Explain Taxes???

Question

I need someone who knows what they're talking about to tell me all about taxes. liability?deductions?allowance?witholding? I was on irs.gov using the tax calculator and my expected refund was $0. why? I'm 18 and was 17 during my 2007 employment, I am planning on filing independently!11 PLEASE HELP

Answer 1

As you know, taxes are the means by which governments make money in the same way that businesses sell products or services. All levels of government in the United States tax citizens and visitors for something or another and use that money for a variety of products and services: make weapons and space ships; finance education; etc. Because you use the collective resources of the United States to earn a living for yourself, you must help pay to maintain paved roads; weapons and space ships; helping the poor; and so forth.

Your income tax bill (liability) is based upon an obscure government formula that tangles your “tax bite” with the portion of resources you utilize to make income and what portion you give back. Single people with few or no assets pay an outrageous disproportion of their income to taxes because you are thought to utilize a smaller portion of the economy and consequently not advance it very much. (Starting a family and buying a house is one oddball way that citizens are encouraged to utilize more resources which effectively reduces their tax bills.) Thus, unmarried independent wage earners have the greatest tax burden of all income earners. You probably pay more of a percentage of your income to taxes than your President, Mr Bush, who likely makes substantially more. But, investments outside of his political scope are presumed to generate more for the overall economy. Consequently, Mr Bush and others like him are rewarded with lower tax bills at the same time you pay higher and higher taxes.

The variable standard deduction is the portion of your income that is not taxed because the formula has a built-in allowance provided to all income earners for essentials like food and clothes. Because your employer withholds a certain percentage of earned income and sends it to the respective government at regular intervals, all levels of effected government are certain of a steady flow of revenue. The practice of setting aside a portion of your wages to cover the anticipated tax bill also reduces the likelihood that you will end the year with a large tax debt which might generate insane penalties. The amount withheld is based upon information that you provided to your employer.

The situation is far worse than I can get into at this time. The tax structure here in the United States is abusive, immoral, severely lopsided, excessive, and unsustainable. It will someday collapse. In the meantime, figuring out how best to use your money to avoid the excess of government is as important as a first rate education.

Answer 2

Tax liability just means the total tax you will be charged for the year. It depends on how much you made, where it came from (a job, or self-employment), and several things about your personal situation. Deductions - don't worry about it for now. You will get something called a standard deduction, an amount that anyone can earn tax-free from a job - that's $5350 for this year. So if you made less than that total, you won't owe any tax. Allowance - that's not likely to apply to you either.

You say you are planning on filing independently - I don't know exactly what you mean by that. If you mean file a separate return from your parents, you have to do that if you had a job and had enough income from that job to have to file. If you mean claim an exemption for yourself, you can't if you were living with your parents for over half of 2007, unless you provided over half of your own support.

Expected refund is just what you paid in extra over what you owed. If you didn't pay anything in, or only paid in what you owed, then there's no refund. Withholding means what they took out of your paychecks for taxes. Depending on how much you made, they might not have taken anything out But if they didn't, there's nothing to get back.

In adition to federal taxes, you might have to file a state return, depending on where you live and how much you made. Each state has its own rules, and they are different from federal.

Answer 3

Your information is limited, but GENERALLY at that age you should get a refund, because 1) your earnings probably weren't more than 5k for the year which is covered by the standard deduction 2) your interest/dividend earnings probably weren't very high (less than $200?) and 3) your employer probably took out a fair chunk of withholdings for taxes. Most people at that age (assuming you're still in high school) are eligible to fill out form 1040EZ. Take a look at that form and work the numbers again.

Answer 4

First you must know your filing status. It may be Single Dependent, even you say you are independent.
Rule: If someone can claim you dependent, you can't claim your personal exemption even if the person that can claim you as dependent does not claim you on his/her return.

If you are Single Dependent your federal deduction is $5,350.
If you are Single Non-dependent, your federal deduction is $8,750.
Your taxable income is your total income less $5,350 (or $8,750). For taxable income up to $7,825, the tax rate is 10%.

The allowance you claim on W4 (that you give to your employer) has nothing to do with your taxes. It is that you tell your employer how much taxes they should hold from your paycheck.

In January 2008 your employer will send you form W2 that will show your total income and taxes withheld.

You will need to file your federal and state income tax returns in 2008 by April 15, 2008. The returns will show your total income (from W2) and your total federal and state taxes on that income (these tax figures has nothing to do with what you put of your W4).

Now if on W2 you paid more federal taxes than your federal tax liability as per your return, then you will get a refund. If on W2 you paid less federal taxes than your federal tax liability as per your return, then you must pay it

Answer 5

The Taxes That We Are Facing Is By Far, UNCONSTITUTIONAL, but only a FEW are Doing Anything
About It.