Income Tax Individual and Corporations

Income tax is the major source of income for the federal government . The Income tax is collected from both individuals and companies . Calculation of Income tax is done by finding out the taxable income by applying the allowable deductions on the annually . But the treatments of individual and corporate income taxes are different on several counts . The following table shows the differences between the two on various criteria

Criteria Individual Corporate

Applicable to All US Citizens or residents Corporations organized under the state laws

Taxable amount Individuals exemptions and deductions Gross

income less allowable deductions and tax credits

Tax rates Graduating slabs depending on the taxpayer 's status . The rate schedules are broken into several ranges of income , known as income brackets , and the marginal tax rate increases as a taxpayer 's income increases Graduated rate from 15 to 35 based on slabs of taxable income

Sources of income Salaries and wages , compensation for services interest dividends on investments , capital gains , rents received from properties and buildings , royalties , alimony , annuities and income from life insurance , pensions , gross profits from a trade or business , income in respect of a decedent , and income from S corporations , partnerships trusts or estates . Income derived from any source worldwide , including gross profit from the sale of goods and services to customers , rents from properties , machineries and buildings , royalties , interests and dividends from investments , gains from the sale of business and investment assets , and...