Tax Time Tips for 2006

Taxes are something that few people enjoy. However, almost everyone who earns money has to pay taxes. In this article, I will discuss the different types of taxes that exist in the United States.

Whether or not you have to pay taxes depends on your current situation. If you have a job or earned income, then you should pay taxes if the gross amount of your pay was over four hundred dollars for the year.

And then there is unearned income, which you should pay taxes on if you make over eight hundred dollars in any given year. Examples of unearned income are stocks, bonds, retirement funds; etc.

What about a contract worker? Do you have to file any tax forms for them? Yes, you do. If you pay a contract worker six hundred dollars or more per year, then you are required to file a 1099 MISC with the Internal Revenue Service.

Also, don’t forget that there are state taxes as well as federal taxes, in some cases. For instance, if you live in Texas you don’t have to file state taxes because there are none. But if you live in Colorado, be prepared to pay both state and federal taxes.

Another often forgotten tax is estimated tax, which is a quarterly tax that you should pay if you expect to earn a thousand dollars in federal taxes for the year. However, you usually do not have to worry about estimated taxes if you work for an employer.

Normally your employer takes care of the estimated tax for you, but it never hurts to be certain. So check up on it if you are not sure. The people who really have to worry about estimated taxes are the small business owners and entrepreneurs. These are the individuals who have no bosses to take care of their estimated taxes for them.

As for money given to you as a gift, you don’t have to pay taxes on that. However, if the gift is greater then twelve thousand dollars, the person who gave you the gift money will have to pay taxes on it. You still don’t, though. It’s good to be you isn’t it?

Finally, there’s always those people who think that federal taxes are illegal and refuse to pay them. If that is how you feel then feel free to not pay them, but remember you could go to prison for that belief.

Paying taxes can be annoying, but most people have to pay them. So the next time tax season rolls around, be prepared to give the tax man his due.