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Taxes
Taxes. It ought to be a four-letter word. Yes, taxes are a necessary part of our government, funding everything from education systems to roadways. But while taxes are an inherent part of being an American, taxes create personal stress – and often personal debt. Keeping up with your tax obligations can also cause you to fall behind on other bills and loans. We can help you organize your finances and pay off your debt.
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Average Federal Tax Rate
11.8%
Taxes Collected by Feds in 2011
$2.3 trillion
Unpaid Taxes Owed by Americans
$114.2 billion
Filing Taxes
No one enjoys filing their taxes, yet it’s something everyone must do. It can be especially confusing when you start your first job or have a life change like marriage. That’s why many people have their taxes filed professionally. If you want to brave the paperwork on your own, we can help you along the way.
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Understanding Taxes
Federal income tax may be the largest, but it’s far from the only tax you pay. You may have deductions from your paycheck for state income tax. If you own real estate, you must pay property tax. And every time you buy an item, sales tax is tacked onto your total bill. Learn the types of taxes you’re required to pay.
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Tax Debt
Owing taxes to the IRS is more common than you might think, with 17 percent of federal taxes going unpaid each year. If you owe taxes but can’t afford to pay them in time, you may be able to set up a payment plan or receive a temporary deadline extension. Learn how to deal with your unpaid taxes.
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More on Taxes
Your Tax Dollars at Work
The average income in 2011 was $41,560. With this salary and a single filing status, you could expect to pay around $5,153 (12.4 percent of your earnings) in federal taxes, in addition to $2,577 (6.2 percent) toward Social Security and $603 (1.5 percent) toward Medicare. Where do you taxes go? The largest portion goes toward national defense, which eats up 17 percent of the federal budget. Medicare, income security and Social Security are close behind, each taking up 16 percent. Another 10 percent pays for the interest on the country’s debts. Other costs that take up less than 10 percent of taxes include health costs, veteran benefits, education and transportation.
Taxes Through History
President Abraham Lincoln enacted the first income tax in the United States, and the 1862 law helped pay for Civil War expenses. Individuals with annual incomes of $600 to $10,000 paid 3 percent, while individuals with higher incomes paid 5 percent. The tax was repealed just 10 years later and was not reinstated until 1894. In the 120 years since then, income tax has undergone numerous changes to keep up with the changing financial needs of the country. Today, the average American pays close to 12 percent of his or her income in federal income tax.
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