The first income tax in the United States was implemented in 1861 to help the federal government cover the costs of the Civil War, according to the Library of Congress. This tax was repealed 10 years later, and after several variations was eventually replaced by the 16th Amendment to the U.S. Constitution, which allowed the government to collect an income tax as a source of federal revenue.Know More
The 16th Amendment was ratified in 1913. Since then, federal income taxes have come to be seen as an indispensable part of what Oliver Wendell Holmes described as the price paid "for a civilized society," according to the U.S. Department of the Treasury. The framers of the Constitution enumerated the government's obligation to provide for the common defense and promote the general welfare. Taxes on income are the method by which the government collects the revenue necessary to execute these functions.
Another useful function of public taxation, according to the Treasury, is in educating the public about the real cost of the government's services. Knowing how much a certain policy will cost before it's implemented encourages lively debate and the rational cost-benefit arguments that are central to policy decisions undertaken by the citizens of a republic. A policy of general taxation thus encourages a broad public understanding of what the government does and how it operates, information vital to voters.Learn more about Income Tax
Abraham Lincoln was president of the United States during the Civil War, but as The Library of Congress points out, some Southerners considered Jefferson Davis their president. The Civil War lasted from 1861 to 1865.Full Answer >
Taxpayers list the information from 1099 forms on regular annual tax forms and send them to the IRS in the same way as they would from a W2 form, according to TurboTax. When filing tax returns with 1099 forms,taxpayers must use a Schedule C form.Full Answer >
The purpose of the income statement is to show the profitability of a company during a specific period, says accountant Harold Averkamp. Investors use this statement, along with other financial statements, to determine if a business is a good investment.Full Answer >
In most cases, monetary damages awarded by a court of law in the United States are treated as taxable income, with the exception of awards for physical injury or physical sickness. According to Nolo, these exceptions are explained in code 26 U.S.C. § 104(a). Other monetary awards arising from law settlements are taxed at ordinary rates.Full Answer >