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So my sister's husband just died and she has to figure out financial stuff for the first time in eons. She was shocked to learn how tax brackets work.
Do YOU know how tax brackets work? I think it's disturbing how many people have no clue how it works. I made my daughter fill out her first tax return by hand so she understands how it all works.
I suppose on the personal finance forum, the percentage who know how they work would be higher.
Tax brackets are a critical part of my tax forecasting, as well as the Qualified Dividend and Capital Gains worksheet. I would advise your SIL to download the 1040 instruction book from the IRS web site and look at the various worksheets and info inside.
I know how they work but if guess the majority of adults don’t. Most tax filers are w2 earners and can ballpark their federal liability within 2-3 minutes if they understood it
In my working years, whenever taxes were discussed, I was constantly amazed at the number of "adults" who had no understanding of tax brackets, or withholding taxes on bonus or overtime income.
Also pained me to see the 20-something wage earning renters paying the H&R Blocks to do their taxes every year. Once maybe OK, after that its "copy and paste". They just would not listen.
IMHO schools should teach tax filing like they (used to anyway) do driving training. Everybody needs it.
In my working years, whenever taxes were discussed, I was constantly amazed at the number of "adults" who had no understanding of tax brackets, or withholding taxes on bonus or overtime income.
Also pained me to see the 20-something wage earning renters paying the H&R Blocks to do their taxes every year. Once maybe OK, after that its "copy and paste". They just would not listen.
IMHO schools should teach tax filing like they (used to anyway) do driving training. Everybody needs it.
Well bonus income as well as overtime income isn’t taxed any different than normal wages
Tax brackets are a critical part of my tax forecasting, as well as the Qualified Dividend and Capital Gains worksheet. I would advise your SIL to download the 1040 instruction book from the IRS web site and look at the various worksheets and info inside.
Agree. I know way ahead of time how much I will pay because I estimate. Our income varies a lot depending on when we sell company stock, etc. so I do an analysis ahead so I make sure I have the cash because I am not required to make quarterly payments as long as I A) pay all I owe by April 15 and B) pay the tiny penalty.
In my working years, whenever taxes were discussed, I was constantly amazed at the number of "adults" who had no understanding of tax brackets, or withholding taxes on bonus or overtime income.
Also pained me to see the 20-something wage earning renters paying the H&R Blocks to do their taxes every year. Once maybe OK, after that its "copy and paste". They just would not listen.
IMHO schools should teach tax filing like they (used to anyway) do driving training. Everybody needs it.
Well, here's the thing. They do teach this in high school but I think you only start to get it when you file your first returns. My daughter learned it in high school consumer ed but really got it when I made her do it by hand.
I think hiring someone or doing it on turbo tax or other software is a mistake when you are first learning. But I was a financial analyst so I enjoy doing that kind of analysis.
Well bonus income as well as overtime income isn’t taxed any different than normal wages
It's not taxed differently but the withholding is different.
What amazes me is people not understanding that it makes no difference what is withheld. You owe what you owe. They only look at the amount due on April 15, not what their tax liability is.
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