Cookie Consent by TermsFeed Paying Income Taxes - Part 1 - Insurance| Life Insurance

Paying Income Taxes - Part 1

Welcome to paying your income taxes Part 1. This is a three part Post I've broken down to make it easier to learn about income taxes are definitely a big part of our lives. We have to deal with them and if we start real jobs that require us to fill it w is and we're going to talk about that process before W-2 is how to file your income taxes and what that means. So there's a lot involved here that we'll be breaking down into small pieces. 
So just a reminder from the last post Income tax gets taken out of your paycheck automatically. So this is a pay stub the same one as last post that talks about how much they made and then exactly what all came out of the paycheck including federal income tax and state income tax.

If paying income taxes you don't pay just once and you're done you have money taken out of your paycheck every pay period. We'll talk about what happens with that money but you're your employer is in charge of taking money out of your paycheck to help cover your income taxes And then you must do what's called file your taxes by April 15th every year to file means that you fill out a form that will determine if you have paid enough taxes throughout the year. Filing your taxes will be an entire part. One of the three parts. So we're going to talk about that a lot more. So for right now just know that there's something you must do that's called file your taxes. There's a date you have to do it by. So April 15th is the tax deadline every year for everybody

The income tax cycle
let's break it down whenever you first get a job your employer will ask you to fill out a W for form.

It determines how much should be withheld from your paycheck to pay for income taxes. The be before has a lot of questions like Do you have children do you have a spouse. Do you have other jobs. All of those come play a part in whether or not you have to pay income taxes or how much you have to pay in income tax. Then when it's January or February typically mid January you're going to receive a document called a W-2 in the mail. It comes from your employer and states the amount of taxes that have been withheld from your paycheck throughout the last year. So the W-2 is kind of like a receipt that tells you everything you need to know in terms of how much you made how much your employer withheld from your paycheck. It's like a summary of what's gone on throughout the year for you financially in terms of income and taxes. So then by that April 15th he must file your taxes by completing an income tax return Form. Typically that's online is just a website you'll go to and then ask you questions. You have to answer and it will to help determine whether or not you've paid enough income tax And it also determines if you've paid too much in income tax or if you've had too much taken out of your paycheck or not enough. Which means you either get a refund or payments. You might have heard your parents talk about like oh I've got my income tax refund for the year typically. That's a good thing you're getting a refund back and having to pay means you didn't have your employer withhold enough money and you owe even more in income tax. this is the overall cycle. You get a job so you fill out a W-4 work and work and work. Then it's January and your employer sends you a W-2 that you have to use to file your taxes.

Income tax withholding 
that W4 is used by your employer And again it's just a form piece of paper that you'll fill out with your information and your employer uses it to determine how much to withhold from your paycheck. There are ways to reduce the amount of tax you owe such as if you have children or are married and the W-4 form asks those questions to take those reductions into consideration.

I'll take a moment and say that with President Trump's new tax plan that came out last December of 2018 that this will be changing sometime this year actually. But it hasn't changed yet and so we still are still going to teach it. But it's the W-4 form we'll be changing a little bit as we move forward in this year and next year. But for right now this is all still current still in use so it's still an important thing to learn.

The W right now is the current pre Trump tax plan W-4.

We'll tell your employer how much of your salary not to tax by using something called allowances. So again a W-4 is for your employer and it explains. If you should be having any reductions in the amount of tax you owe. There's a lot that goes into income tax that we haven't even touched on but the W-4 helps your employer get some basic knowledge to be able to know how much they should be taking. Taking out of your paycheck.