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5 Tax Laws You Need to Know

5 Tax Laws You Need to Know

Death and taxes really are a fact of life. Everyone pays taxes. Even kids buy things so they pay sales taxes. It is imperative to understand how taxes may impact your life. Doing so has advantages. You can think about how to plan for your retirement, understand how your paycheck is determined and even learn about special tax laws that might give you money from the government. A savvy taxpayer is an informed and happy taxpayer.

 

Earned Income Tax Credit

 

In the 1970’s government officials began to think about the best way to help the working poor. One of the most important things they came up with is what is known as the Earned Income Tax Credit or EITC. This program is designed to return funds to those who have paid taxes that year. If you qualify, you can receive thousands of dollars at tax time. These funds can be used for anything from buying a home to paying back your student loans. Learn what is needed to qualify and how to ensure you’re filing the right forms correctly.

 

Income Tax Filing

 

Income taxes are one of the most important taxes people need to understand. Each year, the federal government requires people to pay income taxes by April 15th. In general, this is a firm deadline that must be met. If it is not met, a person may be liable for all sorts of penalties or even the possibility of prison time. People need to know about the kind of forms they need as well as how to fill them out correctly for government officials. Tax preparation experts can help. Free help is often available in many places including your local public library.

 

Payroll Taxes

 

Payroll taxes are a form of tax that serve a specific purpose. The goal of payroll taxes to serve as a source of income for social security and other problems used to provide for the needy in American society. People who pay a certain amount of payroll taxes can later claim help if they need it. That applies to the person paying. It also applies to their dependents including children and a surviving spouse. These taxes are paid by the employee. They are also paid by the employer. The employer needs to make sure they are paid properly or they could face all kinds of penalties.

 

Retirement Planning

 

Retirement is one of those things that everyone will want to do at some point. The prospect of leaving work and yet still having enough money to fund the things that people want to do is immensely appealing. Tax laws can help with this process. For example, people can open up a 40l (k) plan. This plan is designed to allow the person to set aside a sum of money each tax year that they can use when they retire. A good retirement plan can serve as one of many ways for people to fund their golden years.

 

Reducing Your Tax Burden

 

While paying taxes is something people need to do, no one wants to pay more taxes than absolutely personally necessary. There are ways that people can minimize their overall household tax requirements. People should know about the tax laws that govern their personal circumstances and how to take best advantage of it. For example, people can deduct property taxes up to a certain amount. They can also shield their income in other ways such as dedicating part of it for a child’s college fund. A tax professional can help anyone discover how to reduce their personal tax burden.

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