• What are taxes?

    • Not much to say in this section. Benjamin Franklin said it best...."In this world nothing can be said to be certain, except death and taxes."

    • Taxes are involuntary fees enforced by the government in order to finance government activities or services (social security, Medicare, health insurance) after exemptions, deductions, and credits are taken into consideration.

    • With that said, probably the most important thing to keep in mind is timing of taxes. 

      • You get a pay check of lets say $2000. ‚Äč

      • You get taxes taken out. 

      • You get to "take home" $1600

      • With your "take home" money, you can invest into some retirement accounts like 401k/403b or Roth IRA. 

      • Depending on the type of account you put your money it, when you withdraw the money at lets say 65 years old for retirement, you will not be taxed again. 

      • Some contributions are taken from your paycheck before taxes (i.e. your $2000 check)

      • Sometimes you may get a huge tax when you withdraw that money from the account when you're 65. 

      • Main point, its better to get taxed up front and not taxed later, rather than not get taxed now, and have a huge tax later. Why? Time value of money...see basics

2018. by Christie Ton with wix.com

Dr. Piggy Bank

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