The Truth About Taxes

By Arkansas NEXT: Money on Friday, May 14, 2021

Most of the time, employers will automatically withhold (take out) what you owe in taxes from each paycheck, and when you file your taxes, you determine if you somehow owe more than they already withheld from your check—or if you will get a tax refund.

It begins when you get a job. Your new employer will present you with a W-4. This document asks how much money you want withheld from each paycheck, which you will need to determine with your employer. To reduce the amount of taxes they withhold from your paycheck, you can file for deductions:

If you claim zero deductions, your paycheck will be smaller, but you’ll get a bigger refund at the end of the year (if eligible). You can claim more than the standard deduction and less taxes will be withheld, but your refund, if eligible, will be lower (or you may not get a refund at all).

When it comes to the dollar amount you owe each paycheck, that is determined by your filing status, which shows if you’re married or single, how many dependents you have, if you benefit from certain government programs, if you have scholarships that pay for things other than tuition, if you own property, etc.

Even though your taxes are withheld from your paycheck (unless you’re self-employed), you will still be required to file your taxes.

Taxes are due April 15 every year, except when the federal or state government issues a nationwide extension (like during the pandemic). Your employer will provide you with a W-2, a document you’ll need to file your taxes.

Because taxes are kind of complicated, there are dozens of companies and programs that are designed to guide you through the process or do it for you. If you make under a certain amount, federal guidelines provide that you can file your taxes for free. The IRS also offers questionnaires that will help you determine if you need to file, how you need to file and different forms you will need to use.

Arkansas has a state income tax, which is determined by income bracket and is refunded through the Arkansas Department of Finance & Administration.

Sources: IRS.gov and Intuit.com


5 TYPES OF FILING STATUSES

1. Single

2. Married filing jointly

3. Married filing separately

4. Head of household

5. Qualifying widow(er) with dependent child