Let’s face it; we are not getting any younger, financially that is. Gone are the days of our all-expense-paid existence and now that we started earning a living, we now also have to do our share of helping our government raise funds for progress. These financial contributions come in the form of taxes.
One of the most common forms of taxes that every working man should know is the income tax. But there is no need to worry. It’s not as scary as it sounds.
To a free-spirited millennial like you, filing income tax might seem boring and too detail-oriented. However, there are actually several benefits to really going through the details of the tax filing process. If your salary has income tax withheld or you hold a specific academic status, you might be eligible for a tax refund. Tax refund situations happen much more frequently than people think. Because of this, never miss any step in complying with the paperwork required.
Tax Papers: Where Do I Begin?
Now, speaking of paperwork, where do you actually start? What things and figures should you consider writing into those little boxes? Well there is no cause for panic. You are not even the one who need to fill out one of the most important forms–it’s your employer!
A simple W2 creator can definitely help them do that. What’s a W-2? It is a form that tells you your total earnings for the past year and how much taxes have you already paid with your salary. It’s simply a list to track your income and the amounts withheld from it as tax. Get it? Also, as millennials, we tend to answer every question with “There’s an app for that!” For W-2s, there most certainly is, and it’s really helpful.
The W-2 is just one of the forms that must be filled out when you file your taxes but do you even need to though? If your income was more than $10,400 then you definitely should file your taxes. Although, if you are being claimed as a dependent usually by a close family member, then you are required to file beginning at $6,350. Why so specific with these numbers? Ask the Internal Revenue Service (IRS) interactive tax assistant and they will be more than happy to assist you and answer any questions you have! Now isn’t that neat?
What Other Forms are There?
Of course, the IRS might require more information if your case becomes more and more unique. There is Form 1099-DIV for dividends, Form 1099-INT for interest income, Form 1098-E for student loan interest, and Form 1099-B for brokerage trades.
One of the most common and probably the most helpful is the student loan interest form. Let’s face it. A lot of us are burdened with student loans, so this form is really something that you should pay close attention to.
Despite all the daunting paperwork and processes, filing taxes is one of our duties and it just has to be done properly. There are very strict punishments for those who try to do away with paying their taxes. Because of this, individuals and business entities alike should always have tax planning in their annual agenda.