Understanding Taxes - Theme 1: Your Role as a Taxpayer (2024)

FAQs

What is your role as a taxpayer? ›

The U.S. income tax system is based on the idea of voluntary compliance; it is the taxpayer's responsibility to report all income. Tax evasion is illegal. Some people try to evade paying taxes by failing to report all or some of their income.

The primary Taxpayer is whoever is listed first on the tax return. This does not have to be the one with more income or who owes or pays more in tax.

Understanding how taxation works can give you a big-picture idea about the ways your money gets taxed and empower you to take greater control of your finances. A financial advisor can also help you align your tax strategies to reach your financial goals.

Taxes provide revenue for federal, local, and state governments to fund essential services--defense, highways, police, a justice system--that benefit all citizens, who could not provide such services very effectively for themselves.

Enter what best reflects your current occupation. Common entries include: Student, Laborer, Factory Work, Owner-Operator, Self Employed, Homemaker, Unemployed, Retired, etc. What you enter as your occupation will not affect the calculations in your return in any way.

Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. As an independent organization within the IRS, we protect taxpayers' rights under the Taxpayer Bill of Rights, help taxpayers resolve problems with the IRS, and recommend changes that will prevent the problems.

The Right to Be Informed

Taxpayers have the right to know what they need to do to comply with the tax laws. They are entitled to clear explanations of the laws and IRS procedures in all tax forms, instructions, publications, notices, and correspondence.

The person listed first on your joint federal income tax return is sometimes called the “primary taxpayer.” But it's important to note that your tax liability remains the same whether you list your name or your partner's name first on your federal income tax return when you are married and filing jointly.

The primary taxpayer is the first taxpayer listed on the return. In the TurboTax Desktop version: Open your completed Married Filing Jointly (MFJ) return (the real return you'll file with the IRS). Then save the return with a new file name, for the primary taxpayer.

Why are taxes so complicated? Our tax system could be simple if its only purpose were to raise revenue. But it has other goals, including fairness, efficiency, and enforceability. And Congress has used the tax system to influence social policy as well as to deliver benefits for specific groups and industries.

What do I need to know about taxes? ›

Consumers are surprisingly uninformed about basic tax laws, a deficit that could spur them to make poor choices about accepting raises, donating to charities, and other everyday decisions, Sacramento State researchers have discovered.

The four “Rs” of tax refer to the key benefits that flow from taxation: Revenue, to fund public services, infrastructure and administration.

This paper argues that the debate omits consideration of the goals of taxation in the modern era, which are (1) to raise revenue for government activities, (2) to mitigate unequal distributions of wealth in society, and (3) to regulate private economic activity.

A tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.

A tax position refers to a decision taken by a taxpayer regarding the treatment of a specific item or transaction on their tax returns.

Speak with the taxpayer(s) in a slow voice and at a tone that is not loud. The taxpayer will be able to hear you and understand what you are saying. Don't rush your responses; give the taxpayer time to complete their response to your questions. Try to eliminate filler words like “umm” and “like.”

There are four general types of tax preparers: certified public accountants, enrolled agents, tax attorneys, and non-credentialed preparers. Here's a quick guide on the differences between them. Certified Public Accountant (CPA) Enrolled agents. Tax attorney.

The term taxpayer originates from a time period during which buildings were cheaply constructed in densely populated places so that property managers could recoup their property taxes.