Introduction to Taxes and Basic Information

You might think that taxes are a necessary evil better left for professionals, but understanding the basics can help you minimize the total amount of taxes that you pay.

When planning for taxes, we usually think of the Federal filing deadline of April 15, however, you are required to pay taxes throughout the year. Paying the right amounts throughout the year will save you from having to pay penalty charges for underpayments.

For most of us, the payments we make throughout the year are made on our behalf through our employers. Employers automatically withhold taxes from our gross earnings before giving us our net earnings, the little numbers on our paychecks (or big numbers for you lucky ones).
Your employer is also responsible for reporting your total income and taxes paid by submitting form W-2 to the IRS. You must then file your taxes; which tells you the total amount of taxes owed and the total amount of taxes already paid-and either pay the difference (if your automatic deductions were too small) or collect the difference (if your automatic deductions were too big).

Throughout the year, there are important tips to follow in order to prepare for your taxes.
By InvestorGuide Staff

Copyrighted 2016. Content published with author's permission.

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