4 answers
Jasie
Student
Fargo, North Dakota
1
Question
Asked
843 views
When you pay taxes, how much money gets taken or given back?
Taxes are filed by adults every year. as a young adult, it will be my first year paying them.
How much money gets taken or given back? How do you make sure that you're paying the correct amount and not getting extra income taken?
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4 answers
Nida Lopez
Associate Director of Digital Analytics
20
Answers
Atlanta, Georgia
Updated
Nida’s Answer
Hello Jasie,
There are numerous factors that contribute to tax deductions. Your employment status, whether you're a salaried employee (W2) or a contractor/consultant (1099), significantly influences your deductions. Other personal circumstances such as being single or a parent, having health savings, owning investments, being a homeowner, and your income level (which determines your Tax Bracket) also come into play.
Additionally, deductions for state, federal, and social security taxes can fluctuate and add to the complexity. A lot of these deductions are automatic and based on the information you provide in your W4 (witholdings) form when you commence employment. For 1099 workers, it's crucial to ensure you're paying the correct taxes if you choose to self-pay instead of opting for monthly deductions.
It's important to note that your paycheck can be affected anywhere from 10% to 37% due to these deductions. Most people typically find themselves in the 20%-27% range. However, I strongly recommend visiting the IRS website for the most accurate and current information because your deductions can vary based on a multitude of factors. The IRS website provides a wealth of resources that can guide you. Start by searching for 'standard deductions' and proceed from there. Wishing you the best of luck.
There are numerous factors that contribute to tax deductions. Your employment status, whether you're a salaried employee (W2) or a contractor/consultant (1099), significantly influences your deductions. Other personal circumstances such as being single or a parent, having health savings, owning investments, being a homeowner, and your income level (which determines your Tax Bracket) also come into play.
Additionally, deductions for state, federal, and social security taxes can fluctuate and add to the complexity. A lot of these deductions are automatic and based on the information you provide in your W4 (witholdings) form when you commence employment. For 1099 workers, it's crucial to ensure you're paying the correct taxes if you choose to self-pay instead of opting for monthly deductions.
It's important to note that your paycheck can be affected anywhere from 10% to 37% due to these deductions. Most people typically find themselves in the 20%-27% range. However, I strongly recommend visiting the IRS website for the most accurate and current information because your deductions can vary based on a multitude of factors. The IRS website provides a wealth of resources that can guide you. Start by searching for 'standard deductions' and proceed from there. Wishing you the best of luck.
Paul Goetzinger MPA
Academic and Career Consultant and Freelance Writer
751
Answers
Seattle, Washington
Updated
Paul’s Answer
I suppose it depends on how much you make and how many deductions you qualify for.
Let me make one suggestion. You might consider opening a Traditional Individual Retirement (IRA) with a financial institution.
These IRA's can be contributed to, up to six thousand dollars per year.
This contribution can be deducted from your taxes each year. Which means you get more back. That is very alluring. Being paid to save for retirement each year.
Plus, ten thousand dollars of this account can be withdrawn to place a down payment on a house. Another benefit of a Traditional IRA.
Let me make one suggestion. You might consider opening a Traditional Individual Retirement (IRA) with a financial institution.
These IRA's can be contributed to, up to six thousand dollars per year.
This contribution can be deducted from your taxes each year. Which means you get more back. That is very alluring. Being paid to save for retirement each year.
Plus, ten thousand dollars of this account can be withdrawn to place a down payment on a house. Another benefit of a Traditional IRA.
Douglas Ray, CMR, AMR
Sales, consulting, and marketing
52
Answers
Marietta, Georgia
Updated
Douglas’s Answer
Hi Jasie, the short answer to your question is that we pay too much in taxes. The government continues to demonstrate that they are poor stewards of the money they collect from hard working Americans. But as long as they have the power of taxation, we must continue to pay whatever they expect. Your employer's payroll department is responsible for ensuring the correct taxes are withheld from your taxes. If you are self-employed, you will make quarterly estimated taxes. Once the year ends, you will complete an annual tax return form and mail it to the IRS, due April 15 for the previous year. As you complete the form, you will usually discover that either you owe additional taxes on top of what you have already paid, or you discover that you overpaid through the tax year and you have a partial refund the IRS owes you. Keep in mind that we have a progressive tax system whereby if you are just getting started in your work you may be taxed at a lower rate such as 10-20%. As you grow in your career and your income climbs into the higher brackets, you may be taxed at 30% or more. Best of luck and many successes in your career.
Desiree Juby
Training and Development
11
Answers
Charlotte, North Carolina
Updated
Desiree’s Answer
Hello Jasie,
I recommend starting with the irs.gov website and reviewing publication 501. In this publication, there is information who should file taxes, information on the standard deduction based on your filing status; if you are single with no children, you'll file as a single individual and when reviewing charts and tables, you'll look at the numbers pertaining to single filers. For single filers under the age of 65, you are required to file a tax return if your gross income was at least $12,950. These numbers are based on the 2022 filing requirements. The standard deduction for single filers in 2022 $12,950. Although you aren't required to file if your gross income was at least $12,950; if taxes have been taken out of your paycheck throughout the year, you'll want to file taxes to get a possible refund from the IRS.
Some individuals are able to file their taxes for free using tax software by various tax preparation companies that have a partnership with the IRS. Each software company has determined the requirements to be eligible to use their software for free. Using tax preparation software helps you navigate completing our tax forms when you input information about your filing status, W2 information in the boxes and various financial questions such as any student loan interest you've paid during the tax year, any stock you've sold, any contributions to Individual Retirement Accounts among many others. Once you enter all the information, the software calculates your tax responsibility and determines if you'll receive a refund for overpayment of withheld taxes or the amount you owe the IRS for additional taxes not withheld from your paycheck. Using this software can greatly reduce unintentional mathematical errors if you complete the forms by hand.
You can use search term free file alliance to learn more about filing for free using tax preparation software in which the IRS has a partnership.
In addition many communities offer free resources to help you learn more about filing taxes; often these programs are offered by your local library, community organizations and community centers. However, these programs likely will not be able to offer advice to your specific situation.
One additional option to ensure that you are not overpaying your taxes and if applicable, the maximum amount of a refund for which you are eligible is to contact a CPA (Certified Public Accountant) and pay for their services to file your taxes on your behalf. However, this option will cost more money than filing for free using tax software.
I recommend starting with the irs.gov website and reviewing publication 501. In this publication, there is information who should file taxes, information on the standard deduction based on your filing status; if you are single with no children, you'll file as a single individual and when reviewing charts and tables, you'll look at the numbers pertaining to single filers. For single filers under the age of 65, you are required to file a tax return if your gross income was at least $12,950. These numbers are based on the 2022 filing requirements. The standard deduction for single filers in 2022 $12,950. Although you aren't required to file if your gross income was at least $12,950; if taxes have been taken out of your paycheck throughout the year, you'll want to file taxes to get a possible refund from the IRS.
Some individuals are able to file their taxes for free using tax software by various tax preparation companies that have a partnership with the IRS. Each software company has determined the requirements to be eligible to use their software for free. Using tax preparation software helps you navigate completing our tax forms when you input information about your filing status, W2 information in the boxes and various financial questions such as any student loan interest you've paid during the tax year, any stock you've sold, any contributions to Individual Retirement Accounts among many others. Once you enter all the information, the software calculates your tax responsibility and determines if you'll receive a refund for overpayment of withheld taxes or the amount you owe the IRS for additional taxes not withheld from your paycheck. Using this software can greatly reduce unintentional mathematical errors if you complete the forms by hand.
You can use search term free file alliance to learn more about filing for free using tax preparation software in which the IRS has a partnership.
In addition many communities offer free resources to help you learn more about filing taxes; often these programs are offered by your local library, community organizations and community centers. However, these programs likely will not be able to offer advice to your specific situation.
One additional option to ensure that you are not overpaying your taxes and if applicable, the maximum amount of a refund for which you are eligible is to contact a CPA (Certified Public Accountant) and pay for their services to file your taxes on your behalf. However, this option will cost more money than filing for free using tax software.