The Beginnerís Guide for doing Taxes

Posted by Joseph Franks on February 6th, 2020

Did you recently start earning and know nothing about taxes? You are not alone and everyone has been in those shoes at some point. Taxes are tricky and confusing (nobody likes them). People who have dealt with the IRS for years still do not fully understand how it all works. If you just took a job providing a standard paycheck, your employer certainly already got you covered. A calculated percentage is deducted from your salary and forwarded to the government’s tax collecting agency.

Why File a Tax Return?

According to Tax Attorney in Greenville, a payroll withholding is seldom accurate, so you might be paying more or less than you actually owe to the IRS (Internal Revenue Service). Therefore, it is fundamental to file a tax returnand sidestep problems that could emerge in the future. You shall acquaint yourself with the tax code to acknowledge any deductions or credits you might be eligible for. Your salary may not be your sole source of income, which is why your employment taxes do not make up for the total earnings.

How to File a Tax Return?

As a responsible citizen, you are obliged to file a tax return every year, which is due around 15th of April (the next year). The straight forward and free of cost option is to do it manually. You can get the 1040 form by ordering online on the government IRS website. You can also request for the form via phone call and get it mailed to your address. If that seems complicated, you can use a tax software program or website like ‘Intuit’ and ‘TaxSlayer’; you might have to pay a minimal fee for the service. If your form filling aspects are far from simple, you can opt for the last option, i.e. professional help, which is a bit expensive. An accountant or tax expert can efficiently figure out all your details and maximize potential refunds.

A Summary of the Taxing Analytics

The amount of taxes you owe to the government is directly proportional to your overall income. The tax system in the U.S is progressive, which means that there is not one fixed percentage of tax deduction. The more money you make, the bigger the fraction of taxes grows. In the year 2020, the minimum tax bracket for personal income is 10% and the highest is 37%. An individual who earns UDS 9,875 or less is subject to contributing 10% of his/her income to taxes. Anyone who makes more than USD 518,400 per annum falls into the 37% tax deduction category.

Married couples that choose to pay taxes cumulatively can benefit from lower tax rates. Husband and wife that earn up to USD 19,750 per year are accountable for 10% taxes and joint earnings that exceed USD 622,050 shall be included in the 37% tax bracket. If a regular job is your only source of income, your employment company will provide you a W2 form; the form’s data will show how much you are being paid and what portion is going to taxes.

If you own interest generating bank accounts or other investments, you will have to fill out additional forms to manage their taxation. Similarly, contractors and self-employed individuals will need separate forms to file tax returns. People who donate to authorized charities and nonprofit organizations may receive tax relief to some extent. 

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Joseph Franks

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Joseph Franks
Joined: September 16th, 2019
Articles Posted: 102

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