Final answer:
The majority of taxpayers opt for the standard deduction over itemizing when filing taxes due to its simplicity. The U.S. tax system is progressive, with different rates for different income levels, including provisions like tax credits and the alternative minimum tax. Tax filing is an important civic duty completed annually to support government services.
Step-by-step explanation:
As opposed to itemizing deductions from Adjusted Gross Income (AGI), the majority of individual taxpayers choose the standard deduction. The standard deduction is a set amount that taxpayers can subtract from their AGI to reduce their taxable income.
For example, in 2010, the standard deduction and exemption totaled $9,350 for a single person. The taxable income is then calculated as AGI minus deductions and exemptions. Most people opt for this method as it simplifies the tax filing process, avoiding the need to itemize and calculate various personal deductions.
The U.S. tax system is progressive, meaning that as an individual's income increases, not only do they pay more in tax, but they also pay a larger fraction of their additional income as tax. This is evident in the 1040EZ tax form and the basic income tax equation presented earlier.
The federal income tax rate varies for different income levels and is only one part of the broader taxation framework which includes tax credits and the alternative minimum tax.
Every year by mid-April, U.S. citizens and residents are required to file an income tax form with the government, reporting their earned income and calculating the relevant taxes. This filing process is a primary way individuals interact with the government, contributing to the public finances that support government activities and services.