Tax audits are rare, but they happen.
Everyone’s favorite topic: taxes.
With tax day fast approaching, many people are already starting to get their accounting in order in preparation for their annual filing.
It can feel like an arduous task completing and submitting your tax return, especially if you’re not good with figures. However, if you’re organised, then it doesn’t have to be difficult.
Here is a truth that nobody wants to ever admit: if you’re diligent about tracking your details throughout the year, tax time isn’t all that big a deal.
As the notorious April 15th tax filing deadline looms closer, you might want to take the opportunity to figure out how you will choose to maximize your tax refund. You certainly have a wealth of options – including a nice splurge – but there are some options that you might want to take that will repay you for years to come.
If you’ve been slapped with a tax levy, you know exactly how disastrous this extreme measure can be on your credit, belongings, and life in general.
How much tax do you pay?
In America, it’s typical to pay about 50% if you include your income tax and all the sales tax you pay.
Of course, some people pay more, others pay less. Those in poverty often pay little to no income tax, while many rich people evade taxes through legal loopholes in the system. Therefore, the middle class is often left with the bill.
I’m not complaining, that’s just how it goes.
As a middle class American, you may be surprised to find out that you still pay less tax than much of the world.
See how you stack up in this infographic…
It happens to everybody. We get our first jobs, we work hard, we excitedly rip into that first paycheck and, as Rachel so famously said on Friends, “Who’s FICA? Why’s he taking all my money?” Congratulations! You’ve just been introduced to taxes!
Here’s the good news: for many of you, all of the money that is taken out of your paycheck over the course of the year for federal and state taxes will be refunded to you when you file your taxes. Trust me when I tell you: this is the easiest way to do taxes. When you go into business for yourself or start freelancing, taxes get a whole lot more complicated. But that is another article for another time.
Here’s how to manage your money now so that you can lay a solid foundation for later, when you’re ready to start investing in bigger things than CDs (which we’ll talk about in a second). For now, though, baby steps (no offense).