As Benjamin Franklin put it, "In this world, nothing is certain but death and taxes.
" Every year, Americans collect all their tax documents, make schedules faithfully, and file their tax returns.
However, there are some groups of people who are legally excused from this duty of life.
For various reasons, these groups of people file no returns and owe Uncle Sam nothing.
Some of these tax-exempt groups are explained below: Charity Organizations (Not for Profit) Non-profit organizations as defined by the Section 501(c)3 of the IRS codes are exempted from IRS tax payments.
The organizations under this schedule include educational establishments, religious and humanitarian organizations including churches, the Red Cross, hospitals, and Universities.
As these organizations serve us with valuable assistance for no profit, Uncle Sam gives them a waiver from the duty of paying taxes.
Income Earners Below the Tax Bracket Some groups of people are exempt from paying income tax owing to the fact that they earn money below the tax threshold.
There are many reasons as to why one may be exempt from income tax based on their income threshold.
For business income, businesses that suffer losses or no profits will not pay taxes for the period of the loss, and can deduct this loss from future tax liability subject to various qualifications.
This especially works for start-ups that have not yet gotten to break even and are yet to make business profit.
By being exempt from losses and claiming tax deductions on future tax liability, the businesses can use such tax benefits to reinvest towards recovering costs.
People who earn too little income for a given tax period will also be exempt from paying tax.
This tax exemption mainly applies to the homeless or those who are unemployed for long periods during the tax period.
By providing the tax exemption, Uncle Sam gives one an opportunity to recover or grow financially.
Non-Citizens on Foreign Assignments Non-American citizens and non-resident aliens who work for foreign organizations and are posted to the U.
S.
for business purpose will usually pay their taxes due to their home countries and therefore will not be taxed on their income by Uncle Sam.
However, various conditions need to be met as detailed in the Internal Revenue Service codes for one to qualify for such a tax exemption.
People Whose Deductions and Exemptions Exceed Tax Liability If a tax payer has deductions and exemptions that are equal or that exceed the due tax liability, he or she can write off the whole tax liability with these deductions and consequently, pay no taxes.
Such deductions include medical expenses under schedule A of the IRS codes, dependency exemptions claimed against a taxpayers dependents, and deductions from past business losses.
By and large, many regular Americans can also write off significant amounts of tax liability by proper tax planning and by taking advantage of the various opportunities presented to them by the tax law.
" Every year, Americans collect all their tax documents, make schedules faithfully, and file their tax returns.
However, there are some groups of people who are legally excused from this duty of life.
For various reasons, these groups of people file no returns and owe Uncle Sam nothing.
Some of these tax-exempt groups are explained below: Charity Organizations (Not for Profit) Non-profit organizations as defined by the Section 501(c)3 of the IRS codes are exempted from IRS tax payments.
The organizations under this schedule include educational establishments, religious and humanitarian organizations including churches, the Red Cross, hospitals, and Universities.
As these organizations serve us with valuable assistance for no profit, Uncle Sam gives them a waiver from the duty of paying taxes.
Income Earners Below the Tax Bracket Some groups of people are exempt from paying income tax owing to the fact that they earn money below the tax threshold.
There are many reasons as to why one may be exempt from income tax based on their income threshold.
For business income, businesses that suffer losses or no profits will not pay taxes for the period of the loss, and can deduct this loss from future tax liability subject to various qualifications.
This especially works for start-ups that have not yet gotten to break even and are yet to make business profit.
By being exempt from losses and claiming tax deductions on future tax liability, the businesses can use such tax benefits to reinvest towards recovering costs.
People who earn too little income for a given tax period will also be exempt from paying tax.
This tax exemption mainly applies to the homeless or those who are unemployed for long periods during the tax period.
By providing the tax exemption, Uncle Sam gives one an opportunity to recover or grow financially.
Non-Citizens on Foreign Assignments Non-American citizens and non-resident aliens who work for foreign organizations and are posted to the U.
S.
for business purpose will usually pay their taxes due to their home countries and therefore will not be taxed on their income by Uncle Sam.
However, various conditions need to be met as detailed in the Internal Revenue Service codes for one to qualify for such a tax exemption.
People Whose Deductions and Exemptions Exceed Tax Liability If a tax payer has deductions and exemptions that are equal or that exceed the due tax liability, he or she can write off the whole tax liability with these deductions and consequently, pay no taxes.
Such deductions include medical expenses under schedule A of the IRS codes, dependency exemptions claimed against a taxpayers dependents, and deductions from past business losses.
By and large, many regular Americans can also write off significant amounts of tax liability by proper tax planning and by taking advantage of the various opportunities presented to them by the tax law.
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