Tax season is upon us.
Most people pay 4 types of taxes that are listed on their paycheck
- Federal Tax (tax paid to the government)
- State tax (tax paid to the state you live in)
- Social Security Tax
- Medicare Tax
Social Security and Medicare are associated with the federal government.
The most important fact is that American’s have to pay federal and state taxes every year.
When you get a job, you fill out (complete) a W-4 tax form. It asks you certain questions. Based on the questions, the state and federal governments withhold (hold) money from your paycheck every time you get paid. The withholdings (the money) go to the state and federal government.
You are paying taxes from your paycheck each week or biweekly so that you don’t have to pay the government a large amount at the end of the year.
If you are self-employed, you have to pay your taxes quarterly (4 times a year).
Federal tax rates are based on income. The federal government has tax brackets; categories of tax percentage based on income. Often, the higher the income, the more tax a person pays.
State taxes is typically a certain percentage for all people
In the U.S., American’s must file their taxes by April 15th.
For the tax year 2020; January 1, 2020-December 31, 2020,
American’s have until April 15, 2021, to file their taxes with the federal government and their state government.
To file your taxes means completing a 1040 form and mail it to the federal government.
American’s often use the verb “do” when they talk about their taxes. For example, I need to do my taxes. That means gathering their W-2 (a statement employers give employees to show home much they were paid and how many taxes were taken out), receipts, and other information.
Then either people do their taxes individually or use a professional. An accountant and CPA, are a professional who specializes in tax law and doing taxes.
If you use an accountant or CPA “to do” your taxes, they usually e-file (electronically file) your taxes. They send the proper paperwork to the federal and state government.
The amount of tax each person pays depends on many things. Such as, if their single or married. Also, people receive deductions (a discounted amount on their taxes) if they have children and for many other things.
An accountant and CPA have the knowledge of what deductions people are allowed to receive.
Accountants and CPA will be able to tell you if you have to pay more taxes or if you will receive a refund, because you overpaid your taxes.
ATTENTION: This information is not official. Please consult a tax professional about all tax questions.