When it comes to building wealth, nothing impedes your progress as consistently as taxes. Taxes are taken very seriously by the government, and you should do the same. Assuming you enjoy your freedoms. We don't have time in this course to fully tackle this topic, but we'll get you squared away with a basic understanding. filing taxes is necessary to stay compliant with the Internal Revenue Service. If you owe taxes, the IRS will add interest in penalties onto your original balance, which could lead to a massive tax bill.

Lack of payments on this tax bill can lead to wage garnishments and or jail time jail is bad. On the bright side, you may qualify for a tax refund. Billions of dollars in tax refunds are not claimed each year due to a lack of individuals filing taxes. The yearly deadline to file taxes fluctuates, but it's typically around April 15. It is possible to apply for an extension which will allow you to file By October 15, you're typically required to pay taxes on all earned income that you make during the current tax year. There are three main taxes that most individuals have to pay.

State tax rates fluctuate from state to state in some states have no state income taxes at all. Federal taxes are broken down into income brackets, and the higher the income, the higher the tax rate. FECA stands for Federal Insurance Compensation Act, which helps pay for Social Security and Medicare. If you're an employee of a company, you're taxed differently than if you're a self employed business owner, we'll highlight some of the differences here. When you're taxed as an employee, your taxes are withheld from your income up front As a self employed business owner, it's the opposite. You pay taxes on the income that's leftover after subtracting expenses, assuming any income is leftover.

To learn more about business owner tax strategies, you'll need to check out our small business jumpstart our course.