Final answer:
U.S. citizens who earn an income must file a federal income tax return and potentially pay taxes based on their annual income. The 1040EZ tax form is one of the simplest tax forms for individuals. Income taxes collected are used to finance various government expenses and represent the largest single source of federal government revenue.
Step-by-step explanation:
Any U.S. citizen who earns an income is subject to filing a federal income tax return, and depending on how much income they earn in one year, paying a portion of that income to the government. Every year, by mid-April, individuals are required to submit their income tax forms, like the 1040EZ, which is the most straightforward form. This act of filing taxes is a significant interaction between citizens and the government.
The taxes collected through these income tax returns are essential as they help finance government operations, including purchases of goods and services and transfers to households and firms. It's important to note that the calculation of your taxes is based on your adjusted gross income, which takes into account sources like wages, interest, and unemployment benefits, minus certain deductions and exemptions.
While individual income tax represents the largest source of revenue for the federal government, it accounts for less than half of the total federal tax revenue, with other taxes like corporate income taxes and social insurance also contributing to the federal budget.