Chicago — Some Gen Z are far enough in their careers to have experienced the highs and lows of being a working adult. On the low end of the spectrum is having to file taxes, understanding W2s, 1099’s and the other document names that are easily confused with WD-40.
I’m a few years into my career and I admit that I still struggle navigating the tax landscape. I’ve compiled this guide that includes information about taxes, what they are and how to file them.
Let's start with the basics.
What are taxes?
According to the Internal Revenue Service (IRS), taxes are mandatory payments made by people and businesses that help fund government services at the federal, state and local level. They help pay for things like Social Security and Medicare, education, national defense, infrastructure and other goods and services aimed to benefit the community.
Governments can levy three main kinds of taxes: income-based taxes, wealth-based taxes and consumption-based taxes.
Why do we have to pay them?
Taxes are the main-source of income for the U.S. government. They’re used to pay for goods and services to the public like roads, public transportation, family financial assistance, schools, etc.
How do we pay them?
We pay taxes in various ways, some of which don’t involve any effort on our part. Taxes are levied on goods and services we purchase, which vary by state and even municipality. We also get amounts taken out of our checks, which go to social security and to the state and federal governments.
Additionally we pay our taxes by filing tax returns, the most grueling process of our young adult lives. Investopedia says a tax return is a form or forms that reports income, expenses, and other pertinent tax information. They allow us to calculate our tax liability, schedule payments, or request refunds for the overpayment of taxes. According to the IRS, most U.S. citizens and permanent residents who work in the United States need to file a tax return if they make more than a certain amount for the year. But even those who make less should file because they could get money back in some cases.
This year, income taxes are due April 18.
How do I file taxes?
In the U.S., individuals use variations of the IRS's Form 1040 to file federal income taxes. It can be found on their website. Various 1099 forms are used to report income from non-employment-related sources, including free-lance jobs. The forms include information about your income, filing status and claimed tax credit and deductions.
Make sure to fill your form out as accurate as possible, but most importantly, get a professional to file them for you.