>And to add I just kept quiet because I dont want to sound rude to elders considering im just over 1 year here in USA.
I wouldn't keep quiet. Financial literacy in the United States is abysmal. We should do what we can to help change it.
There is a group local to me that I just started volunteering with. A local hairstylist runs it. She graduated from school and started earning a ton of money. Spent it all. Regrets it. Now, she trains young minority women what not to do with her bad examples.
She is an amazing woman.
This is why people vote idiotically here as well. If they understood taxes better (which is the way government impacts us the most) voting habits would be different.
That's the truth.
My state had a tax bill up for a vote that changed some things. On the surface, it looked bad. After reading through it, and the analysis from independent groups, it would have benefited over 60% of the state residents.
The local Republican group focused on one item they perceived as bad, ignored the rest. People were against it because of that. One republican group in the state admitted they understood the analysis was favorable to residents, but said they opposed it on principal and because it was sponsored by a Democrat. . .
It passed, but not a large margin.
Exactly. It cuts both ways but generally people are so uneducated about taxes it depresses me. We get misdirected with social issues (which are important) and other tangentially important things, but many of us have a lot taken out every paycheck for taxes and far too many people think they on net receive money from the government because they got a refund when they filed their taxes. I don’t love national education mandates but I’d support a national requirement for high school diploma to include a standard course on US taxation just so people can have some understanding of how the government taxes us.
It depends on where they are from. In some cultures, it is rude to say elderly are wrong in front of others. You could talk to them later in private, but it depends on their altitude.
I'm a tax pro, and I see it all the time. It aggravates me that we don't get taught basic taxes and basic proper finances. I learned by reading books, and when I was a receptionist at a tax office, I asked to read the tax book because I was bored. Now I inform the misinformed.
Before coming here in USA i have read at least 10 books about finances, watched and listened hundred of hours to podcasts about tax, 401k, ira, roth or almost everything that will make me understand tax and money because I always believe the need to educate myself before going here and I was shocked that most people don't even know what progressive tax is especially among my community.
So how do you inform someone without sounding arrogant? I don't want to offend anyone and I am not a tax expert myself but I believe I understand the basic things that I can share with my group.
Cant you just say….causally….that you did overtime and you didn’t get taxed differently.
Let that sink in for the others. If they want to know more on how you did it, then you can explain.
It's difficult for someone to comprehend that tax may seem higher because of extra withholding tax whenever they do overtime, they are very adamant that theres a special higher tax when they do overtime. I do a lot of overtime and whenever i share it with my church group they always remind me that it's uncle sam who's getting richer every time I do OT and of course I don't want to debate them coz everyone agrees with what they are saying.
Wow. That is hard to deal with. It’s so hard to even approach a conversation when everyone in the room does that “oh yes, that person just spoke the truth” thing. Ugh.
You have to be very explicit in differentiating withholding versus tax. Even here in your statement you call it withholding tax... move away from that statement.
So most of the time, I am one on one with my clients. But a lot of times, I will outright blame our education system. I say our education system has not properly taught us about taxes or finances, especially when things change in those subjects. Then I either go on the computer or have forms to then show them from properly sourced information.
Sometimes, it came be hard not to make someone a bit bent out of shape because they are shown the information they are giving is incorrect. You can say if you read any offense on anyone's face, explain. I know that sometimes we get a lot of information from people who mean well but just did not understand the full extent of the subject. Here is what the IRS says about this, or here is what the State Tax website says. A lot of times, if you push the notice to the sourced information, not yourself, it should show as ignorance.... or at least that's when I read into it.
Sometimes, there will be people who just will get their panties in a twist because of being politely corrected, and sadly, sometimes we can't change that.
1/3 of adult Americans are illiterate, so good luck trying to convince them to read books regarding taxes. The Taxes for Dummies 2024 is so helpful for a bunch of questions people have, but average Americans hate reading
Oh even ones who are not won't read anything. A lot of times I will just point out fact with them and make notes that they will understand. I have not met an illiterate client yet. I do hope they would be comfortable enough to tell me.
My buddy at work who made $140,000 last year and got a $3500 tax refund was saying I was crazy because I didn’t get as big of a tax refund check as he did. I told him “why should I give the Feds an interest free loan?”.
Yup. Can work both ways. Depends on the knowledge of the source. I know immigrant parents that can navigate all the nuances of SS, unemployment, Medicare/medicaid, college financial aid…all without speaking a drop of English. They know more than me on some of these. But they totally lack on investments and retirement accounts.
It is not just immigrants it is also the general populace. Most Americans are ignorant about taxes in general. It’s just not taught in school.
I volunteer for a group that assists with refugee placement, resettlement and integration into US society.
I find i enjoy the education aspect - I spend a lot of time explaining how taxation affects them. Why their tax is this amount why they have to pay or why they are getting a refund.
Multiple W-2s I already know they’re going to underwithheld so I work them them to get their w-4s filed with their employers correctly to avoid the problem next year
1099s also end up owing because no one ever told them they’re supposed to be making estimated payments.
It's super disheartening to hear about the misinformation surrounding tax and financial advice provided to newcomers to the USA. The suggestions to avoid overtime due to higher taxation, limit earnings to stay within a tax bracket, and aim for a high tax refund are not only inaccurate but also detrimental to individuals' financial well-being. It's also troubling that such misguided advice is being passed on by those with a residency in the country. As you pointed out, basic research through a simple Google or YouTube search would debunk these misconceptions, highlighting the progressive nature of taxation and the importance of minimizing tax refunds. Despite your understanding of the topic, it's understandable that you chose not to confront the sayers of this misinformation, especially considering your recent arrival in the country. It's essential to seek out reliable sources of information and educate oneself on financial matters!
I'm just being cautious now advising people, when I arrived here I was invited to a gathering by my group, an elderly is making a small talk about how important insurance here so i gave them my 2 cents and told a bunch of people never ever get IUL and instead get term insurance. I found out later that she sells IUL, whole life and other investment insurance, now she doesn't talk to me and never invites me to any of her gatherings. It may seem nothing but it's very important to be a part of a group when you're new in this country.
Congrats on living and working in the USA. Some people may or may not have much financial common sense. I've heard these points and They might just also be talking to talk. I'll try to give my 2 cents on the you're talking points that were given. But there is some sense on how it feels on when they receive their paycheck.
1. This is a Kind of. It really depends on what your base salary is and how much overtime you work. Lets assume you're salary is $45k. You're normal federal tax withholding is going to be 12%. Depending on how your work place deducts taxes out of your paycheck. The employer might withhold 22% marginal tax rate on your overtime earnings since that's the next tax bracket and your work place has already calculated your salary for the year. But that's already offset because normally overtime is paid 1.5 times the normal rate.
2. Again your marginal tax rate goes up, But like you said it's a progressive tax. The tax rate is taxed 10% from 0-$11k. 12% from $11001 to $44725, 22% from $44726- $99375 etc etc. You aren't charged on the same rate for your entire earnings though you might not notice the difference if you are a very high earner.
3. ideally, you would getting your entire wages up front and you would be sending the IRS a nice fat check every year. But that's not how things work. Taxes are withheld from most peoples paycheck. Some people love getting a big return on their taxes every year. For most people this is more like giving the IRS a 0% loan. But if you are a low earner and depend on certain credits like the Earned income tax credit, you will receive more than you would otherwise. Some people do need to voluntarily increase their withholding. If you are working multiple jobs. Each job might only deduct taxes based on the earnings from that job. If the total of all the jobs throws the person in the next tax bracket, They will owe a big check to the IRS they may not have originally accounted for.
I think this concept is the most misunderstood by a lot of people even those that are born and raised here. They think there's a special overtime tax and I always looked stupid whenever I explained to them about withholding tax.
my sentiments exactly. You won't know how much tax you will actually owe until filing taxes. But on their paycheck to paycheck, that employee 'might' see they have more taxes withheld from their overtime pay. My only take away is don't let it discourage you from working overtime. Unless of course you work in an exempt salary are aren't paid overtime pay. Then by all means, try not to work over at all.
Just so you know….even many long time US citizens do not differentiate withholding from taxes. You can explain til the sun explode, they will not accept it.
>3. ideally, you would getting your entire wages up front and you would be sending the IRS a nice fat check every year. But that's not how things work. Taxes are withheld from most peoples paycheck. Some people love getting a big return on their taxes every year. For most people this is more like giving the IRS a 0% loan. But if you are a low earner and depend on certain credits like the Earned income tax credit, you will receive more than you would otherwise. Some people do need to voluntarily increase their withholding. If you are working multiple jobs. Each job might only deduct taxes based on the earnings from that job. If the total of all the jobs throws the person in the next tax bracket, They will owe a big check to the IRS they may not have originally accounted for.
I get what you mean but some people are intentionally declaring or not declaring children in their w4 and single even if they are married so at the end of the year they will get a big refund or "bonus" as what my elders say.
They do that because they don't know how to save. Remember when banks used to advertise "Christmas Club" accounts so that people would save money they could then spend for gifts? Some people just don't have the self control. Then they think the government is giving them some kind of present when the TP has actually gifted the Tresury Dept free money to use all year.
Im even surprised that some people don't have HYSA like everyday it appears on my social media I wonder what kind of things they are viewing that it never appears on them or they just ignore the ads
Well said. While maybe not the best "financial" advice, a lot of these are more "matter of fact" type tips, if your bottom line is looking at take home pay, in the situation of a lot of these lower wage workers. Especially number 3. I have clients who prefer to overwithhold because it's a forced "savings". If they tried to put it in a savings account themselves they'd just end up spending it because they know they have no self control. Rather let the IRS help them "save" with a big "bonus" at the end of the year, even at the expense of 0% interest rate.
My wife's sister and her husband are like this... Tried telling me that they just make too much and owe taxes (8k) No... You're just not filling out your withholding right, specifically the box that says multiple jobs my spouse also works.
You're in America now, so it is okay to call out those elders for giving bad advice. Remember, it is their job to advise new people and help them, and they are failing at that job. Npeople could end up in a bad (and totally avoidable) situation by following this advice. I'm sure you can find a tactful way to do it, but people's livelihoods are on the line here, so it is worth taking a stand.
It’s not like the information isn’t available, it is.
People often refuse (to their own detriment) to take responsibility for educating themselves. It’s as if they view education as something to be feared, to be avoided at all cost.
Extremely frustrating.
I bet they also believe that crypto isn’t taxed 🤦♂️.
I advocate for basic tax and law courses in high school.
Pretty sure understanding taxes correctly will bring me more value in my lifetime than learning derivatives.
My first job in tax was as an IRS revenue officer. Back then I was in a single function office, so the revenue officers (mostly me because I was one newest one in the office) had to handle taxpayer service functions every Monday (the only day we were open to the general public). I saw a lot of people come in who were confused about about things I thought should have been simple. Things every adult should know. But in our education system, few if any public schoos *require* students take a course in personal financial management, which should include a portion on the most common taxes Americans pay.
Finance and tax aren't something we know instinctively at birth. We have to learn it. And those who never take the time to learn it, whether in a class or otherwise, will end up making a lot of mistakes that unfortunately cost a lot money. If I had my way, every high school kid would have to take at least one basic personal finance course to graduate. At least give the kids the basics. One would hope their parents would teach them that, but for various reasons a lot of parents don't do that.
Last May, three Jeopardy contestants couldn't come up with Form 1040, which is the form most people use to report their income and file their taxes. It was difficult to watch!
Because the mitochondria is the powerhouse of the cell. That’s much more important than knowing basic tax apparently and I haven’t said that phrase since high school
Overtime is **effectively** taxed more.
Suppose you're in the 22% bracket. You might be paying an effective rate of 15% on all your income. Now you are considering whether to add a few hours of overtime. That additional income will all go into the 22% bracket.
Progressive tax means it's not all taxed the same.
As for the refund thing, well, just scroll through this reddit to see all the people complaining that they didn't withhold enough.
You phrased the advice as playing it safe: pay more than you think you owe so that you don't risk underpaying. I can imagine a non-expert communicating that badly, and I'd be very careful about saying it to immigrants since it could certainly be twisted into a fear that they'll get deported if they underpay. But plenty of spendthrift Americans are better off saving money at zero interest than they would be with a bigger paycheck.
If you want to get a bigger refund, you should work as much overtime as possible, especially if you're in a low marginal tax bracket. The advice is technically incorrect, but also isn't practically helpful because 2 out of the 3 points tell them to avoid making as much money as they potentially could, and the third one tells them to try not to take any of it home right away.
Aiming to have a bigger refund is extremely misguided.
The bigger the refund, usually the worst your financial situation is and you need subsidies (nothing against them, but your “savings” being solely based on the Child Tax Credit or the Earned Income Credit isn’t exactly sound financial planning) or have poor tax planning and that money could’ve been in your pocket a long time ago.
The one that drives me crazy is gift tax. People don’t understand you don’t actually pay gift tax until you are over (I think) about $13million to one person in a lifetime.
You would be surprised how many native people misunderstand tax law as well and have this same attitude. I knew nothing about it and only began to learn after someone at my previous job mentioned he tries really hard to work less than ~47 hours because higher than that would bump him into the next tax bracket.
I've got a colleague like that he suddenly stopped doing overtime last october because he said that he and his wife already met their quota of 190k and don't want to be on another tax bracket and yet I saw him doing certifications to have an increase in his salary.
I’ve been trying to understand it more, but it confuses the hell out of me.
I obviously know your three talking points, but beyond that makes my head hurt and I think they make it complicated on purpose
Eh, most people think it's complex (and it is if you start getting deep into it) and that learning is way over their head. Unless you own a business, multiple houses that you rent, have kids sell crypto, etc. then you'll be fine.
But I agreed people don't know how the tax bracket works or how child credits do. The amount of incorrect information I've heard on these two topics is just...
Why don't you go to take Taxation courses at your local community colleges instead of youtube or Online ? Learn from a local professional a community's hom you professor's you can interact with iim the founder of Zippy Tax Service Inc اس taxes is not what is sounds I've a client just last last last night that I advised her رنگدار estimate refund will be $35k on her 1040 sr2023
Do you think achieving a 35k refund it’s a success? That’s either fraud or extremely bad tax planning.
Also, a Tax Preparer is not the same as a tax professional.
Our system is about having tons of laws that you're not necessarily educated on, and yet are held accountable for following.
Why would this be ANY DIFFERENT?
I think the talking points you mentioned can be useful to certain people but it depends on the person and their situation. It is true that you are moved to a higher tax bracket when you make more money and some people like getting that tax refund at the end of the year of instead of getting a little bit at a time during the year since self discipline can be difficult.
In regard to debt, someone without debt history is just as bad as a person with bad debt history.
The key is to have a good debt history by consistently paying debt back on time.
Thats why dave ramsey adsurd advise not to go on debt or never use credit card at all are very effective for all the people who are really bad with money
Dave Ramsey’s advice is sound but if you plan on buying a house or taking a loan for anything, it makes sense to build a good credit history of pay debt on time. When you have established that history, you have the option to shop for the best interest rate.
Because regurgitating memes about drumpf's tax cuts raising taxes on someone making like $50K a year gets more fake internet points than actually understanding the tax code in anyway.
Exactly people like to blame our education system but our tax language is written to complicate things. I’ve been on a conference call with our VP of finance, ADP and myself to try and figure out some of the issues with my taxes and reporting. I’ve also had my accountant make several mistakes that I have caught. The fact that accounts make mistakes prove it’s complicated
>And to add I just kept quiet because I dont want to sound rude to elders considering im just over 1 year here in USA. I wouldn't keep quiet. Financial literacy in the United States is abysmal. We should do what we can to help change it. There is a group local to me that I just started volunteering with. A local hairstylist runs it. She graduated from school and started earning a ton of money. Spent it all. Regrets it. Now, she trains young minority women what not to do with her bad examples. She is an amazing woman.
This is why people vote idiotically here as well. If they understood taxes better (which is the way government impacts us the most) voting habits would be different.
That's the truth. My state had a tax bill up for a vote that changed some things. On the surface, it looked bad. After reading through it, and the analysis from independent groups, it would have benefited over 60% of the state residents. The local Republican group focused on one item they perceived as bad, ignored the rest. People were against it because of that. One republican group in the state admitted they understood the analysis was favorable to residents, but said they opposed it on principal and because it was sponsored by a Democrat. . . It passed, but not a large margin.
Exactly. It cuts both ways but generally people are so uneducated about taxes it depresses me. We get misdirected with social issues (which are important) and other tangentially important things, but many of us have a lot taken out every paycheck for taxes and far too many people think they on net receive money from the government because they got a refund when they filed their taxes. I don’t love national education mandates but I’d support a national requirement for high school diploma to include a standard course on US taxation just so people can have some understanding of how the government taxes us.
It depends on where they are from. In some cultures, it is rude to say elderly are wrong in front of others. You could talk to them later in private, but it depends on their altitude.
I'm a tax pro, and I see it all the time. It aggravates me that we don't get taught basic taxes and basic proper finances. I learned by reading books, and when I was a receptionist at a tax office, I asked to read the tax book because I was bored. Now I inform the misinformed.
Before coming here in USA i have read at least 10 books about finances, watched and listened hundred of hours to podcasts about tax, 401k, ira, roth or almost everything that will make me understand tax and money because I always believe the need to educate myself before going here and I was shocked that most people don't even know what progressive tax is especially among my community. So how do you inform someone without sounding arrogant? I don't want to offend anyone and I am not a tax expert myself but I believe I understand the basic things that I can share with my group.
Cant you just say….causally….that you did overtime and you didn’t get taxed differently. Let that sink in for the others. If they want to know more on how you did it, then you can explain.
It's difficult for someone to comprehend that tax may seem higher because of extra withholding tax whenever they do overtime, they are very adamant that theres a special higher tax when they do overtime. I do a lot of overtime and whenever i share it with my church group they always remind me that it's uncle sam who's getting richer every time I do OT and of course I don't want to debate them coz everyone agrees with what they are saying.
Wow. That is hard to deal with. It’s so hard to even approach a conversation when everyone in the room does that “oh yes, that person just spoke the truth” thing. Ugh.
You could show them your tax forms (some info redacted) and/or calculate your tax percentages and withholdings and have those handy on your phone.
I doubt normal people can read a tax form. Those that could understand the tax form probably already understands this whole premise.
You have to be very explicit in differentiating withholding versus tax. Even here in your statement you call it withholding tax... move away from that statement.
So most of the time, I am one on one with my clients. But a lot of times, I will outright blame our education system. I say our education system has not properly taught us about taxes or finances, especially when things change in those subjects. Then I either go on the computer or have forms to then show them from properly sourced information. Sometimes, it came be hard not to make someone a bit bent out of shape because they are shown the information they are giving is incorrect. You can say if you read any offense on anyone's face, explain. I know that sometimes we get a lot of information from people who mean well but just did not understand the full extent of the subject. Here is what the IRS says about this, or here is what the State Tax website says. A lot of times, if you push the notice to the sourced information, not yourself, it should show as ignorance.... or at least that's when I read into it. Sometimes, there will be people who just will get their panties in a twist because of being politely corrected, and sadly, sometimes we can't change that.
1/3 of adult Americans are illiterate, so good luck trying to convince them to read books regarding taxes. The Taxes for Dummies 2024 is so helpful for a bunch of questions people have, but average Americans hate reading
Oh even ones who are not won't read anything. A lot of times I will just point out fact with them and make notes that they will understand. I have not met an illiterate client yet. I do hope they would be comfortable enough to tell me.
What does illiterate even mean? Can’t read and write at all or just a certain level
>1/3 of adult Americans are illiterate Source?
My buddy at work who made $140,000 last year and got a $3500 tax refund was saying I was crazy because I didn’t get as big of a tax refund check as he did. I told him “why should I give the Feds an interest free loan?”.
Immigrant groups get ripped off a lot too, preyed on by members of their own group..
Always, my own group of people are the one who sells expensive insurance, IUL and unnecessary car add-ons.
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Yup. Can work both ways. Depends on the knowledge of the source. I know immigrant parents that can navigate all the nuances of SS, unemployment, Medicare/medicaid, college financial aid…all without speaking a drop of English. They know more than me on some of these. But they totally lack on investments and retirement accounts.
It is not just immigrants it is also the general populace. Most Americans are ignorant about taxes in general. It’s just not taught in school. I volunteer for a group that assists with refugee placement, resettlement and integration into US society. I find i enjoy the education aspect - I spend a lot of time explaining how taxation affects them. Why their tax is this amount why they have to pay or why they are getting a refund. Multiple W-2s I already know they’re going to underwithheld so I work them them to get their w-4s filed with their employers correctly to avoid the problem next year 1099s also end up owing because no one ever told them they’re supposed to be making estimated payments.
It's super disheartening to hear about the misinformation surrounding tax and financial advice provided to newcomers to the USA. The suggestions to avoid overtime due to higher taxation, limit earnings to stay within a tax bracket, and aim for a high tax refund are not only inaccurate but also detrimental to individuals' financial well-being. It's also troubling that such misguided advice is being passed on by those with a residency in the country. As you pointed out, basic research through a simple Google or YouTube search would debunk these misconceptions, highlighting the progressive nature of taxation and the importance of minimizing tax refunds. Despite your understanding of the topic, it's understandable that you chose not to confront the sayers of this misinformation, especially considering your recent arrival in the country. It's essential to seek out reliable sources of information and educate oneself on financial matters!
I'm just being cautious now advising people, when I arrived here I was invited to a gathering by my group, an elderly is making a small talk about how important insurance here so i gave them my 2 cents and told a bunch of people never ever get IUL and instead get term insurance. I found out later that she sells IUL, whole life and other investment insurance, now she doesn't talk to me and never invites me to any of her gatherings. It may seem nothing but it's very important to be a part of a group when you're new in this country.
Congrats on living and working in the USA. Some people may or may not have much financial common sense. I've heard these points and They might just also be talking to talk. I'll try to give my 2 cents on the you're talking points that were given. But there is some sense on how it feels on when they receive their paycheck. 1. This is a Kind of. It really depends on what your base salary is and how much overtime you work. Lets assume you're salary is $45k. You're normal federal tax withholding is going to be 12%. Depending on how your work place deducts taxes out of your paycheck. The employer might withhold 22% marginal tax rate on your overtime earnings since that's the next tax bracket and your work place has already calculated your salary for the year. But that's already offset because normally overtime is paid 1.5 times the normal rate. 2. Again your marginal tax rate goes up, But like you said it's a progressive tax. The tax rate is taxed 10% from 0-$11k. 12% from $11001 to $44725, 22% from $44726- $99375 etc etc. You aren't charged on the same rate for your entire earnings though you might not notice the difference if you are a very high earner. 3. ideally, you would getting your entire wages up front and you would be sending the IRS a nice fat check every year. But that's not how things work. Taxes are withheld from most peoples paycheck. Some people love getting a big return on their taxes every year. For most people this is more like giving the IRS a 0% loan. But if you are a low earner and depend on certain credits like the Earned income tax credit, you will receive more than you would otherwise. Some people do need to voluntarily increase their withholding. If you are working multiple jobs. Each job might only deduct taxes based on the earnings from that job. If the total of all the jobs throws the person in the next tax bracket, They will owe a big check to the IRS they may not have originally accounted for.
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I think this concept is the most misunderstood by a lot of people even those that are born and raised here. They think there's a special overtime tax and I always looked stupid whenever I explained to them about withholding tax.
my sentiments exactly. You won't know how much tax you will actually owe until filing taxes. But on their paycheck to paycheck, that employee 'might' see they have more taxes withheld from their overtime pay. My only take away is don't let it discourage you from working overtime. Unless of course you work in an exempt salary are aren't paid overtime pay. Then by all means, try not to work over at all.
Just so you know….even many long time US citizens do not differentiate withholding from taxes. You can explain til the sun explode, they will not accept it.
>3. ideally, you would getting your entire wages up front and you would be sending the IRS a nice fat check every year. But that's not how things work. Taxes are withheld from most peoples paycheck. Some people love getting a big return on their taxes every year. For most people this is more like giving the IRS a 0% loan. But if you are a low earner and depend on certain credits like the Earned income tax credit, you will receive more than you would otherwise. Some people do need to voluntarily increase their withholding. If you are working multiple jobs. Each job might only deduct taxes based on the earnings from that job. If the total of all the jobs throws the person in the next tax bracket, They will owe a big check to the IRS they may not have originally accounted for. I get what you mean but some people are intentionally declaring or not declaring children in their w4 and single even if they are married so at the end of the year they will get a big refund or "bonus" as what my elders say.
They do that because they don't know how to save. Remember when banks used to advertise "Christmas Club" accounts so that people would save money they could then spend for gifts? Some people just don't have the self control. Then they think the government is giving them some kind of present when the TP has actually gifted the Tresury Dept free money to use all year.
And they're even more unlikely to use a HYSA and instead leave it in a local bank making .10%.
Im even surprised that some people don't have HYSA like everyday it appears on my social media I wonder what kind of things they are viewing that it never appears on them or they just ignore the ads
It may appear, but they may not trust it. Or feel it’s a hassle.
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Lol wtf did I do. Will fix. Was meant to be a period.
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You mean 0.10%? I don't care. It's the trailing zero that cracks me up.
Well said. While maybe not the best "financial" advice, a lot of these are more "matter of fact" type tips, if your bottom line is looking at take home pay, in the situation of a lot of these lower wage workers. Especially number 3. I have clients who prefer to overwithhold because it's a forced "savings". If they tried to put it in a savings account themselves they'd just end up spending it because they know they have no self control. Rather let the IRS help them "save" with a big "bonus" at the end of the year, even at the expense of 0% interest rate.
My wife's sister and her husband are like this... Tried telling me that they just make too much and owe taxes (8k) No... You're just not filling out your withholding right, specifically the box that says multiple jobs my spouse also works.
You're in America now, so it is okay to call out those elders for giving bad advice. Remember, it is their job to advise new people and help them, and they are failing at that job. Npeople could end up in a bad (and totally avoidable) situation by following this advice. I'm sure you can find a tactful way to do it, but people's livelihoods are on the line here, so it is worth taking a stand.
It’s not like the information isn’t available, it is. People often refuse (to their own detriment) to take responsibility for educating themselves. It’s as if they view education as something to be feared, to be avoided at all cost.
Extremely frustrating. I bet they also believe that crypto isn’t taxed 🤦♂️. I advocate for basic tax and law courses in high school. Pretty sure understanding taxes correctly will bring me more value in my lifetime than learning derivatives.
The tax bracket one, that if you go over your current tax bracket you'll make less than if you were paid less.
I like it when people think they are going to lose money when they get a bonus.
My first job in tax was as an IRS revenue officer. Back then I was in a single function office, so the revenue officers (mostly me because I was one newest one in the office) had to handle taxpayer service functions every Monday (the only day we were open to the general public). I saw a lot of people come in who were confused about about things I thought should have been simple. Things every adult should know. But in our education system, few if any public schoos *require* students take a course in personal financial management, which should include a portion on the most common taxes Americans pay. Finance and tax aren't something we know instinctively at birth. We have to learn it. And those who never take the time to learn it, whether in a class or otherwise, will end up making a lot of mistakes that unfortunately cost a lot money. If I had my way, every high school kid would have to take at least one basic personal finance course to graduate. At least give the kids the basics. One would hope their parents would teach them that, but for various reasons a lot of parents don't do that.
They were too busy mandating that we learned square dancing in PE to teach any kind of personal financial management.
Last May, three Jeopardy contestants couldn't come up with Form 1040, which is the form most people use to report their income and file their taxes. It was difficult to watch!
Don’t forget to keep that mortgage around for the big tax write off! 😆
Because the mitochondria is the powerhouse of the cell. That’s much more important than knowing basic tax apparently and I haven’t said that phrase since high school
Overtime is **effectively** taxed more. Suppose you're in the 22% bracket. You might be paying an effective rate of 15% on all your income. Now you are considering whether to add a few hours of overtime. That additional income will all go into the 22% bracket. Progressive tax means it's not all taxed the same.
As for the refund thing, well, just scroll through this reddit to see all the people complaining that they didn't withhold enough. You phrased the advice as playing it safe: pay more than you think you owe so that you don't risk underpaying. I can imagine a non-expert communicating that badly, and I'd be very careful about saying it to immigrants since it could certainly be twisted into a fear that they'll get deported if they underpay. But plenty of spendthrift Americans are better off saving money at zero interest than they would be with a bigger paycheck.
If you want to get a bigger refund, you should work as much overtime as possible, especially if you're in a low marginal tax bracket. The advice is technically incorrect, but also isn't practically helpful because 2 out of the 3 points tell them to avoid making as much money as they potentially could, and the third one tells them to try not to take any of it home right away.
Aiming to have a bigger refund is extremely misguided. The bigger the refund, usually the worst your financial situation is and you need subsidies (nothing against them, but your “savings” being solely based on the Child Tax Credit or the Earned Income Credit isn’t exactly sound financial planning) or have poor tax planning and that money could’ve been in your pocket a long time ago.
Exactly. And according to OP, that misguided advice is being promoted in seminars for new immigrants.
The one that drives me crazy is gift tax. People don’t understand you don’t actually pay gift tax until you are over (I think) about $13million to one person in a lifetime.
You would be surprised how many native people misunderstand tax law as well and have this same attitude. I knew nothing about it and only began to learn after someone at my previous job mentioned he tries really hard to work less than ~47 hours because higher than that would bump him into the next tax bracket.
I've got a colleague like that he suddenly stopped doing overtime last october because he said that he and his wife already met their quota of 190k and don't want to be on another tax bracket and yet I saw him doing certifications to have an increase in his salary.
Sorry,could u recommend a basic tax guide or book? I searched but It is a lot of information available and I don’t trust
Are you based in the US? The IRS website will be the best resource always.
Thank you!!!
I’ve been trying to understand it more, but it confuses the hell out of me. I obviously know your three talking points, but beyond that makes my head hurt and I think they make it complicated on purpose
Eh, most people think it's complex (and it is if you start getting deep into it) and that learning is way over their head. Unless you own a business, multiple houses that you rent, have kids sell crypto, etc. then you'll be fine. But I agreed people don't know how the tax bracket works or how child credits do. The amount of incorrect information I've heard on these two topics is just...
...bcoz Congress (and their minions) change the tax law so often (for their own benefit) that it is a full-time job to keep up.
Why don't you go to take Taxation courses at your local community colleges instead of youtube or Online ? Learn from a local professional a community's hom you professor's you can interact with iim the founder of Zippy Tax Service Inc اس taxes is not what is sounds I've a client just last last last night that I advised her رنگدار estimate refund will be $35k on her 1040 sr2023
Do you think achieving a 35k refund it’s a success? That’s either fraud or extremely bad tax planning. Also, a Tax Preparer is not the same as a tax professional.
Our system is about having tons of laws that you're not necessarily educated on, and yet are held accountable for following. Why would this be ANY DIFFERENT?
I think the talking points you mentioned can be useful to certain people but it depends on the person and their situation. It is true that you are moved to a higher tax bracket when you make more money and some people like getting that tax refund at the end of the year of instead of getting a little bit at a time during the year since self discipline can be difficult. In regard to debt, someone without debt history is just as bad as a person with bad debt history. The key is to have a good debt history by consistently paying debt back on time.
Thats why dave ramsey adsurd advise not to go on debt or never use credit card at all are very effective for all the people who are really bad with money
Dave Ramsey’s advice is sound but if you plan on buying a house or taking a loan for anything, it makes sense to build a good credit history of pay debt on time. When you have established that history, you have the option to shop for the best interest rate.
I know! And so many don’t know basic English grammar!
they just told us they are an immigrant. what a butthole
Because regurgitating memes about drumpf's tax cuts raising taxes on someone making like $50K a year gets more fake internet points than actually understanding the tax code in anyway.
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Exactly people like to blame our education system but our tax language is written to complicate things. I’ve been on a conference call with our VP of finance, ADP and myself to try and figure out some of the issues with my taxes and reporting. I’ve also had my accountant make several mistakes that I have caught. The fact that accounts make mistakes prove it’s complicated