Types of Taxes in The United States - Sales Taxes

Sales Taxes is a tax imposed by a state or local government on sales collected by retailers at the point-of-sale. It's based on a percentage of the selling prices of the goods and services. Forty five states,  plus the District of Columbia impose a sales tax. If the taxpayer files a Form 1040, and itemizes deductions on Schedule A, he or she has the option of claiming either state and local income taxes or state and local sales taxes. (the taxpayer cannot claim both) if the taxpayer saved his or her receipts throughout the year he or she can add up the total amount of sales taxes actually paid and claim that amount.
Many states exempt charitable, religious, and certain other organizations from sales or use taxes on goods purchased for the organization's use. Generally such exemption does not apply to a trade or business conducted by the organization.

Types of Taxes in The United States - Gift Tax

The Gift Tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value in return. The tax applies whether the donor intends the transfer to be a gift or not. The Gift Tax applies to the transfer by gift of any property. The taxpayer makes a gift if he or she gives property (including money), or the use of  or income from property without expecting to receive something of at least equal value in return. If the taxpayer sells something at less than its full value or if he or she makes an interest-free or reduced-interest loan, he or she may be making a gift. The annual exclusion for gifts is $14,000 for the 2014 tax year.
Its considered non-taxable gifts:

• Gifts that are not more than the annual exclusion for the calendar year;
• Gifts to a political organization for its use;
• Gifts to charities;
• Gifts to one's (US Citizen) spouse;
• Tuition or medical expenses one pays directly to a medical or educational institution for someone. Donor must pay the expense directly. If donor writes a check to donee and donee then pays the expense, the gift may be subject to tax.

Types of Taxes in The United States - Estate Tax

Estate Tax is a tax levied on an heir's inherited portion of an estate if the value of the estate exceeds an exclusion limit set by law. The Estate Tax is mostly imposed on assets left to heirs, but it does not apply to the transfer of assets to a surviving spouse. The right of spouses to leave any amount to one another is known as the "Unlimited Marital Deduction".
When someone in your family dies and the property of the deceased transfers to you, the federal government imposes an estate tax on the value of all that property. You only pay estate tax when the tax on the net taxable estate exceeds your remaining balance of the unified credit.

Use Form 706

Calculating Your Taxes

The main problem in completing a tax return is to figure out what income is taxable and the deductions that can be claimed. The rest is largely mechanical: add and subtract correctly, follow the instructions on the tax return and comply with procedural requirements.
The following checklist might be useful:

1. Collect the taxpayer's data;
2. Review taxpayer's prior returns;
3. Select the proper tax return form;
4. Determine gross income by totaling all income not specifically excluded;
5. Compute the adjusted gross income (AGI) by subtracting the adjustments;
6. Subtract itemized deductions from AGI, if their total exceeds the correct standard deduction amount;
7. Subtract the correct number of exemptions to determine taxable income;
8. Use the tax table (if taxable income is under $100,000) or the tax computation worksheet (if taxable income is $100,000 or more) to determine/calculate tax amount;
9. In the following order:
1. Add any alternative minimum tax;
2. Reduce any tax due by any tax credits (such as child tax credit, credit for child and dependent care expense, adoption credit, etc);
3. Add other taxes (such as self-employment tax, household employment taxes);
4. Reduce tax by any payments (such as withholdings, estimated tax payments, earned income credit, etc)
10. Determine the tax refund amount or the amount owed;
11. Sign and file the tax return on time.

Death of a Taxpayer and The Final Income Tax Return

If a taxpayer died before filing a return for 2014, the taxpayer's spouse or personal representative may have to file and sign a return for that taxpayer. A personal representative can be an executor, administrator, or anyone who is in charge of the deceased taxpayer's property. If the deceased taxpayer did not have to file a return but had tax withheld, a return must be filed to get a refund. The person who files the return must enter "Deceased", the deceased taxpayer's name, and the date of death across the top of the return. If this information is not provided, it may delay the processing of the return. 
The final income tax return is due at the same time the decedent's return would have been due had death not occurred. A final return for a decedent who was a calendar year taxpayer is generally due on April 15 following the year of death, regardless of when during that year death occurred. However, when the due date falls on a Saturday, Sunday, or legal holiday, the return is filled timely if filed by the next business day.
If the taxpayer's spouse died in 2014 and he or she did not remarry in 2014, or if his or her spouse dies in 2015 before filing a return for 2014, the taxpayer can file a joint return. A joint return should show the taxpayer's spouse's 2014 income before death and his or her income for all of 2014. Enter "Filing as surviving spouse" in the area where the taxpayer signs the return. If someone else is the personal representative, he or she must also sign.
The surviving spouse or personal representative should promptly notify all payers of income, including financial institutions, of the taxpayer's death. This will ensure the proper reporting of income earned by the taxpayer's estate or heirs. A deceased taxpayer's social security number should not be used for tax years after the year of death, except for estate tax return purposes.

Filing Your Taxes

The annual income tax return for individuals is due by April 15th. However, when the 15th falls on a weekend (Saturday or Sunday) or a holiday, the due date becomes the next regular working day. Therefore, if the 15th happened to be Saturday, the return would be due on Monday, April 17th. 
If the taxpayer uses a fiscal year, the return is due the 15th day of the fourth month after the close of the fiscal year. For example, if the fiscal year ends June 30, his or her tax return due date would be October 15. If the taxpayer is a U.S. citizen or resident alien abroad and files on a fiscal year basis (a year ending on the last day of any month except December) the dual date is 3 months and 15 days after the close of the fiscal year.
If a taxpayer is a U.S. citizen or resident alien residing overseas, or is in the military on duty outside the U.S., on the regular due date of the return, he or she is allowed an automatic 2-month extension to file the return and pay any amount due without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15.
The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS is automatically extended if either of the following statements is true:

• The taxpayer serves in the Armed Forces in a combat zone or he or she has qualifying service outside of a combat zone;
• The taxpayer serves in the Armed Forces on deployment outside the United States away from his or her permanent duty station  while participating in a contingency operation. A contingency operation is a military operation that is designated by the Secretary of Defense or results in calling members of the uniformed services to active duty (or retains them on active duty) during a war or a national emergency declared by the President or Congress.

The deadline for taking actions with the IRS is extended for 180 days after the later of:

• The last day the taxpayer is in a combat zone, have qualifying service outside of the combat zone, or serve in a contingency operation (or the last day the area qualifies as a combat zone or the operation qualifies as a contingency operation)
• The last day of any continuous qualified hospitalization for injury from service in the combat zone or contingency operation or while performing qualifying service outside of the combat zone.

In addition to the 180 days, the deadline is extended by the number of days that were left for the taxpayer to take the action with the IRS when he or she entered a combat zone (or began performing qualifying service outside the combat zone) or began serving in a contingency operation.

If the person entered the combat zone or began serving in the contingency operation before the period of time to take the action began, the deadline is extended by the entire period of time he or she has to take the action.

If the return is mailed, it must be placed in the mail and postmarked on or before the due date. The practice of filing sooner is encouraged by the IRS. Generally, the earliest possible date is January 1, although few, if any, taxpayers are in a position to file this soon. Employees, for example, must wait for Form W-2 to be issued by the employer. The tax law allows the employer until January 31 to prepare and issue the necessary Forms 1099 or W-2 for the previous year. If the taxpayer anticipates a refund, the sooner the tax return is filed, the sooner results can be expected. Because of the increased workload of the IRS as April 15 approaches, an early filing of a return means that a refund will be processed in less time.

If a taxpayer sends his or her return by registered or certified mail, the date of the filing is the postmark date. The registration receipt is evidence that the return was filed on the postmarked date. If a taxpayer sends a return by certified mail and has a receipt postmarked by a postal employee, the date on the receipt is the postmark date. The postmarked certified mail receipt is evidence that the return was delivered and postmarked on the date stamped by the United States Post Office.

Most returns are filed at regional centers geographically dispersed across the United States. The address of the Internal Revenue Service Office serving the states in which the taxpayer lives can be found in the instructions to form 1040.

Form 1040 Instructions

Valuing Inventories on Tax Year

An inventory is necessary to clearly show income when the production, purchase or sale of merchandise is an income-producing factor. If the taxpayer must account for an inventory in his or her business, he or she must use an accrual method of accounting for his or her purchases and sales. 
To figure taxable income, the taxpayer must value his or her inventory at the beginning and end of each tax year. To determine the value, the taxpayer needs a method for identifying the items in his or her inventory and a method for valuing these items. The rules for valuing inventory are not the same for all businesses. 
The method the taxpayer uses must conform to generally accepted accounting principles for similar businesses and must clearly reflect income. The taxpayer is inventory practices must be consistent from year to year.
The value of your inventory is a major factor in figuring your taxable income. The method you use to value the inventory is very important. Generally there are two methods for valuing inventory. These methods are cost or lower of cost or market.

• COST METHOD. To properly value your inventory using the cost method, you must include all direct and indirect costs associated with it.
• LOWER OF COST OR MARKET METHOD. Under the lower of cost or market method, compare the market value of each item on hand on the inventory date with its cost and use the lower value as its inventory value.