Regarding ~ TAXES
Definition – The sound a pre-teen girl makes when she doesn’t get her way.
That is also the sound you will make the first time you look at your paycheck and see how much money is taken out in Taxes. But before we get into how much is taken out of your paycheck, let’s discuss exactly what Taxes are.
Taxes are what we pay for services that impact the greater good of society. Think about services like school, police, military, and the fire department. Those are all very essential services that help everybody right? Well, in order for those services to be there for us, almost every member of society has to help pay for them.
Taxes are automatically taken out of everyone’s paycheck before they actually get paid. Citizens are required by law to pay Taxes but the government does not trust us to do it on our own; pretty smart if you ask me, so they do it for us. This is also known as a compulsory payment……feel free to use that one at your next sleepover!!
The percentage of your income that you pay in taxes is based largely on how much money you make in a year. In the following table, for tax year 2019, you will see the tax rate or “bracket” based on what is earned individually or as a married couple.
|Tax Bracket / Filing Status||Single||Married Filing Jointly or Qualifying Widow|
|22%||$39,476 to $84,200||$78,951 to $168,400|
|24%||$84,201 to $160,725||$168,401 to $321,450|
|32%||$160,726 to $204,100||$321,451 to $408,200|
|35%||$204,101 to $510,300||$408,201 to $612,350|
There are a bunch of surveys and studies out there that suggest most households fall into the 22% tax bracket.
So let’s say that after you graduate from college, you get a full-time job that pays $60,000 per year. 22% of $60,000 is $13,200. That is how much money the federal government (think military, congress, national parks, white house) takes out of your annual income.
But we are not done yet!
You also pay taxes to the state you live in and the city you live in. Then there is the tax you pay for Social Security and Medicare which help the elderly (you’ll see this labeled as FICA on your paycheck).
Now you see why I started this Memo with UHGAAA!!!!
But I want to make something very clear to you. Taxes are not only required by law but are also our civic duty to pay as citizens of the United States.
These dollars we pay help to make America one of the safest and most productive countries on the planet. It is, therefore, my honor to be a contributing member of our society and pay my fair share of Taxes.
There are people out there however that try to benefit from what our country has to offer while not paying their fair share. I think this is disgraceful and so should you. Never try to get out of paying your taxes. It is wrong and it is also illegal.
With that said, there is nothing wrong with legally limiting the amount of taxes you have to pay. These are called “Tax Breaks” and are wonderful ways to hold onto your money. The cool thing is that many of these Tax Breaks are granted to you by simply saving your money!
What a cool thing, right?!
These go by complicated names such as 401k, IRA, 403b, HSA, SEP, Roth….and on and on….
We’ll definitely talk about all of these in future Memos because they are super important and necessary to reach any level of Financial Independence.
So to sum it all up, yes Taxes SUCK but they are necessary in order to live in such a wonderful country.
Just don’t pay more than you have to.