Some Key Tax Terms:

• Taxable Income: The taxpayer's total income less deductions, exclusions, and exemptions that might be available to a particular taxpayer. Tax is imposed on the taxable income.
  
  
• Exempt: A taxpayer can be exempt from paying a certain amount of federal income tax if he/she meets certain income, tax liability, and dependency requirements. No tax is imposed on the exemptions.
  
  
• Tax Rates: Some percentage applied to the taxable income to determine a taxpayer's liability.
  
  
• Marginal Tax Rate: The percentage at which the next dollar added to the taxable income will be taxed. It's important for the taxpayer to know his/her marginal tax rate in order to minimize taxes.
  
  
• Tax Credit: The amount of the taxes a taxpayer has to pay can be reduced by tax credits. A taxpayer can get tax credits for purposes such as child care expenses and the earned income credit for low-income taxpayers.

For more glossaries of commonly used tax terms, please consult the following resources:

Major Kind of Taxes:

There are a wide range of taxes imposed by the taxing Authorities of the United States. Following are some major types of taxes:

• Income Taxes:taxes on income, both earned income (salaries, wages, tips, commissions) and unearned income (interest from savings accounts, dividends if you hold stock). Both individuals and businesses are subject to income taxes.
  
  
• Wealth Transfer Taxes: including --
  
  
  • Federal Estate Tax: the Federal taxes levied on the transfer of property from the deceased to his or her heirs, legatees or devisees.
    
    
  • Federal Gift Tax: a tax imposed on the donor of a gift.
    
    
  • State and Local Transfer Taxes: many states and some local jurisdictions impose an inheritance tax on the right to receive property at death.
  
  
  
• Employeement Taxes: the Federal government and most states impose some form o femployment tax on either self-employed individuals, employees, or employers. The most common form of state employment tax is levied on wages, with the proceeds used to finance the state's unemployment benefits program. The Federal government imposes two types of taxes on employment -- a social security tax and unemployment tax. The Federal Insurance Contribution Act (FICA) imposes a tax on both an employee and his/her employer if the employee is eligible for social security and Medicare health insurance benefits. Proceeds from the FICA tax are used by the Federal government to finance its payment of social security benefit. The Federal Unemployment Tax Act (FUTA) imposes a tax only on the employer. The FUTA tax revenues are used by the Federal government to fund unemployment benefit programs of the various states.
  
  
• Excise Taxes: taxesimposed on certain privileges as well as the manufacturing, sale or consumption of specified commodities. The major types of excise taxes are:
  
  
  • Occupational Taxes: Some businesses, such as liquor dealers, must pay a fee before engaging in their business.
    
    
  • FAcilities and Services Taxes: the person who pays for services and facilities must pay the tax on these items.
    
    
  • Retail Sales of Products and Commodities Taxes.
    
    
  • Luxury Taxes: the tax imposed by state governments on certain retail sales of products.
  
  
  
• Other types of taxes, for instance:
  
  
  • Franchise Tax: a tax on the privilege of doing business in a state or local jurisdiction.
    
    
  • Sales Tax: a tax on the gross receipts from teh retail sale of tangible personal propety (eg. clothes, automobiles, equipment) and certain services.
    
    
  • Real Property Tax: a tax on the value of realty (eg. land, buildings, etc.) owned by nonexempt individuals or organizations.

Internal Revenue Service (IRS):

Founded in 1862, the Internal Revenue Service (IRS) is responsible for administering and enforcing msot federal laws and related statues. Its activities include the determination, assessment, and collection of taxes, determination of pension plan qualifications adn exempt orgnization status, and the issuance of rulings and regulations. In addition, it handles taxpayer complaints and provides taxpayer service and education. IRS publishes and distributes the reproducible tax forms and other manuals, regulations, statistics, and decisions, etc.

IRS also offers free consulation by telephone regarding tax questions and problems. Following are some of the toll-free phone numbers for IRS assistance: (Best time to call: 8:00am and 3:00pm to 4:30pm)

For more information on IRS and its services, please consult the following resources:

Illinois Department of Revenue (IDOR):