The basics of taxes you need to know.
What are the basics of taxes?
Income taxes are collected through withholding (or deducting) money from your paycheck. Employers deduct the money and send it to the government. People who are self-employed, such as entrepreneurs or ride-share drivers, also have to pay income taxes, but those taxes aren't withheld from their earnings.
What should I consider when filing taxes?
Before beginning, taxpayers should have: Social Security numbers for everyone listed on the tax return. Bank account and routing numbers. Various tax forms such as W-2s, 1099s, 1098s and other income documents or records of digital asset transactions.
"The top 10%, with incomes of at least $169,800, pay about three-quarters of the nation's tax bill, the analysis found."
How does your taxes work?
Federal income tax rates and brackets | Internal Revenue Service
You pay tax as a percentage of your income in layers called tax brackets. As your income goes up, the tax rate on the next layer of income is higher. When your income jumps to a higher tax bracket, you don't pay the higher rate on your entire income.
What are 5 things taxes pay for?
Taxes also fund programs and services that benefit only certain citizens, such as health, welfare, and social services; job training; schools; and parks. Article 1 of the United States Constitution grants the U.S. government the power to establish and collect taxes.
"Although most Americans believe the middle class bears the heaviest tax burden, it's actually the top 1% who pay the highest federal tax rate, at 25.9%, the Tax Foundation analysis found."
Do tax deductions get you money back?
Tax deductions reduce your taxable income and therefore can reduce the amount of tax you owe. Reducing the taxable portion of your income can help to swing your tax return toward the refund side.
What does the W-2 form tell you?
IRS Form W-2, or a "Wage and Tax Statement" is a tax form that reports the wages an employee earned during the year, as well as any taxes their employer withheld. This is an essential form you need to file your taxes as it often determines the size of your refund — or if you'll owe taxes.
"Financial stress during tax season can manifest in different ways, but we 'Quicktax" are to help"
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Quicktax is here to help. It can also bring intense feelings of stress or anxiety about dealing with finances. Financial stress during tax season can manifest in different ways, whether that's procrastinating on your tax return until the last minute or experiencing intense stress about filing incorrectly.
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