Taxes · Module 5 of 6
What was already taken
The tax taken from your paycheck, why it’s never exactly right, and how it gets squared up at the end of the year.
Key terms in What was already taken
- Tax withholding
Tax withholding is the portion of pay that an employer or pension provider deducts and sends to the tax authority on the worker's behalf. In the United States it is a prepayment of federal income tax, credited against the final bill when the return is filed. The amount depends on the information the worker supplies.
- Form W-4
Form W-4, the Employee's Withholding Certificate, is the U.S. form an employee gives an employer to indicate how much federal income tax to hold back from each paycheck. The Internal Revenue Service suggests completing a new one when personal or financial circumstances change, so that withholding stays close to the real tax.
Source: Internal Revenue Service, About Form W-4, Employee's Withholding Certificate
- Form W-2
Form W-2, the Wage and Tax Statement, is the U.S. form an employer files to report wages paid to an employee and the taxes withheld. Employers send one copy to the Social Security Administration and give one to the employee. Its figures are used when preparing the employee's annual return.
Source: Internal Revenue Service, Topic no. 752, Filing Forms W-2 and W-3
Every term on Lever is in the money glossary.
About this module
What was already taken is part of Taxes, one of 15 subjects in Lever. It’s a short run of 5 lessons, about 13 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
More in Taxes
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1
The part that is not yours
Why we pay taxes, what income they’re worked out on, and how to set tax aside yourself when no one does it for you.
5 lessons -
2
What your rate really is
How tax brackets really work, and the difference between the rate on extra income and the rate you actually paid.
5 lessons -
3
What you can subtract
Tax deductions versus tax credits, the standard amount versus itemizing, and keeping proof for your claims.
8 lessons -
4
The paperwork year
Filing your tax return: who needs to, when it’s due, whether to pay for help, and how to fix a mistake.
7 lessons -
6
Money that is not wages
How tax works on investment gains, losses and dividends, and how a loss can lower the tax on a gain.
6 lessons
Try this module
It’s part of Taxes. Lever will bring it to you when you’re ready, or you can go straight there.