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TAXESWhat Students should know:The U.S. has a Progressive Tax system, meaning the amount of taxes you pay varies largely with how much you earn (including cash, wages, tips, etc.) How much you pay in taxes also depends on where you live (state taxes like sales, property, etc.)The Federal Government spends tax money on a wide variety of items, but app. 70% focuses on Social Security, Medicare, and Defense.You fill out a W-4 with every new job. Fewer allowances claimed means more money withheld from your paycheck and vice versa.Every January you receive a W-2 for each job you held the previous year. It details your earnings and tax withholdings.Filing taxes may seem complicated, but most situations don’t require a professional. Most teens will use the 1040EZ form to file their taxes.Your paycheck stub is like a “receipt” – it details where all the withheld money from your paycheck went.Teens working part time jobs should file a tax return because they probably won’t owe much income tax and will likely receive a refund of all/most of their withheld money. Remember, a large refund isn’t always a good thing – you could have saved/invested it!Failing to pay your taxes can result in: penalties/fines, credit score decrease, house/property liens, and more (like prison!)Common Student Misconceptions:I didn’t earn enough money last year, so I don’t need to file a tax returnIt’s still worth filing a tax return, because you will likely get a refund on the withheld income tax. Remember, a refund is really YOUR money – it was just withheld from your paycheck!If taxes are withheld from my paycheck, why do we have to file tax returns? Why do some get a refund while others owe more?Employees pay an income tax – how much you owe per year is based on how much you earn. Income taxes are withheld from your paycheck (withholding tax) and is a credit against the total income taxes you owe for the year. Based on the number of allowances you claim on your W-4, you may get a refund (meaning you withheld more than you needed), or you’ll owe more money (you withheld too little).If I file taxes, my parents won’t be able to claim me as a dependentParents can still claim teens as dependents if the teens meet certain requirements. Parents cannot add a teen’s earned income to their own and pay taxes that way. ................
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