00:06Taxes are like peak adulting and you might not feel prepared for them, but we got you.
00:12We're going to cover everything from filling out important paperwork to making the best
00:16of your tax refund.
00:17I know it can seem like a lot to take in.
00:19There's paperwork, there's deadlines, there's penalties, and more paperwork.
00:25So, we're going to take it step by step and learn all about taxes.
00:31Taxes are what every American citizen has to pay so that the government uses to take care
00:36of the country, your roads, your buildings, maintenance, everything like that.
00:40It's the single largest expense over a person's lifetime.
00:44You'll spend more money on taxes than you will spend on housing and food combined.
00:54Welcome to Money Talks.
00:56Today, we're talking about withholding.
00:58What is it and how do you actually fill out those tax forms to select the appropriate amount
01:03of withholdings?
01:04But before we do that, we have some real taxpayer questions from Tyreek and Mia.
01:09My name is Mia.
01:11I'm 27 years old and I'm a production assistant living in Portland, Oregon.
01:15Tyreek here.
01:16I'm 31.
01:17I'm a filmmaker from Brooklyn, New York.
01:19The last splurge item I bought was an $89 house plan.
01:24My last splurge was horseback rider lessons for me and a special lady.
01:28The best investment I've ever made was a car I bought when I was 23.
01:32And the best investment I've ever done is my education.
01:35Today on set, we have our experts, Lauren and Lynn, to help answer questions.
01:40So let's dive into question number one from Tyreek.
01:44So I'm a recent graduate and I just received some new hire paperwork from my employer and
01:49I'm not sure how I'm paying the right amount of taxes.
01:54I think I should hire somebody to help me, guide me through this process because I'm very confused.
02:00So can you please help me out?
02:02Let me know how much I should be taking out of my money, how much I should be giving back
02:05to the government.
02:08So withholding is basically the concept of understanding how much money is going to be
02:14withheld from your paycheck when you get paid by your company.
02:18What that is is essentially your employer collecting a portion of your paycheck and paying
02:22that directly to the federal government on your behalf.
02:26What your employer will request of you is to fill out your W-4, which is where you will
02:33then indicate your status as a tax filer.
02:37There's a W-4 calculator.
02:39You have to go to the IRS.gov and you'll need to enter the information that they're asking.
02:47What you'll first do is fill out what your individual status is.
02:51So if you are single, you fall into a different tax category than somebody who is married or someone
02:58who is considered a head of household.
03:00In the hierarchy order, either married filing a joint return or head of household, that's
03:07at the top of the hierarchy, after that is single, after that is being claimed as a dependent
03:14on someone else's tax return, and then after that is married filing a separate return.
03:19You can be single but qualify as head of household as long as you have a qualifying child or a
03:25qualifying
03:25relative.
03:26An example is that you have a child who is your dependent.
03:29You can claim each of those children so long as no one else is claiming them as a dependent
03:35on their individual return as well.
03:37Foster children and adopted children also qualify.
03:40There is an age requirement, so they need to be under the age of 19, or if they're a full
03:45-time
03:45student, they need to be under the age of 24.
03:47Some people are also taking care of their parents or some individual could be an adult who has
03:55developmental issues.
03:56But if you provide the primary care for someone and no one else is claiming them as a dependent,
04:03then typically you can file that person as a dependent.
04:06Unfortunately, we cannot claim our furry friends as allowances.
04:10Great advice, ladies.
04:12All right, our next question is from Mia.
04:14I recently started freelancing at a production company.
04:17What tax paperwork should I expect to fill out to make sure my taxes are paid?
04:22Dun, dun, dun.
04:22What tax form do we fill out?
04:27If you have a corporation, an LLC, or an S corporation or partnership, instead of completing
04:33a W-4, you're going to complete a W-9.
04:36So the W-9 is essentially what is a request for your taxpayer identification number, and
04:42that is what helps you get paid.
04:44Don't get confused by the word tax ID number.
04:47When someone asks you for your tax ID number, they're asking you for either your social security
04:54number or your employer identification number.
04:56And it basically collects all of your information so that you can then be qualified to receive
05:03your paycheck.
05:03I also recommend that if you're taking home your gross amount of pay, try to set aside
05:09between 20% and 30% because you will end up owing that back in taxes at the end of
05:14the year.
05:14As a freelancer, you're definitely considered the employee and your employer as well.
05:18Just make sure to set aside anywhere between 20% and 30% of that take-home pay.
05:23All right, Lynn.
05:23The biggest thing that you should do is make sure you document everything, every single
05:28business expense.
05:29Your mileage, your gas receipts, if you go out to dinner to discuss business, and those
05:34are the things that you want to keep track of that you will report on Schedule C of your
05:381040 tax return when it's time to file taxes.
05:41All right, we learned a ton about tax withholdings from our fabulous experts.
05:46Stay tuned to learn all about how to prepare to file your tax return.
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