A disgruntled ex-employed call the state, reported my family's glass business for sales tax evasion. Among the local state sales tax auditors called to schedule some time to pore through our books.
What is familiar with as your 'income' tax has established tax brackets each having its own tax rate from 10% to 35% (2009). These rates are placed on your taxable income which is income a lot more than your 'tax free' funds.
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