The word ‘taxes’ can seem very daunting to young adults. In fact, most people try to avoid dealing with the concept of taxes and don’t bother trying to understand them until they need to. It’s something that we never had to think about until we start earning a wage over the tax threshold. Of course, students don’t have an income. And if they do it will never be over the taxable income whilst in education.
Preparing children is crucial so they can be confident in money management. Many schools use the excuse that taxes are too abstract for students because they’ve never dealt with that much money before. But surely they’re dealing with big numbers in maths anyway? and percentages? why not make some maths lessons about taxes so they can actually use what they’ve learnt in the real world. And ultimately, it will ensure they have confidence and familiarity with money management which is a vital part of being a successful individual.
We’ve answered the top three questions asked by young adults regarding tax returns…
Who needs to file taxes?
This depends on which country you’re in and whether you’re working for a company or self-employed. It’s important to find out whether you’re responsible (if you’re self-employed you definitely will be) or whether your company will file the taxes for you. But remember – if your income does not exceed a certain threshold (it will vary depending on which country you’re in) then you will not need to file a tax return. For example, in the U.K you can earn up to £12,570 of non-taxable income, anything over this will be taxed.
What happens if I file after the deadline?
It’s important to not miss the deadline for filing your taxes. Depending on which county you’re residing in, there will be different penalties for late tax returns. You can be charged up to 5% interest on the amount due for each month that you fail to hand it in. As you’ve probably already guessed, this can add up to a lot of cash! However, if there is some reason that you can’t make the tax return online then you can file for an extensive beforehand. Be organised!
How do you know if you’re eligible for a tax refund?
It’s important to check this out at the end of a tax year. Not so fun fact – over $1.3 billion in tax refunds is unclaimed each year. Don’t let your hard-earned cash contributions to this ridiculous figure! It’s very common to be overtaxed. To check if you’re due a tax rebate you must check all of your payslips. There are many tax rebate calculators online to save you mathematical trouble. In this, you should enter your gross income and the tax paid. TIP: Make sure you find a tax calculator that has a business expense on it too – because these can be subtracted from your income. Things such as company cars, insurance, software etc. Once calculated, you’ll know the amount you’re owed (if you are) and can apply for a tax rebate online or filling out a form and sending it to your local government tax address.