When and How Do You Pay?
Most of the taxes you owe are paid throughout the year. Sales taxes are paid at the time of purchase. Property taxes are often rolled into your monthly mortgage payments. Income taxes, however, can vary.
For most people, individual income taxes are automatically taken out of their paychecks. This is called payroll withholding. If you look at your pay stub, it usually tells you exactly how much money has been deducted in taxes.
But some people's taxes aren't deducted from their paychecks at all. This might be the case if you own your own business or work as a freelancer. In that case, it's up to you to pay the right amount of taxes you owe. The deadline for paying your taxes for the calendar year is April 15 of the following year. So, for example, you must file your 2021 taxes by April 15 of 2022.
One thing to keep in mind is that even if your taxes are automatically taken out of your paycheck, that doesn't mean you can ignore the April 15 deadline. Your payroll withholding is only an estimate of how much you owe in taxes. At the end of the year, you're still expected to calculate the actual amount you owe. You'll figure out how much you actually owe by following the instructions that come with your state's tax forms. Each state is different, so it has different forms and different instructions to follow. A good place to find more information about your state's tax forms and tax rules is your state government's website.
When you calculate your taxes, sometimes you'll find that not enough money was taken out of your paycheck and you'll owe more money to the government. However, you might find that you paid too much and the government owes you money instead. That's why some people love tax season (because they get money back) and others despise it (because they owe money to the government).
Whether you love it or hate it, you have to admit that the U.S. tax system can be pretty complicated. We've talked about the different types of state income taxes and the different rates of these taxes, but the complications don't end there. Believe it or not, there are still more exceptions to the rules. Read on to find out what happens when you live in more than one state or if you join the military.