Income Tax Basics
Created by FindLaw's team of legal writers and editors | Last reviewed June 20, 2016
Welcome to the Income Tax Basics section of FindLaw's Tax Center, where you can find specific information on filing your taxes this year as well as general information related to personal income tax laws. Unless your income is below a certain level, you will have to file federal income tax returns each year. Therefore, it's important to understand your obligations and the way in which taxes are calculated. This section includes articles about how to set up a payment plan with the Internal Revenue Service, various methods for lowering your income taxes, the alternative minimum tax, the meaning of "back taxes," itemized deductions, and more.
Top Tax Myths Debunked
The tax system is so complicated and intimidating that myths about the system and your rights have proliferated. Don't get confused by the baseless arguments, strange conspiracy notions, and misguided assumptions that can get taxpayers in trouble. Rumors and misunderstandings are common and you should always look for official verification when you hear something that sounds too good to be true, but if you hear any of the following stories be aware that they are untrue:
- Tax protestors that claim that taxes are illegal, involuntary, or invalid are mistaken. These arguments typically closely examine the constitution, the precise language of the tax code, and the status of organizations responsible for administrating the tax system. These arguments have all been litigated and found meritless by multiple courts.
- Home offices can be written off, but to qualify for this deduction you must be self-employed. The home office deduction is only available if part of your home is used regularly and exclusively for business.
- Gamblers may think their losses are tax deductible, but this deduction is limited to a deduction equal to or less than your winnings.
- Workers sometimes think tips don't count as taxable income. If you earn more than $20 in any given month you must report that amount to your employer by the 10th of the following month, who then reports tips to the IRS. This income is taxable.
- Technophobes may say there are no benefits for e-filing, but e-filing results in quicker returns, more accuracy, and avoids lines at the post office; among other benefits.
The IRS and Your Rights
It is important to understand your rights when dealing with the Internal Revenue Service (IRS). IRS employees must explain and protect your rights throughout the process. They may not disclose your information to anyone unless authorized to do so by law. You have the right to know why the IRS wants information, how it will be used, and what will happen if you refuse to provide the requested information.
IRS employees must be polite, professional and fair. You have the right to have someone represent you when dealing with the IRS. Your representative could be a tax attorney, a certified public accountant, or an "enrolled agent." You can stop an interview at any time to consult with your representative, bring someone with you, or tape record your meeting. You only need to pay as much as you owe and can get a payment plan if necessary. The IRS will owe you interest if it takes more than 45 days to send you your refund. You can appeal an audit agent's decision and the collection efforts of some collections agents.
This list of rights is not comprehensive. You have additional rights and there are important details and caveats to each of the rights listed here. Follow the links below for more detail and additional resources about your rights when dealing with the IRS.
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