In addition, there are two several types of income taxes, federal and state. Federal income tax is a tax that is required by the IRS on the yearly earnings of an individual and of corporations. Federal income taxes are applied on all of the forms of earnings of a taxpayer’s taxable income. A tax is collected from individuals and corporations by the city, state, or country in which the person lives. When the tax collected is credited to the government of the country’s account, it is referred to as federal tax. Federal tax is the money used by the government of a country to pay for the growth and maintenance of the country. The greatest source of revenue for the federal government comes from the income of its residents.