What is a flat tax? Categories and Criticism

A flat tax, is a tax system that applies a single tax rate to all levels of income. It has been proposed as a replacement for the federal income tax in the United States, which was based on a system of progressive tax rates in which the percentage of tax taken increases as income rises. … Read more

What are Franking Credits? and How to Calculate them

Franking credits, franked dividends, fully franked, imputation credits, dividend imputation – you could be forgiven if these terms have your head spinning. Dividends, as you may know, are a portion of a company’s earnings issued to reward its shareholders. And since a dividend is a form of income, you’d normally pay tax on it as … Read more

What is the De Minimis Tax Rule?

De Minimis tax rule, when translated means about minimal things, the concept was coined from a Latin expression de minimis non-curat lex. In taxation, the De Minimis tax rule is one that determines if discounts on municipal bonds should be subject to capital gains tax or income tax. What is de minimis? “De minimis non-curat … Read more

What is Backup Withholding? Explained

When you pay someone who is not your employee to perform work for your business, that income is taxable and may be subject to backup withholding. Backup withholding is tax withheld from payments to workers that were otherwise not subject to withholding (personal service payments). Backup Withholding  This is a tax that is withheld by … Read more

Annualized Income Installment Method Explained

The Annualized Income Installment Method (AIIM) is a method used to calculate the amount of taxes payable by a business during a tax year. Taxes are typically paid in installments quarterly, but some businesses do not report uniform cash flows throughout the year. Many businesses are seasonal, which means that they earn most of their … Read more

What are Amended Returns? Explanation with Example

An amended return is filed with the tax authority to make corrections to a previous year’s tax return. The tax return’s amended version can increase tax benefits or tax liability, depending on the amendment. What is an Amended Tax Return? If you made a mistake on your tax return or forgot to claim a credit … Read more