Understand why you pay taxes.

In 1789, Benjamin Franklin said nothing is certain but death and taxes. You may not be able to stop them, but being well informed about taxes can ease your concerns.

You have to accept that if you earn a paycheck you will pay taxes. Federal, state and local governments rely on taxes to fund public services like education, transportation, defense and health programs.

Gross pay is the full amount you are paid. Your paycheck reflects taxes on your gross pay minus any nontaxable deductions such as 401(k) contributions. Net pay is your take-home pay, the leftover amount for you to spend and save.

If your income or filing status meets certain guidelines such as a low income, you may not need to file a tax return. It is worth noting, though that you are encouraged to file in case you are eligible for a refund from taxes paid or payment from credits such as the:

• Earned income credit
• Additional child tax credit
• American opportunity credit
• Credit for federal tax on fuels
• Premium tax credit
• Health coverage tax credit

If you want to find out whether you need to file a federal tax return, use the Interactive Tax Assistant Links to an external site. available through the IRS.

In this course, you will learn about paycheck tax withdrawal forms, preparing income taxes and managing tax payments.

 

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