Transcript
One of the first lessons you learn about money as a kid is that the price on the tag may not be the same as the price on the receipt. Why? Taxes.
Taxes have a much bigger impact on our lives beyond just paying a little more for the things we buy.
And the better you understand them, the better equipped you are to make decisions about them.
All taxes can be divided into three basic types: taxes on what youbuy, taxes on what youearn, and taxes on what youown.
Every dollar you pay in taxes starts as a dollar earned as income. The main difference is the point of collection.
Sales taxesare paid by the consumer when buying most goods and services.
These taxes provide state and local revenue, funding services like education, transportation, and health care.
The Individual Income Tax is a tax paid on many sources of income you might earn, like the taxes taken directly from your paycheck.
Income taxesare major sources of revenue for the federal government and many state governments.
The third type of taxes are taxes on what you own—like homes, land, or vehicles—known as property taxes.
Property taxesgenerate revenue at a local level. They provide funding for everything from parks, to public safety services, to additional funding for schools.
Every dollar you pay in taxes affects how much of your income you get to keep, save, and spend.
So, understanding each tax type can help you make better decisions about everything from which job to take, to where to live, to how you vote.
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FAQs
California's state and local governments rely on three main taxes. The personal income tax is the state's main revenue source, the property tax is the major local tax, and the state and local governments both receive revenue from the sales and use tax.
What are the three tax bases? ›
California's state and local governments rely on three main taxes. The personal income tax is the state's main revenue source, the property tax is the major local tax, and the state and local governments both receive revenue from the sales and use tax.
What are the three types of tax forms? ›
There are three personal income tax forms — 1040, 1040A and 1040EZ — with each designed to get the appropriate amount of your money to the IRS. Differences in the forms, however, could cost you if you're not paying attention.
What are the three main categories of a tax return? ›
The three main categories of a tax return are income, deductions, and credits. Income reports all revenue sources, deductions reduce taxable income, and credits directly decrease tax owed, potentially leading to a refund.
What are the different types of taxes for kids? ›
Among them are income taxes, property taxes, and sales taxes. A tax on the money that people make is called a personal income tax. Companies in the United States withhold, or hold back, a part of almost every worker's pay. They send this money to the U.S. government.
What are 3 federal taxes? ›
The main types of payroll taxes your business will encounter are: Regular Income Tax. Federal Insurance Contributions. Unemployment Taxes.
What are the basics of taxes? ›
Common types of taxes include income, payroll, sales, and property taxes. Income taxes are federal, state, and local taxes that may be collected on income, both earned (salaries, wages, tips, commissions) and unearned (interest, dividends).
What are the three types of income according to the IRS? ›
Three of the main types of income are earned, passive and portfolio. Earned income includes wages, salary, tips and commissions. Passive or unearned income could come from rental properties, royalties and limited partnerships.
What are the 3 stages of tax return? ›
Where's My Refund? has a tracker that displays progress through 3 stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent. You will get personalized refund information based on the processing of your tax return.
What are simple taxes? ›
A simple tax return is the most basic type of tax return you can file. Each tax filing program defines simple tax returns differently, but they generally include: W-2 income. Limited interest and dividend income. Standard deductions.
Currently, the state's principal revenue sources are personal income taxes, sales and use taxes, bank and corporation taxes, and a series of excise taxes. Today, it is California's counties, cities, schools, and special districts that depend on the property tax as a primary source of revenue.
How many main types of tax systems are there? ›
Tax systems in the U.S. fall into three main categories. They're regressive, proportional, or progressive. Regressive and progressive taxes impact high- and low-income earners differently but proportional taxes don't.
What are the 3 economic bases that the government taxes? ›
What are the sources of revenue for the federal government? Over half of federal revenue comes from individual income taxes, 9 percent from corporate income taxes, and another 30 percent from payroll taxes that fund social insurance programs (figure 1). The rest comes from a mix of sources.
What are the 3 major government taxes? ›
Key Takeaways. The primary sources of revenue for the U.S. government are individual and corporate taxes, and taxes that are dedicated to funding Social Security and Medicare.
What are the 3 areas where your tax dollars are spent by the federal government? ›
Spending Categories
These categories organize federal spending into topics based on their purpose (e.g., National Defense, Transportation, and Health).
What are the three main sources of federal tax revenue? ›
The three main sources of federal tax revenue are individual income taxes, payroll taxes, and corporate income taxes.
