deductions and other factors to calculate his tax liability. Taxes have to be filed by law every year the individual makes any kind of income, whether from wages, self-employment, capital gains or other sources.Continue Reading
Taxpayers file different forms depending on their category, filing status and type of income and deductions included in the form, reports Investopedia, Individuals use various versions of Form 1040, corporations use Form 1120 and partnerships use Form 1065. Companies and sole proprietors commonly file taxes every quarter to keep tax liabilities as close to zero as possible by year's end.
Because income tax is one of the primary sources of funds that make it possible for the government to perform its duties and run its projects and departments, by law, businesses and individuals who make income must file and pay income taxes every year, says Investopedia. The United States, like many other countries, uses a progressive tax rate, meaning that those who make a higher income pay a higher percentage of it in taxes.Learn more about Taxes