r/personalfinance • u/zonination Wiki Contributor • Jan 31 '15
Reminder: Khan Academy still has basic explanations on taxes in the U.S. This should help you with understanding tax brackets, deductions, and other related information. Taxes
Basically a repost from last year, but I felt the need to remind people that this resource exists. There are some simple explanations of tax law in the U.S. over at Khan Academy. Here are a couple links:
And since retirement accounts tie into deductions:
Let me know if there's anything related I should add to this list. Happy filing!
88
Jan 31 '15
People who don't understand tax brackets are my pet peeve.
"IF I EARNED TEN DOLLARS MORE, I'D ACTUALLY EARN LESS AFTER TAXES."
NO. LEARN HOW A THING WORKS BEFORE YOU BITCH ABOUT IT.
10
u/hotchrisbfries Feb 01 '15
What does Bill Gates and I have in common?
We both get taxed the same amount for the first 50,000 we make.
8
Feb 01 '15
Well since 100 percent of Bill's income is capital gains, he gets taxed at a flat 15 percent.
3
u/NOTorAND Feb 16 '15
If he's making over 400k in gains it's actually 20%. http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New
19
Feb 01 '15
[deleted]
4
Feb 01 '15
He may have meant that if he works more hours, or if he gets a significantly harder job, that he isn't rewarded proportionally for that... I think most people that educated understand tax brackets.
17
u/goblueM Feb 01 '15
I think most people that educated understand tax brackets
Sadly, no. Many very smart people are completely ignorant about tax brackets. Just because you're smart in one area does not mean you understand another
12
2
Feb 01 '15
That is fair, someone may rationally decide that their increase in net income, which is taxed in the next bracket is not worth doing the extra work for. In absolute terms, you never make less because you enter a higher bracket, but it's not just about pure numbers.
11
u/dex1 Jan 31 '15
2015 brackets: http://taxfoundation.org/blog/irs-releases-2015-tax-brackets
15
Jan 31 '15
[deleted]
61
u/FreeCashFlow Jan 31 '15
You misunderstand. You'll only be taxed at 25% on the $500 above the bracket cut-off. The rest will be at 15% and lower.
27
u/Bones_MD Jan 31 '15
So wait...let me get this straight. First 9225 is taxed at 10%, then everything up to 37.5k after that 9225 is taxed at 15% and so on?
25
u/jmblock2 Jan 31 '15
Yes
29
u/Bones_MD Jan 31 '15
Oh my God that makes so much more sense now.
5
Feb 01 '15
Beautiful, isn't it? I love clever systems like this.
10
u/Bones_MD Feb 01 '15
That really is amazingly clever and it really doesn't fuck any one particular person over. Wow that's actually a lot more balanced than I thought it was, and the top tax bracket is only attainable by the top five or six percent of earners in the US.
1
11
u/FreeCashFlow Jan 31 '15
You got it! And don't forget, your taxable income is reduced by both the standard deduction and the personal exemption. In 2015 these will total $10,300. The deduction could be higher if you itemize, which depends on factors like state and local taxes, charitable giving, mortgage and student loan interest, medical expenses, etc.
3
1
3
u/TehFacebum69 Jan 31 '15
Does this apply in the UK as well (England, specifically)? I looked on the .gov page about it and I didn't really understand it.
3
u/mtrain123 Feb 01 '15
Yes it is the same in UK. You pay 40% on income greater than £31k but 20% on anything below it.
7
→ More replies2
Feb 01 '15
Literally in the very thread where videos explaining tax brackets has been posted. You can lead a horse to water...
10
Feb 01 '15
I went to a private Orthodox Jewish high school and learned no secular studies whatsoever. In tenth grade I dropped out of school and got my diploma through a correspondence course from Penn Foster.
A few years later Fafsa finally offered me enough money to afford college. My math level at this time was fractions. My father told me about Khan Academy, so I looked it up, figured out that I was pretty much on a second grade math level, and just started plugging away.
Less than a year later I had learned everything through algebra II. I started in November or December and was finished by June, when I started my summer job. For various reasons I didn't start college that year but I still remembered it well enough to place into the lowest credit course at my local community college.
Khan Academy is just amazing. It completely changed my life, and my outlook on math. I never thought of math as a puzzle before I started watching Sal's videos. It's beautiful.
37
u/HomicideSS Jan 31 '15
It's annoying how they don't teach this in high school. It's okay though, we learned a bunch of irrelevant things
72
u/scottfarrar Jan 31 '15 edited Jan 31 '15
I'm a high school math teacher, I can shed some light on why these kinds of courses are not often given, and why even the content is not often taught.
The main reason is: the concepts are simple, the details are "hard".
Secondarily: it lacks direct relevance to high school students as they do not typically have jobs at all, and even fewer have jobs that pay enough to justify anything other than the
AMTstandard deduction.More about the details: difficult taxes are due to personal situations which are too numerous to explain didactically, and really only relevant to a person in that exact situation. Can you imagine a more boring class than learning about how to complete the various combinations of tax forms?
What are the conceptual skills required behind "doing" taxes? Arithmetic and technical reading, with some organization skills to tie it together. I would argue those skills are taught in schools-- they're the kind of thing you do every day. As for the philosophy of government regarding taxes, public high school students take a Government/Economics class their senior year.
Look at Khan Academy's listings of topics. The total length of the videos is about 1 hour, and that's at Khan's slow pace of talking. Now lets say you designed a course that went into 1000% more detail-- even that would be 10 hours, or two weeks in a normal high school course pace. Too small for a semester or even a quarter length course.
Now there do exist personal finance courses that would cover these kinds of things, along with other money management topics, like managing credit card debt. But what is the "bang for the buck" for the school or the student? They courses I'm aware of would not be rigorous enough to be accredited as college prep math or social studies. And the school would need to assign a teacher and budget for it-- many schools face budget cuts and need to cut Art, Music, even Language courses.
And...who actually can't do their taxes? Yes I know many people don't: they go to H&R Block or something-- but would a brief series of direct lessons years in the past have any effect on this? If someone told you about deductions 10 years ago, would you know how to do it without looking it up?
Finally, its because tax information is already freely available to anyone who wants to learn it: now on Khan Academy for example, but states like California have free services to help you do taxes, and of course you can read the IRS instructions for yourself.
Ideally, schools teach all of the relevant foundation concepts (like arithmetic reading, and social studies) that give students the mental tools to adapt to a variety of future events. Schools cannot teach every specific procedure for all possible future events for all possible students.
14
u/kyha Feb 02 '15
I'll agree, somewhat... actually, y'know what, I'm gonna disagree. You're working from a very flawed premise.
The problem with not teaching taxes in high school isn't one of math, it's one of civics. Nobody explains what the taxes are used for, nobody explains how taxes are considered legitimate, and most importantly nobody ever explains where to find the rules on how they're being taxed and the forms they need to fill out.
And nobody explains the most basic tax form, the 1040-EZ, or what W-2s or W-4s are or look like, or what I-9s look like and why they're important. At this point,
Nobody explains the generic process and procedure for starting a business, including municipal, county, state, and federal licensing requirements. Nobody explains the records that need to be kept, how to start a set of books, where to find additional information, or even that every individual is a sole proprietor who needs a set of books separate from the books of any business they start. Nobody explains how to set up a payroll, or the administrative requirements to do so. Nobody explains what the FICA tax or unemployment tax are used for, or the formulae for how they're considered acceptable.
I also have a beef with high schools not teaching information on the basic theory behind criminal law (you must in most cases do something with mens rea, or 'guilty mind', intending to do something that's against the law before you can be held criminally liable for it, and crimes are considered offenses against the state because the state structure itself suffers damage if they're committed), or where to find information on what the text of various crimes and their punishments are. The same with civil law, and the reasons for various types of laws such as building codes.
I'll agree that schools can't teach every specific procedure... but when even the most fundamental and basic aspects of "how to be taken seriously when you try to participate in the state" are ignored, you end up with states and counties and municipalities that are left in incredible deficits and have to hire huge revenue staffs just to try to catch up to people who don't pay their taxes. This costs taxpayers money, increases disrespect for the state and government, increases the likelihood that the students will end up in prison [for tax evasion, if not for simply disrespecting the law], increases internal strife among the various social classes, and hurts everyone.
You ask what the "bang for the buck" for the school is? It's teaching kids how to participate in the state structure that creates enough peace for the school to exist. How about for the student? Reduce disrespect for government, and maybe even be able to get the armed cops out of school buildings. What about for the taxpayers/parents? They don't have to worry about their kids getting incorrect information about social participation requirements.
I believe that civics is a foundation concept that needs to include the aspects I just mentioned. I don't believe taxes are necessarily mathematics -- they're just arithmetic, until the person paying them needs to move numbers from one category to another, at which point it's more knowing how to do and keep the paperwork to show what they're trying to do.
Tax evasion and failing to file taxes can lead to assets being seized, and/or the person going to prison. It's important to explain why taxes are collected, and what they're used for.
3
u/scottfarrar Feb 02 '15
Interesting points. I think the government/economics course (12th grade) covers some of these things in a basic way.
In regards to the bang for the buck comments, I don't think many schools can afford to think of such long term goals without a lot of additional support from the state. If it's not college prep or API-increasing these days it won't survive long.
But to push back in a way that may illustrate some flawed premises on the other side: many of the things people want to put in the high school are simultaneously too simple and too advanced. I say simple because "starting a business" procedures are just that-- procedural. Yes you don't know exactly the procedure, but given certain skills you can find out how. The schools are (ideally) providing these meta-skills.
But I also say advanced because there are complex specifics to starting a business that rest upon foundations like concepts of democracy and capitalism. These things are hard to pin down because they are so basic to how we all think. Consider as an analogue the math concept of addition: recently there was a post on the front page about adding 5+7, where the teacher conveyed "making tens" ( 5+(5+2)) is a useful way to see the problem. But the comments were filled with people that thought "that was just how their brain worked". The idea is so ingrained that it is unfamiliar to the adult. These concepts exist in social studies as well. I'm not saying theres no value in the ideas you suggest, but I am saying that courses do have goals to accomplish already.
1
u/kyha Feb 02 '15
Schools are already getting tax revenue from the state. They're supposed to be preparing people to participate in the state. If they're not, it's a failure of the current curriculum to prepare the students for what they'll be expected to do as adults.
And teaching library skills in low elementary school grades is fine... until people need to start looking at university libraries, or try to look up citations for legal cases so they can understand what the law actually requires. University libraries don't use Dewey Decimal, they use (in US) the Library of Congress categorization. And it took a long time for me to understand legal citations (which are references to specific books, inline, in ways that don't mesh with most research paper citation formats).
1
u/Aquix Mar 22 '15
Wow. I don't know anything about any of the topics you mentioned. So, is there a "tax" course I can take (I haven't watched the Khan videos just yet but I have a feeling they won't cover everything I need to know) and does this stuff fall under accounts, economics, or civics?
2
u/kyha Mar 22 '15 edited Mar 22 '15
I don't know of any actual courses at high school level on any of the topics that I mentioned. That's the worst part: these are things that everybody needs to know, but nobody at all is ever taught.
Doing a set of books for a sole proprietorship (including one's own life) is basic bookkeeping, which might fall into a category called "business math". Double-entry bookkeeping isn't taught in home economics, but it should be taught somewhere.
The theory of taxation is civics. Licensing is civics. The differences between criminal law and civil law is civics, as are criminal and civil law themselves. The theory of government (including public safety, order, and paying for it) is civics. How to participate in a court case as plaintiff, defendant, and on a jury is civics. Learning about the different levels of governments, the rule that lower governments can't undo or loosen the laws of higher governments, and where to find each level of government's constitutions and charters and laws and ordinances and regulations are all civics.
Starting a business should fall under civics, as well, especially since the government seems to want there to be a lot more small businesses than there currently are. I'll grant that there might be a good reason to only teach this to people who want to start a business, but there are a lot more businesses being run in junior high and high school than most people would want to recognize. When they're started without appreciation for the rules and regulations, any attempt to impose those rules and regulations and taxes afterward is going to increase resentment against government.
But right now, "tax" courses (at college level) are typically considered accounting courses. I'm guessing that this is one of the main needs that the Khan Academy saw and is trying to address with their videos. You might be able to find an Adult Continuing Education class, or seminars at your local library, to figure out how to do the forms... but I'm pretty sure you'll never find one that will give you the theory behind it all. :(
This is the world that we're born into, where students aren't shown that the people who wield government authority are representing something much more than just being other people who are arbitrarily getting in your face.
[edit: mentioning that the tax courses I've seen have all been at the college level, not at the high school level.]
2
Feb 01 '15
[deleted]
5
u/superDuperGreat Feb 01 '15
Handed a set of user stories (read: requirements) for software or a a software feature, the new guys just don't get it.
The hardest part of life, for me, was finding out I actually had to do stuff on my own. I had just spent 18 years being told exactly what to do and there was no way 4 years in college could break those bad habits so one day I showed up to the industry's doorstep still not knowing I would have to do stuff.
To be fair, I've been in the industry for a while now and still nobody has told me what to do. I just want an accurate scope of work but nobody will give it to me.
1
Feb 01 '15
[deleted]
1
u/kyha Feb 02 '15
unfortunately, being able to do that in your sleep is what you're doing and able to do that's worth that $100k/year salary.
1
u/almostsharona Jan 31 '15
It seems like government and econ classes could simply build in a unit or two on this. They are seniors, so they aren't trying that hard anyway. This may actually entice then.
4
u/BloodandRank Feb 02 '15
Thats a common misconception. My senior year in highschool was my toughest year. 4 ap classes and 2 dual enrollment (community college+highschool credit) made every night full of homework (apart from club responsibilities). Ap classes require a test to receive college credit so every minute of class lectures is important. Definitely can not devote units to non course material until after testing, and even then not all students will pass the test so you are preparing them for their college courses. While there are obviously different kinds of students, it is honestly insulting to many college bound students to suggest seniors slack. The requirements to even be considered to top schools is immense, as are those to be accepted to upper midrange schools. Learning how to do your taxes does nothing to help you get into harvard law school and does less to prepare you for your engineering internship out of a top school. It isnt too far of a stretch to assume students who put in the effort to attend a prestigious or mid level college can also put in the effort to learn how to do their government mandated taxes, or pay someone to do it for them.
1
u/lovestruckluna Feb 02 '15
That doesn't mean it can't be done. There is typically a period of time after college exams, in my AP Econ class, we used that to learn the basics of tax forms.
1
u/almostsharona Feb 27 '15
You're right, and I apologize because I should/do know better, especially since I was that AP student as well. Now, as an AP teacher, I see that must of my AP students remain focused and hard-working, and over half of my CP students do. This means that the misconception is based on maybe 30% of the average set of students at my school, most of whom weren't setting the world on fire in previous years either. Most of my colleagues agree, yet we all perpetuate this myth.
2
u/Indenturedsavant Jan 31 '15
Sounds like someone is jelly they didn't major in accounting. But seriously, go audit an intermediate accounting class, that is where the "fun" begins. Also taxes are one of those topics that some people just find interesting, like people who enjoy studying case law or reading almanacs. I doubt most people would find anything beyond precalc interesting enough to make it into a profession.
2
u/scottfarrar Feb 01 '15
Sure I'm all for people going on to study economics, finance, accounting. Algebra 2 is where many of the foundational concepts to those fields are developed: such as compound interest, theory of functions, optimization.
Accounting is not often going to be able to be offered at the high school level. Don't most colleges have calculus as a pre-req? Sure, you could introduce accounting concepts in less detail earlier, I personally don't know if it is as broadly applicable to the general public. What do you think are some benefits?
1
u/nwrnnr5 Jan 31 '15
Wait a second, what sort of high school do you work at where kids are paying AMT?
1
1
1
u/tuseroni Feb 02 '15
As for the philosophy of government regarding taxes, public high school students take a Government/Economics class their senior year.
in a way, in government and econ classes that i had taken they covered why we have taxes and what taxes are used for, but not much into why we have tax brackets or what it means to be IN a tax bracket (i actually just learned this on my own last year....some 10-11 years after the fact) we were never told the philosophy about WHY taxes are bracketed, or comparing and contrasting to flat percentage tax rates. so i had believed that if you made a certain amount all your income was taxed at x and if you made more it was all taxed at Y rather than the first bit being taxed at x and the remainder at Y.
3
u/scottfarrar Feb 02 '15
First, not to sound harsh, but some of that is on you. School isn't going to hand you every piece of information you need in life (that's an impossible task), its going to prepare you to be able to seek, access, and process information on your own.
But second, I can't speak to what your specific teacher did in 12th grade gov/econ, but California for example has a Social Studies standard that reads:
12.2 Students evaluate and take and defend positions on the scope and limits of rights and obligations as democratic citizens, the relationships among them,and how they are secured.
3. Discuss the individual’s legal obligations to obey the law, serve as a juror, and pay taxes.
12.3 Students analyze the influence of the federal government on the American economy.
3. Describe the aims of government fiscal policies (taxation, borrowing, spending) and their influence on production, employment, and price levels
1
Feb 02 '15
As for the philosophy of government regarding taxes, public high school students take a Government/Economics class their senior year.
I did not - I guess it depends on where you are/when you attended.
2
u/scottfarrar Feb 02 '15
In which state did you attend high school?
1
Feb 02 '15
New Jersey
2
u/scottfarrar Feb 02 '15
Most states have updated the standards in the past few years, New Jersey included, so here are the current adopted standards regarding "civics":
http://www.state.nj.us/education/cccs/standards/6/6-3.htm
The standard of
6.3 Active Citizenship in the 21st Century All students will acquire the skills needed to be active, informed citizens who value diversity and promote cultural understanding by working collaboratively to address the challenges that are inherent in living in an interconnected world.
is woven into all grades, but specifically checked upon in grades 4, 8 and 12.
The philosophy that does not specifically mention taxes is instead based upon the idea that students who can take on the larger task of something like "Make informed and reasoned decisions by seeking and assessing information, asking questions, and evaluating alternate solutions." or "Deliberate on a public issue affecting an upcoming election, consider opposing arguments, and develop a reasoned conclusion." could take on "taxes" as a part of those threads and others, or, as it becomes important in the future lives of the students, individually access information.
2
Feb 03 '15
Interesting. Like you say, it must have been a recent change. I graduated in 1996. We had "social studies", but that didn't seem to particularly focus on "active citizenship" topics - it was more geography and history.
Thanks for the information though!
1
u/total_looser Feb 06 '15
should still teach the concepts, the basics:
- what are tax brackets
- what are itemized deductions
- whats the difference between a w2 and a 1099
- what are capital gains
another thing school sohuld teach is basic contractual concepts
- what are terms
- what are conditions
- what are exclusions
- how to read a contract
many students graduate high school then get extremely shitty student loans, sometimes with mega high interest rates and a no prepayment option - they are saddled for life with a horrible loan.
heck, i know tons of 40-50 year olds that are still completely befuzzled by cotracts, then get super angry about stuff like deductibles and maximums.
53
u/SigaVa Jan 31 '15
The purpose of school is to teach you how to learn and think, not to teach you specific applied skills. That way you can go learn stuff like this on your own.
18
Jan 31 '15 edited Aug 15 '15
[deleted]
17
u/pm_me_ur_math_hw Jan 31 '15
Your experience does not apply to every high school. I feel I got a tremendous education in my (public) high school.
4
Jan 31 '15 edited Aug 15 '15
[deleted]
1
u/pm_me_ur_math_hw Feb 01 '15
I even had the opportunity to go to a local community college to take classes for free. I graduated with 30 credits. It was way easier than AP classes, however based on what I've seen
1
u/MamaXerxes Feb 01 '15
All of my AP classes were harder than my college courses in their corresponding subjects.
1
u/HenryDavidThrowaway9 Feb 01 '15
My experience may just be piss-poor, but I never held the AP course I took to a very high regard. They were just parroting larger concepts back to the instructor. The extent of critical thought was distilled into memorizing taglines, quotes and key words for the evaluations, just like standard classes. Enlightening elucidations from any high school course curriculum were few and far between.
3
1
u/FlavorfulCondomints Feb 01 '15
What school were you at? I definitely learned how to think and took tests/quizzes/etc. in a public US high school that were not "fill in the blank" or all multiple choice.
1
Feb 01 '15 edited Aug 15 '15
[deleted]
1
u/FlavorfulCondomints Feb 01 '15
Yeah, I took both regular and AP. Still did critical thinking stuff in both levels, but I understand that the dynamic is different in a larger Texas school.
1
u/KeepPushing Jan 31 '15
Doesn't every school have elective classes? Just let this be one of them. I learned all kinds of skills in those classes including how to cook. You can't tell me that schools don't serve a higher purpose than just how to "learn and think". Learning taxes and understanding the history and purpose of it help students "learn any think" anyway. The more I think about it, the more I'm sick of this excuse for why we don't teach kids to do taxes in school. Just do it.
4
u/SiliconGuy Jan 31 '15
In my school, honors and AP classes gave your overall GPA a boost. So, wanting to get into the best college I could, I did not take electives like cooking, etc. Even with a perfect score in those classes, those classes would have actually brought down my GPA. I think many US high schoolers face this dilemma.
→ More replies2
u/RVelts Jan 31 '15
Some kids at my school even went as far as to take Health and PE during the summer, since those GPA's didn't count towards your overall GPA. A 4.0 would bring down your GPA if it was > 4 (with 4.5 being max for honors, and 5.0 being max for AP classes).
3
u/SiliconGuy Jan 31 '15
It worked the same way in my school. It might have been 5 for honors and 6 for AP, though.
In the class the year before me, the salutatorian was not valadictorian because he took an extra weightlifting class. He got a perfect grade, 4.0, which brought his GPA down enough to make him not be valedictorian. If I recall correctly, he could have taken some kind of study hall (which had no GPA effect), which is precisely what the valedictorian had done.
1
u/SigaVa Feb 01 '15
You think learning the trivial details of the currently implemented tax system in whatever corner of the world you happen to live in is a "higher purpose" than learning how to think and learn? Wow.
Also, 99% of all public schools offer exactly the type of classes you're talking about.
And who's "offering excuses"?
1
u/KeepPushing Feb 01 '15
You think learning the trivial details of the currently implemented tax system in whatever corner of the world you happen to live in is a "higher purpose" than learning how to think and learn? Wow.
You think offering me a false dichotomy helps make your point?
Also, 99% of all public schools offer exactly the type of classes you're talking about.
Absolutely not true. What's the point of you making this hyperbolic statement at all? Why even post this?
1
u/Pzychotix Emeritus Moderator Feb 01 '15
Learning taxes and understanding the history and purpose of it help students "learn any think" anyway.
To be fair, these were your words:
Learning taxes and understanding the history and purpose of it help students "learn any think" anyway.
I'm pretty sure any history class covers the history and purpose of taxation. That they don't teach you how to fill out a 1040 is a different subject matter altogether, but you didn't really specify to that extent.
1
u/KeepPushing Feb 01 '15
History classes also covers the history of great scientists and mathematicians and yet we're allowed to take classes that delves more in depth into those subjects than whatever cursory glance a high school history class can give. An income tax class can cover all kinds of policy making details that a high school history class cannot.
4
u/TallDude12 Jan 31 '15
We had an elective called personal finance in high school that included taxes for 1 unit. It felt super irrelevant for all the students. I think only 1 or 2 kids in the class had actual taxes to fill out and their parents just did it for them. For the rest of us, it felt like something that would be learned later in life as needed. It's hard to remember the details from high school by the time you actually have to fill it out yourself, so I had to relearn everything anyways.
2
u/Historytech Feb 03 '15
as a high school teacher I have to say this is the answer. People on reddit do not represent the average student in a classroom and the average student would not only be bored stiff but also would forget it.
I've taught tax brackets and some information about how to do them before when I had some extra time to kill when I only got half my classes that day and they just couldn't give two shits.
3
u/badwolf7850 Jan 31 '15
When I was in high school we had electives like Personal Finances, and Money Management and I think one was required. I took both and I'm glad I did. Do other schools not have this?
7
u/BucetaMonster Jan 31 '15
My school does but it considered the lower math class for upperclassmen. Usually they have students take pre-calc and Calc AB-BC and the finances class isn't required to graduate.
4
u/kypiextine Jan 31 '15
Don't forget that taking that personal finance class also makes it nearly impossible to get those higher level maths into your schedule. There's only so many classes you can take.
3
u/BucetaMonster Jan 31 '15
It's so ridiculous that they make students take elective courses that are mandatory like p.e. and art even though kids taken these classes before. Personal finance should be mandatory by today's standards.
5
Jan 31 '15
On the other hand I'm glad my school requires extra PE over personal finance to graduate. I'd rather take weight training than learn stuff I can easily learn online and thus already know.
1
u/MaybeDrunkMaybeNot Feb 01 '15
I mean, it is low level math. That's why it's not required. It would prevent people from taking a real math class like calc.
3
u/HomicideSS Jan 31 '15
Mine didn't. Then again I always see my district on the news for negative things. From coaches stealing athletic funds, to the district getting sued because a student was molested by a principal, to corruption. Needless to say I ain't proud of it
4
Jan 31 '15
But they did teach basic reading skills, addition, subtraction and multiplication which is all you need to do your taxes. If you don't know how to do your taxes, you were failed somewhere else in your education career. Personal taxes are not that complicated, you fill in numbers from your w2 and follow the instructions. If you make enough money, have investments and deductions they get more complicated, but are doable.
→ More replies→ More replies4
u/__PatrickJMT__ Jan 31 '15
It is not just annoying, it is downright tragic. I think it should be 100% mandatory for high school students to take a basic course that focuses on finance, interest, loans, etc..
11
1
9
u/rgtaber Jan 31 '15
This is a great resource for understanding basic tax information in the US. I have shared these videos to at least a dozen people and always gotten good feedback. I'm still surprised when people don't understand progressive tax brackets.
Khan Academy also did a short series on mortgages and interest, but those aren't particularly related to taxes.
3
8
Jan 31 '15
Thank you so much for this. I'm one of those "pay it" people and never actually know what I'm paying or why.
I sat down and worked everything out on paper along with the videos (using my own states brackets of course) and now I'm angry about the amount of my check that goes to taxes. At least I know where it's going now
11
u/Fleurr Jan 31 '15
Not to get into a discussion of politics, but there are a lot of hidden costs of running a government this big. But if you break it down and disagree with certain policies... Well, now you know how to vote!
4
9
Jan 31 '15 edited Jan 13 '21
[removed] — view removed comment
3
Jan 31 '15
I was really curious to explore the no pay in/pay out. Do we have some good faqs I could check out so I can start working on next year's taxes?
5
u/ScrumpleRipskin Jan 31 '15 edited Jan 31 '15
It's kind of a guessing game-- I've never got a perfect zero balance. You have to know your best guess for your annual income and adjust your withholdings for the year so by the end you owe nothing and get nothing back. Which means you maximized your income to stay in your hands without giving the government an interest-free loan.
http://www.investopedia.com/articles/taxes/08/owe-nothing-federal-tax-return.asp
If you're shit with money and love a huge tax return, just claim zero on your W4 with your employer. See, the W4 is you telling the government and employer how much or how little tax you want taken throughout the year. The W2 is what you get at the end of the tax year that says exactly what you made. Then you pay or receive the difference between the two documents.
Be careful! If you take too little throughout the year out of your pay, you may have to pay a penalty. Which sucks because if you pay a ton of taxes in payroll deductions, you don't get a bonus at the end. It's a one way street in the governments favor.
1
Jan 31 '15
Some believe paying come tax time is a good thing. You got more money through the year
6
u/TallDude12 Jan 31 '15
Unless you're able to invest the extra money as you go, most are probably better with a bigger refund that can be used as a form of "forced savings". That way when tax refund time comes, you can finally have something bigger that you need/want instead of actually having to budget for it.
1
2
2
Jan 31 '15
If I dropped insurance Sept 26 am I screwed on the fine?
12
Jan 31 '15
IRS employee here:
If I dropped insurance Sept 26 am I screwed on the fine?
Probably yes. Five more days might have made the difference.
Have a look at the tax year 2014 Interactive Tax Assistant for "Am I required to make a Shared Responsibility Payment (SRP)?".
Thank you for reading.
10
u/Indenturedsavant Jan 31 '15
Let me preface with saying that I'm not being sarcastic, because people that don't deal with you guys on at least a semi-regular basis will think I am. You guys have some of the best customer service I have ever dealt with. Thank you for your hard work, I wish you were all appreciated more.
2
2
u/zonination Wiki Contributor Jan 31 '15
This is a bit above my level.
/u/taxmankeith, how is your knowledge of the ACA?
2
u/onhcpf Feb 01 '15 edited Feb 01 '15
Hi, can someone explain this for me? Suppose a person makes $100,000/year. If he donates $10,000 to charity, so his taxable income is only $90,000, how does that benefit him? Either he gets taxed on his $10,000 (in the $90,000+ bracket) or he gives it all away and gets nothing. How is he "writing it off"? How do people use charity donations like this to come out ahead/benefit?
2
u/rlbond86 Feb 01 '15
how does that benefit him?
In short, it doesn't benefit him. He would be financially better off keeping the money in almost every imaginable circumstance. However, the tax deduction encourages donations, since someone who donates a lot at least doesn't have to pay income tax on the money he donated.
3
Feb 01 '15
It encourages donating as opposed to throwing things away and in general, it rewards people who donate. Every year, I donate about $400 - $500 worth of things that I no longer need at home. These things are no longer useful and selling them on craigslist is too much of a hassle. So, I'm either going to throw them in the trash or donate them. If I donate, I get a deductible. :) Also, some people just like to donate lots of money/big things. The deductible is just a nice reward for that.
However, if you are just trying to donate x amount of dollars to save it from taxation, you are doing it wrong and you are going to lose money.
→ More replies1
u/zonination Wiki Contributor Feb 01 '15
That should be right in the deductions section of the videos!
(Please review the previous video for background information)
2
u/onhcpf Feb 01 '15
I already watched that, and I'm still confused.
2
u/zonination Wiki Contributor Feb 01 '15
Ah, I took a second look at your question. Basically, by donating to charity, you reduce the amount from your taxable income. There is not really a way to come out ahead, unless donating to the charity is more valuable than the % you lose from the after-tax gain you get from the money.
I hope I am explaining this well.
2
u/Wolfie305 Feb 01 '15
So I kinda wanna see what I'll be getting back from taxes just from my job alone (not any of my student loan interest and other things) since my appointment with my CPA isn't for a bit.
Can I go through with the Turbotax free thing without it effecting me? Where do I stop so it doesn't actually file or whatever?
5
u/dozmataz_buckshank Feb 01 '15
if you just watch the tax bracket video congratulations you now know more about the American tax system than 75 percent of Americans. also if you live in United States congratulations on living in one of the most under taxed countries in the world despite what some may think.
1
u/BigCommieMachine Feb 01 '15
Here is a serious question: Why do we actually have to do our taxes? People's situations rarely change quickly. Why don't we file things like expected deductions for the coming year and have withholdings adjusted for the year? If your situation changes: you simply fill out paperwork and have your withholding adjusted.
6
u/professorder Feb 01 '15
Here's a serious answer: Companies like Intuit and H&R Block spend millions lobbying against this sort of thing.
2
u/Pzychotix Emeritus Moderator Feb 01 '15
Err, that's exactly what your W-4 is for.
1
u/BigCommieMachine Feb 01 '15
To some extent, but I am suggesting an extended W-4 which would attempt to eliminate all withholdings that aren't owed as taxes.
2
u/Pzychotix Emeritus Moderator Feb 01 '15
Have you looked at the W-4 worksheet on the second page? It allows you to calculate your withholdings given your expected deductions/adjustments for the year. And worst case, you could just use the IRS withholding calculator to do it for you.
1
Feb 01 '15
And if someone (actually, millions of someones) doesn't adjust their withholdings?
→ More replies
1
1
u/dddddave6 Jan 31 '15
My Macro class online suggested that we use the Khan Academy. Pretty cool stuff...
1
1
u/pecou Jan 31 '15
Thank goodness for Khan Academy, it saved my but more than once thus past year and is still saving me. I learn everything in there that I would not be taught in school like HOW TO FILE YOU TAXES. Take notes school system.
1
1
1
1
u/Creative_Deficiency Feb 11 '15
This is the first time I've ever heard of the AMT. A common complaint I hear is, basically, that rich people take a lot of deductions and end up paying a much smaller amount of income taxes than some think they should.
Does the AMT not do an adequate job of addressing this?
(I know this thread is old in reddit years, but I didn't feel starting a new thread here was appropriate for something so small.)
1
u/kludgecruft Mar 19 '15
This is awesome! thank you so much. I just got hired by a US company with a TN work visa, and will be needing to fill up a lot of strange tax papers and start getting acquainted with US taxes.
Any advice on taking the right tax/financial decision for my first time working in the US?
1
u/zonination Wiki Contributor Mar 20 '15
Feel free to create your own thread if you need specific information!
1
1
u/ksb28390 Mar 31 '15
I have a question about filing taxes. I'm helping a friend, who made 17K last year, paid 884.04 in taxes with her employer. She has a grown son who lives with her, doesn't work, and who she supported all 12 months. Neither have health insurance, and in NC where we all live, there is no subsidy through medicaid because of the jerks in raleigh who declined that in protest to the law passing. The least expensive coverage for both her and her son is $477, which is far above the 8% threshhold for unaffordable coverage. That's the background. She went to two big tax prep companies, one in a superstore, and another that is probably the largest, both of whom said she would only get back 38.00 after their fees. I did a quick and dirty run through on a tax prep software page, and it is showing she should get all her taxes back. Any comments, advice, warnings, knowledge anyone can offer about whether she would be safe to file herself rather than going through one of these companies? What are we missing.
1
u/zonination Wiki Contributor Apr 01 '15
This would probably be a good question to ask in a thread of your own.
Hope you get the answers you need! :)
122
u/Ocean_Skye Jan 31 '15
khan academy in general is great for everyone for many subjects. i recommend everyone introduce themselves and their children to it.