Hey Kataka, I'm so glad to hear that!! I've been a small business owner too for about 8 years now and I've had to explain these concepts many times. Stay tuned because I'm planning to make some videos related to small business in 2021! 😀
I can't imagine not taking a raise for fear of taxes. I would assume you will still bring home more money even though you are paying more in taxes so you still win in the end. Jinkies!!!
I have a question about how income taxes work in general. Here’s what I think I know: I submit a W4 when I work, which tells the government how much I want taken out of each paycheck for taxes. Then I work the full year and my income is X amount. I either paid more out of each paycheck, and will receive money back (tax return) based on this tax bracket calculation of how much taxes I owe, or they didn’t take out enough money each paycheck for taxes and now I owe taxes. So essentially, tax time each year is me coming together with the US government and squaring up the bill. Did you make more income that we need to know about? Do you have tax right offs that need to be accounted for? (Mortgage interest, dependent costs, student loan interest, etc.) And that’s when we either get some amount back, or we owe a little. Am I understanding the big picture correctly?
That is a good question! In most circumstances, because of tax brackets, it's beneficial to file jointly if you're married. The joint tax brackets are for exactly twice the amount of income as the individual tax brackets. So if I had a high salary and my spouse had a low one, filing jointly and combining our income would essentially allow me to move some of my income in a high tax bracket into a lower one. The only situation I can think of where it would not be advantageous would involve certain tax deductions or credits that are limited based on your income, or limited to a certain amount per tax return filed - and if your income and your spouse's income were almost equal. The student loan interest tax deduction is a good example that I've encountered. It's limited to $2,500 per tax return filed, joint or individual. I'll plan to cover this topic in more detail in the future, I think I like it. :)
Another subscriber here. One of the best and simplest explanations about tax brackets I have seen so far.
This was very helpful to me as a small business owner. I’ve subscribed.
Thank you!
Hey Kataka, I'm so glad to hear that!! I've been a small business owner too for about 8 years now and I've had to explain these concepts many times. Stay tuned because I'm planning to make some videos related to small business in 2021! 😀
New subscriber here! Thank you so much for simplifying the tax bracket concept.
You made this so simple. Thank you!
Glad it helped! :)
Very easy to follow video on tax brackets!
Thank you! 😍
I can't imagine not taking a raise for fear of taxes. I would assume you will still bring home more money even though you are paying more in taxes so you still win in the end. Jinkies!!!
That's what a lack of education on the subject does to people!
Thanks, I just discussed this with my boss and he was making that mistake, I'll send him this if he still disagrees :)
amazing video! thanks for the help!!!
Glad you liked it! :D
@@PracticalPersonalFinance Glad you explained it :)
Good to know mate! No one likes tax but its something we all have to pay unfortunately hahah
Tell me about it! :P
I have a question about how income taxes work in general. Here’s what I think I know: I submit a W4 when I work, which tells the government how much I want taken out of each paycheck for taxes. Then I work the full year and my income is X amount. I either paid more out of each paycheck, and will receive money back (tax return) based on this tax bracket calculation of how much taxes I owe, or they didn’t take out enough money each paycheck for taxes and now I owe taxes. So essentially, tax time each year is me coming together with the US government and squaring up the bill. Did you make more income that we need to know about? Do you have tax right offs that need to be accounted for? (Mortgage interest, dependent costs, student loan interest, etc.) And that’s when we either get some amount back, or we owe a little. Am I understanding the big picture correctly?
Great video!
So is it beneficial to file jointly with a spouse or it is just convenience?
That is a good question! In most circumstances, because of tax brackets, it's beneficial to file jointly if you're married. The joint tax brackets are for exactly twice the amount of income as the individual tax brackets. So if I had a high salary and my spouse had a low one, filing jointly and combining our income would essentially allow me to move some of my income in a high tax bracket into a lower one. The only situation I can think of where it would not be advantageous would involve certain tax deductions or credits that are limited based on your income, or limited to a certain amount per tax return filed - and if your income and your spouse's income were almost equal. The student loan interest tax deduction is a good example that I've encountered. It's limited to $2,500 per tax return filed, joint or individual. I'll plan to cover this topic in more detail in the future, I think I like it. :)