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Teaching Your Children about the Basics of Taxes

While we spend years trying to get our children to receive the best of education, we often forget to teach them about the basic things that they need to learn of. Tax refunds happen to be one of those things that your children would need to understand, sooner or later. For a simple and clear understanding of taxes:

Teaching Your Children about the Basics of Taxes

What Are Taxes?

Taxes are amounts of money that a taxpayer needs to pay to the government to support the special services that the taxpayers receive, along with supporting the government itself. These taxpayers can be held accountable for the payment of tax to the town, county, state or national government. Taxes are paid because you are part of a community. Had you not been a part of your community, you may not have been able to pay for certain things. Hence, it is safe to say that taxes are a method by which a community pays for one another, in order to provide everybody with benefits.

What Are the Advantages of Paying My Taxes?

If you look around, you will notice that there are several advantages, such as national security, police department, roads, fire departments, public schools, libraries and much more.

How Many Types of Taxes Have To Be Paid?

  • Income tax: This could come from the pay you receive from work or from a non-employment source such as savings accounts, etc.
  • Property tax: This form of tax is paid based on the number of motor vehicles, lands and buildings that you own.
  • Sales tax: This is one of the best known taxes; these are the taxes that you have to pay on each item that you purchase off any store.
  • Payroll tax: Social Security and Medicare programs are taken care of through the payment of the payroll tax.
  • Excise tax: This form of tax applies to all things that are for consumption, such as gas, hotel bills, etc.

Some Examples of the Things That Are Taxable

  • Your salary
  • Estate
  • Interest on all bonds that you own
  • Bonuses from your employer
  • Water bills
  • Interest on any bank accounts under your name
  • The winnings from any type of lottery
  • Any sort of political contributions
  • Tips you receive from work
  • Capital gains on any investments that you make
  • Credit card interest

How to File Your Taxes

If any of the above apply to you, it will become necessary for you to file your taxes and pay them. To file out the taxes, you could pick one of the following forms:

  • 1040EZ: This form is quite simples and requires the taxpayer to have a taxable income that is less than $50,000.
  • 1040A: This form is a little complicated when compared to the 1040EZ, but also requires the taxpayer to have a taxable income that is less than $50,000.
  • 1040: This is the most complicated tax form that is applicable for all those individuals who have a taxable income that exceeds $50,000.

For more information, take a look at http://taxes.about.com/od/taxplanning/a/taxbasics.htm