Every year, residents of the United States pay a portion of income to the federal and state government to fund infrastructure for quality of life.
Individuals pay different amounts.
Factors affecting the amount include total income, marital status, dependents, residence, medical expenses, business and occupation expenses, tax qualified retirement plans, student loan interest, and other factors.
Generally, people who receive more income have a higher tax bracket and people who receive less income have a lower tax bracket. However, it is important to check eligibility on tax credits, deductions, and refunds based on the year’s economic conditions. Many people are eligible when filing taxes correctly and on time. Most employers and employees pay income tax throughout the year. April 15 is the deadline to submit forms and make tax payments.
The Internal Revenue Service (IRS) administers, monitors, and regulates federal taxes.
Tax professionals such as a Certified Public Accountants (CPA)s or Enrolled Agents (EA)s are specialists who help minimize taxes and file income tax forms.
Tax software is also available to help with the process.
Most people pay income taxes as soon as they start earning money. Employees are required to complete IRS Form W-4, which specifies the amount of money the employer withholds from each paycheck. Employees pay income taxes at regular intervals. The amount withheld corresponds to total taxes estimated on total income during the year.
Every year, people are able to determine whether they have overpaid or underpaid their taxes.
Follow these tips:
• Determine availability for tax credits or reductions.
• Complete tax forms.
• Determine overpayment, underpayment, or full payment.
If you overpay, you are eligible for a refund. If you underpay, you must pay the balance. If you paid your taxes in full, then no additional action is necessary.
QUESTION: Do you maximize your income and minimize your taxes?
Chris Bryant is an American financial advisor.