As such, they are free of any federal income tax or penalty. The five-year period for qualified withdrawals starts on January 1 of the first tax year for which you make a Roth contribution. Example 1: You established your first Roth IRA with a regular annual contribution on April 15, 2009.
If there is any depreciation or amortization, it will be listed on the income statement. This gives you the earnings before interest and taxes. 5. Subtract any interest expenses listed on the income statement from the earnings before interest and taxes. This gives you the net income for tax purposes.
Since those with higher taxable incomes pay a higher percentage, the Federal income tax is a progressive tax. Sales and excise taxes, by comparison, are considered regressive. Since the goods get taxed at the same percentage, those with lower incomes pay a larger percentage of their income in sales and excise taxes.