Digital Signature Legality for Accounting and Tax in United States

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in order for the government to run it needs money the government gets its money by taxing its people taxes pay for all sorts of government jobs and services federal taxes help pay for national things like the president congress federal judges and the military state taxes pay for local roads and the governor county and city taxes helped pay for schools fire trucks and the police without taxes the government couldn't run and the country would be in chaos so as much as we don't like paying taxes doing so is an important part of living in a society a tax is money that the government collects in order to pay for everything that the government does we work for money or an income and the government takes a portion of this as a tax [Music] payroll withholdings are taken out of an employee's paycheck every time payroll is run there are federal state and sometimes even local taxes withholding taxes are payroll taxes where the employer withholds a percentage of the employee's income for federal state and local income taxes employer taxes are payroll taxes that are paid by the employer only some payroll taxes like medicare and social security are shared taxes that are split between the employer and employee employers are responsible for payroll taxes for their employees however employers are not responsible for managing payroll taxes for contractors how are payroll taxes going to affect how much you see on your paycheck the amount on your paycheck before taxes are taken out is gross pay the amount after payroll taxes and other deductions like benefits is net pay also known as take-home pay one tax that comes out of your paycheck is the social security tax this tax is meant to help people when they retire once you're old enough you can start collecting a social security check until then you will pay a portion and your employer will also pay into this tax medicare tax comes out of your paycheck too it pays to help people age 65 and over who are sick and need medical care you will pay part and your employer will also kick some in on your behalf in addition to the payroll taxes we talked about employers must pay an unemployment tax for each individual that works at the company this is called state and federal unemployment taxes there are other taxes besides just payroll so let's keep going income tax is what's called a progressive tax which means that those who make more money pay a higher tax rate if you make very little money you pay no income tax at all if you make a decent amount of money you pay a fraction of it to the government if you make a lot of money the fraction you pay is theoretically higher this system is designed this way because those who have enough money not to worry about putting food on the table each day can afford to pay more to the government income taxes are a percentage of the money someone makes on their job there are different types of income tax including federal state and local income tax federal rates can be anywhere from zero percent to thirty nine point six percent and state rates run from zero percent to thirteen point three percent in some states people can pay over fifty two percent of their income in income taxes alone you report and file these taxes each year by april 15th all the money you make during the year is considered income no matter how you make it if you work at a job for wages that's income if you win the lottery that's income too if you own property like a house then you probably have to pay property taxes there's often a property tax from the county and the city property tax is usually a percentage of the current value of the house if you own a three hundred thousand dollar house and the tax is three percent then each year you have to pay the government nine thousand dollars in taxes these taxes are paid when you make a major purchase like a car or home and again each year based on the value of the item your home tax may be included as part of your monthly mortgage payments sales tax is placed on all retail sales in many areas sometimes items like food or clothing are exempt from sales tax in some places every time you buy something at a store and they add on the tax at the end that's the sales tax sales tax levels vary depending on where you shop and what you buy businesses also have to pay all sorts of business taxes depending on how much profit they had and there are lots of other taxes such as tariffs on imports gift taxes estate taxes and unemployment taxes if this isn't enough to make your head spin don't worry the current tax code is over four million words long no one is going to be reading that this is why we depend on tax professionals and tax programs to help us file our taxes each year here's the bottom line on understanding the u.s tax system your paycheck won't be as big as you think it should be after all the deductions your new tennis shoes won't cost you what the price tag says after sales tax is added and that brand new car you want will cost you more than what the invoice says after you pay the state to own it all these pieces should be considerations when you're budgeting when in doubt consult a tax professional to help you navigate through all the laws