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April 7, 2023
New Mexico’s Legal & Financial Weekly
Vol. 10.103 No. 14
ADOPTIONS: 2 PROBATE: 32 AUCTIONS: 6 NOTICE OF SUITS: 7 OTHER: 29 SPANISH NOTICES: 0
5 Tips to Help Young Professionals Prepare a Tax Return
F
iling your taxes can be stressful and intimidating, but it doesn’t have to be. As the deadline for filing taxes approaches, don’t let the pressure overwhelm you. Follow these five tips for a smooth tax season.
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Know the different types of taxes you might have to pay. Federal Taxes: Your money is taxed at a rate between 0% and 37%, depending on how much you earn. Your employer will deduct the money for these taxes, and the taxes listed below, from your paycheck each payday. State Taxes: Not all states require you to pay state income taxes, but those that do typically take 3% to 11%. Local Taxes: These apply only to certain large cities, such as New York City, and can be as much as 10% of your gross paycheck. Social Security: Your employer will withhold 6.2% of your pay to cover Social Security taxes. Medicare: For this tax, 1.45% of your pay is withheld from your check. Understand what getting a tax refund means.
Understand due dates.
People make big plans for tax refunds, but most Americans are unclear Your tax return is usually due on April 15, although this year’s deadline has on why they’re getting a refund. A refund indicates that you overpaid your been extended to April 18. If you’re not ready, you can request a six-month federal and state taxes, essentially giving the government an interest-free extension, but this is only an extension for filing the return. The money you loan. Adjust your tax withholding through your payroll to have less money owe is still due by the regular tax deadline. deducted from your paycheck. Understand what to do if you owe taxes and don’t have the money to pay Understand the different tax forms you might receive. right away. These are the different forms needed to file your taxes:
Don’t panic, but don’t ignore the problem either. Contact the IRS to set up a payment plan. You’ll have to pay the government eventually, and until you W-2: This comes from your employer and summarizes wages, taxes and do the IRS can add costly interest and late fees to what you owe. Get started, deductions throughout the year. pay what you can as soon as possible, and then continue making payments. 1099: These are used to report other types of income you’ve received, Just as you can change your withholding to have your employer deduct including bank interest (1099-INT). Not every taxpayer receives these fewer taxes from your paycheck, you can increase the amount to keep from forms. owing in the future. Contact your HR/Payroll department to learn more. 1098: This form and its variants show payments you’ve made that may For help in figuring out how your income taxes impact your financial qualify you for tax benefits. For example, a regular 1098 shows mortgage situation, reach out to a CFP® professional at LetsMakeAPlan.org. interest paid, a 1098-T shows money paid for school tuition and expenses, and a 1098-E shows student loan interest paid. -(NewsUSA)