Federal income tax is due on most types of income, including wages and salaries, pensions, bonuses, commissions, business income, dividends, interest, capital gains, rent and royalties.
The main channels for payment of income tax are:
For employees, withholding tax deducted from income by their employers;
For self-employed people, 3-monthly payments of estimated tax;
For non-working people with sufficient earnings, 3-monthly payments of estimated tax;
Alternative minimum tax, for people who have been clever enough to reduce their tax to a low proportion of total income, also payable on an estimated basis.
There are many possible deductions from gross income which reduce the amount of taxable income on which tax is calculated. Employees give their employers information about their deductions using Form W-4.
The annual tax return form that must be filed by all taxpayers as individuals is the 1040.