Taxes: What are they, and why are they important?
Taxes are yet another financial topic that young adults know little to nothing about when entering adulthood. It can be hard learning how to do taxes when we know nothing about them. Understanding the basics of taxes can help a person become more financially successful and independent in the long run.
According to https://taxfoundation.org/tax-basics/tax/, taxes are defined as “a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.” With most jobs, taxes are taken directly from your paycheck. By looking at your paystub, you should be able to identify the taxes by locating the amount of money deducted from your earnings.
Taxes are important because they aid the government in funding goods for the people. Unfortunately, that means some of our money never makes it to our accounts on payday. The amount of money you must pay in taxes is determined by tax brackets. Tax Brackets categorize each range of income and designate tax rates to them accordingly. As of this year, the tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The higher a person’s income, the higher percentage of taxes they must pay. It is important to mention that filing status also greatly impacts how much a person must pay. There are five filing statuses, including single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child. https://apps.irs.gov/app/understandingTaxes/teacher/hows_mod05.jsp
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|Brylee Bergbower is a student at the University of Texas at Tyler studying Kinesiology who is taking on the world, learning about financial matters, and writing about it for Kelly Community. In her spare time Brylee juggles two part-time jobs, spends time with family and friends, stays fit, and studies!|