Fundamentals of Taxation

Answer:

Taxpayers refers to those who report and record their earnings with the government in a year and pay a certain amount based on their income. Government bodies have offered certain relaxations for taxpayers to reduce their taxable income which maybe standardised or itemised. Taxpayers can utilise the allowance to reduce some amount from the tax to be paid to the state or local body or ask for refund if permitted.Standardised deduction refers to a flat amount that applies to all qualified taxpayers which is a portion of the income that's non-taxable. It is based on the person's source of income, age, disability and dependability. Whereas, itemized deduction includes expenditure on products, services or contribution like charitable gifts.
Taxpayers using standard deduction get to reduce a certain amount from tax, which is less than those who use itemised deduction. But in case of refund policy, taxpayers who used itemised deduction are more probable to receive that refund amount as taxable income in the next year. This is because, the amount they deducted and received as refund are counted as earning in the next year.
So, the circumstance when the state or local tax refund to be included as taxable income is when the taxpayer use itemised deduction in the previous year.

Answer:

Tax exemption refers to relaxation of certain items from taxable roof which can be used by taxpayer to reduce their burden. They are generally given to drive the interest of people towards that field, which would have needed more attention. Non-taxable allowance are also given with keeping in mind interests of people and need of that item.
Congress has given certain items tax exemption which include-scholarship for studies, life s insurance, municipal bond and much more. Scholarships when given tax exemption, can be utilised completely by the individual for their studies which would attract more young adults to take up education and economic status will no more be an obstacle. This would improve the educational level of the country and economic status of the people. If tax exemption is lifted, many people cannot afford higher education thus affecting all.
Thus, congress has chosen to give tax exemptions on certain items, keeping in mind the educational and general interest of people and their welfare.

Answer:

Fringe benefit is a form of pay other than salary by the employer for the performance of the employee. Any benefit provided to an employee is taxable and are included under their income. This can be helped by the employer by showing the benefit under certain categories which are non-taxable and this is termed as employer provided fringe benefit.
Common examples of fringe benefits include medical, dental insurance, housing allowance, educational assistance, sick pay, meal discounts and much more. They are taxable.Employers usually provide all employees with personalized benefit statement every year. This would include their income and other benefits the company provides. Employers provide various fringe benefits to retain their valuable employees and also offers flexible work environment. However, these benefits are taxable unless they fall under certain categories which include-
Discounts provided to employees for products sold in business normally and in the interest of employee, discounts cannot exceed more than a level where that would affect the income of employee. Business related trips taken by the employee for official purposes. Employees moving outside work environment for official purpose. Vehicle allowance, accident insurance due to work, meals and lodging on business purpose are non-taxable fringe benefit to be provided by the employer.
So, employer provided fringe benefits refers to those benefits provided other than salary for the performance of employee at work, which may be taxable or non-taxable.