Taxes

Question 1

What are taxes?

Answer 1

Taxes are financial charges levied or imposed upon a taxpayer or a legal entity to fund expenditures or to create social welfare

Question 2

7 types of taxes

Answer 2

1. Income tax - tax on income
2. Property tax - tax on property
3. Inheritance tax - tax on inheritance
4. Sales tax - tax on sales
5. Excise tax - tax on bad products
6. Tariff - tax on international trade
7. Payroll tax - tax on salary

Question 3

What is an excise tax?

Answer 3

tax on bad products like tobacco, alcohol, etc.
- One other type of excise tax is the carbon tax, which is the tax on the consumption of fuels that are harmful to the environment.

Question 4

What is a tariff?

Answer 4

tax on import and export

Tariff helps protect domestic corporations from outsiders who can compete at cheaper prices

Question 5

What is payroll tax?

Answer 5

the tax imposed on employers and employees.

Payroll tax is usually used to fund social security and unemployment insurance

Question 6

Distinguish between a tax credit and a tax deduction?

Answer 6

• tax credits help reduce your tax obligation. Tax credits are used to encourage good behaviours of the society
• A tax deduction is used to reduce your income.

Question 7

I have some dependants

Answer 7

ppl in the family who live off of your income

Question 8

Every time I receive a paycheck, the payroll staff have already taken away part of my salary and remit it to the tax agency

Answer 8

submit the payments to

Question 9

What is the form you use to declare your income and expenses for tax purposes called?

Answer 9

Every year, each person has to file a tax return. A tax return is just a form in which we declare our income, deductions, and credits to calculate the tax

Question 10

Different sources of income?

Answer 10

1. Employment income: salary or wages
2. self-employment income/business income: run their own business or they work for themselves
3. Professional income: the income you earn from professional activities like consulting, accounting, legal or medical services
4. Rental income: others rent their real estate and collect rents every month
5. Investment income: invest money in stocks and bonds
   - Dividends are paid to stockholders by companies
   - Interests are paid to bondholders
6. Capital gains: the gain of the property after you sell it
7. pension income: the money you receive from the government when you get old enough

Question 11

A simple formula to calculate tax?

Answer 11

Tax = (income - deductions) * tax rate - tax credits

Question 12

Differences between tax evasion and tax avoidance?

Answer 12

• tax avoidance: legal

- Tax evasion: a crime

Question 13

What are tax havens?

Answer 13

places to evade taxes