What is TAX ?

Ans. 1.A TAX IS A PAYMENT MADE BY THE PERSON WHO HAS EARNED INCOME DURING A YEAR TO THE GOVERNMENT.

2.Tax is nothing but it is a charge made by goverenment on the goods, on travelling, medicien, that is a sort of income to the governemnt and these money is used for developing perpouse.

What is tax deduction at source (tds) , is it the income tax that we pay or is it the tax returns that we get?

Ans.Tax deducted at source is one of the modes of collecting Income-tax from the assessees in India. Such collection of tax is effected at the source when income arises or accrues. Hence where any specified type of income arises or accrues to any one, the Income-tax Act enjoins on the payer of such income to deduct a stipulated percentage of such income by way of Income-tax and pay only the balance amount to the recipient of such income.

What is tax law? - (what you don't know can hurt you)

Ans.Tax law is found in many places - tax law is generated by the federal government, state government as well as counties, cities, and other municipalities. The variety of taxes that everyone faces is staggering - tax law affects almost every aspect of your life.

As for federal taxes, the law is primarily found in:

Title 26 of the United States Code - the Internal Revenue Code of 1986 as amended (the "Code" as promulgated by the Congress of the United States),

Title 26 of the Code of Federal Regulations (the "Regulations" as promulgated by the Internal Revenue Service),

proposed regulations issued by the Internal Revenue Service ("IRS"),

temporary regulations issued by the IRS,

revenue rulings issued by the IRS,
private letter rulings issued by the IRS,

revenue procedures, policy statements, and technical information releases issued by

the IRS, and

federal tax court decisions.

Tax law for states, counties, cities and other municipalities is likewise contained in codes sections, regulations, administrative codes, procedures and statements issued by the respective government authorities, as well as state court decisions. In many instances, state law is patterned after federal law but this is not necessarily always the case.

Tax law is pervasive throughout our daily lives. A lot of trees have been turned into pages of tax law. As you ease into your research of tax law, try to see the forest without getting lost in all the trees.

In a nutshell, tax law is a bewildering array of law that is scattered throughout many different sources and subject to many interpretations.

Hope & Lifetime Learning Credits

What are the Hope and Lifetime Learning education credits, who is eligible, and why should we take them? Well, let’s start with the first part of the question, and work our way to the end. Education credits are tax credits available for qualified education expenses paid by the taxpayer in the furthering of their education. Qualified education expenses are defined as an expense paid during the tax year for tuition and fees required by an eligible educational institution for student enrollment and attendance. It really doesn’t matter how you pay these expenses, only that the expenses are valid. Now, let’s give some examples of expenses that are not qualified so that you can determine those that are qualified, and how you account for these expenses. Room and board, medical expenses, student health fees, transportation, personal living expense, insurance, course-related books, supplies, equipment, or any non-academic activity or non-credit course are not qualified expenses. What does this leave? Basically: tuition.
If you take a deduction for education expenses in any other area of the personal tax return, you cannot use that expense when figuring a Hope or Lifetime Learning credit. If you received tax-free assistance, such as a Pell Grant or scholarship, you must deduct that amount from your qualified expenses; however, most scholarships and Pell grant monies are taxable, so you may be taxed, but you can also get the credit. If you make any prepayments of tuition, you can use the prepaid amounts on your current year’s tax return, provided you have followed all other guidelines.
Now, there are two different credits: the Hope credit and the Lifetime Learning credit. What are their differences? Well, first you cannot take them jointly; you must choose one or the other. The Hope credit can only be taken during the first two years of college, as defined by the educational institution, and cannot exceed $1500. The Lifetime Learning Credit maximum for 2005 is $2000. It cannot be taken in conjunction with the Hope Credit, even if your expense exceeds the Hope limitations. If your expenses exceed the Hope limitation the first two years, simply include the excess on your Schedule A.
Your credits are also limited by your level of income, and your adjusted gross income totals. So, when figuring these credits, you need to consider your current student status, as Hope will expire after your 2nd year of higher education, and your income levels, and your expense levels. You can take any excess expense deductions under your itemized deduction expenses on Schedule A, when Hope or Lifetime Learning is at their maximums.
Who is eligible to take these credits? You are eligible as a taxpayer or eligible dependent that was enrolled as a student in an eligible educational institution. If you can be claimed as someone’s dependent, they will be able to claim the education credit, not the dependent. Generally, dependent students’ expenses will be claimed by their parents or legal guardians. Now, here is an interesting note: if you are a student, and you cannot be claimed as someone’s dependent, only you can take the education credit; even if you are not the individual paying the expense.
Why would you take the credit? I think a better question would be why would you not take the credit? In case you haven’t noticed, it can be very expensive to attend higher education classes. For anyone seeking to further their education, receive a degree, and pursue their dream, any tax credit that can be taken, is a helping hand toward achievement of that dream. Today, without furthering your education, you’re almost positively sentenced to a lifetime of minimum wage earnings, and struggling to make ends meet. A college education is the fastest route still, to a better life, better wages, and the achievement of the American Dream.