Two things are certain: death and taxes. I am metaphysically traumatized by both, but while my knowledge about the first is shaky, here is what I’ve got about the latter.
April 18th. Remember that date, because it’s when taxes are due this year. The taxes are based on your income in the year 2022 - from January 1st to December 31st. They’re due a quarter into 2023 to give everyone enough time to collect documents and finish the paperwork.
You should file taxes regardless of if you have made an income or not. Why?
If you’re an international student like me, it happens to be compulsory by the government and not doing so by the deadline could result in problems with or a revocation of visa as well as possible ineligibility for a green card.
A refund could be coming your way. You may want to double-check their taxable income — some portion or all of a scholarship or grant can be taxable if it’s used for incidentals, including room and board or travel.
And lastly, “This is a great introduction to adulthood,” Holly Reid, a certified public accountant who specializes in financial education for young people, tells CNBC Make it. ”
I don’t think the idea of paying taxes is very intuitive, because technically it’s like we pay taxes every time we receive a paycheck.
What happens when we “pay” taxes? When employers pay us, they usually withhold part of the money to pay estimated federal tax on our behalf. A tax refund is a reimbursement to taxpayers who have overpaid their taxes, often due to having employers withhold too much from paychecks. The U.S. Treasury estimates that nearly three-fourths of taxpayers are over-withheld, resulting in a tax refund for millions. Overpaying taxes can be viewed as an interest-free loan to the government. On the other hand, approximately one-fifth of taxpayers underwithhold; this can occur if a person works multiple jobs and does not appropriately adjust their W-4 to account for additional income.
Essentially, if you fail to file your taxes on time, you'll likely encounter what's called a Failure to File Penalty. The penalty for failing to file represents 5% of your unpaid tax liability for each month your return is late, up to 25% of your total unpaid taxes. If you're due a refund, there's no penalty for failure to file. To take a little stress of, United States citizens are only required to file tax returns once they hit the income thresholds for their filing statuses, which ranges from $12,950 to $27,300 for tax year 2022, and if you are a citizen with no scholarships and possibly not earning in that range, you’re good for this year - although it is still good to begin familiarizing yourself with this.
We pay Federal tax and State tax. The details for both can be found on the IRS website. The old-fashioned way is to find and fill up the tax forms relevant to you and mail it to the respective address that can be found here.
The other option is to file online using tax preparation software, such as TurboTax or H&R Block. These programs walk you through the process of entering your income, deductions, and credits and will automatically calculate your tax liability. You can then file your tax return electronically.
So far we have, you have a job = employees keep some of your income and pay taxes for you, filing taxes = a refund/ opportunity to pay the entire obligation, find a relevant form, fill it up, and send it out = you are a dutiful citizen.
U.S. residents file federal income tax returns with Form 1040, but you may need to include additional forms like Schedule C and Schedule SE if you have self-employed income.
Now let’s try to get more details in about Form 1040 and its requirements Part 2.
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