The US Tax System

I'm very excited for us to dive into the US tax overview.

So I am joined here today by Brian Klintzmann.

He is from and he's gonna be taking us through a high level introduction to US taxes.

He's going to cover a variety of topics, like an overview of how taxes work. He's gonna give you a little more information on how to understand the ten forty form and then give you all the knowledge that you need to know on what to expect when filing taxes in the United States.

I know, again, this can be a new top you to drop any questions that you might have about taxes or have for Brian in the chat.

We will do our best to try and answer any questions that you have along the way, but Brian will also be doing a live q and a at the end so we can hopefully answer any questions that you have. So, Brian, I am going to pass the mic off to you, and we can go ahead and get started.

Thanks, Courtney. I appreciate that very much. I'm so excited to have so many people here from all over the world that I just, feel like a world traveler just being with you all today, so that's great.

Again, my name is Brian Klinsman.

Just a really quick background. I I'm a certified financial planner, which means I work with people and individuals helping them plan their financial future, which is really I I love that. Part of my background is I have a degree in in taxation, which I know sounds thrilling to you all. But, it really I I love numbers. And, I think that when we talk about the the tax system, it really it doesn't need to be, complex. It's actually pretty straightforward.

So I I thought I would start, you know, just as a quick overview to think about, you know, every every country really has a tax system. It's it's how they usually pay for their roads and schools and hospitals and sometimes military, things like that. And, the United States is no different. We have a tax system that's that's built for that.

In fact, we have in the United States United States constitution, which kinda drives all of our laws, we have, twenty seven amendments. Now the sixteenth amendment passed in nineteen thirteen is what gave our congress the ability to tax our citizens on their income. So it's a pretty old system, over a hundred years old, and it works pretty well.

We we have a couple of layers we'll talk about. We'll talk about the federal government. So anybody that works in the United States, and earns income will pay taxes to the federal government in some way. There's a possibility that if you work in a certain state, you will also pay another layer of taxes, which is called the state taxes for that state. And even in a rare case, you might even be in a city or a local, community that has a local tax. That's not very common.

So we'll go into all those things a little bit later, but that's kind of an overview of what we're gonna talk about today is that the the payment and the collection of taxes in the United States. So everybody, whether you're a citizen here or you're working in the United States, if you have earned income, that will be reported to the government. And since it's reported to the government, the government's expecting you to also report in on your own. Courtney mentioned that form ten forty, which is just the number of the form that the individuals use. Corporations and other things, they use different forms. But the form ten forty is for individuals.

And today, what I wanna do is just talk a little bit about the the the big picture of this. So we'll start with our first slide, and we'll go through just a little bit of information about how this happens.

So when you're working in the United States, you'll have a paycheck, and that that's probably not uncommon to you. A paycheck is this sort of a documentation or historical record of the hours that you worked and the pay that you earned for that period, sometimes a week or two weeks or even a month. So that paycheck comes, and the person that you're working for, it could be a hospital or some other group like that, that that they will they will withhold taxes on your behalf. Now you have a say in this.

So, basically, on the front end, when you start working, you will fill out a form. It's called a w four, but you'll fill out a form that says, hey. This is how much taxes I think I want you to I think I'll or how much income I think I'll make, and I want you to withhold on. And the and your employer will do that.

They'll withhold those dollars, and they'll send them on. They'll route them on to the government. So they'll forward them to the government on your behalf.

So it's really kind of a pay as you go system if you think about it. So during the year, all twelve months of the the calendar year that this is based on, think of it like sending in little donations or little contributions from your paycheck to the government.

And since we don't know how much we're gonna end with our at at the end of the year, it's kind of a guess for everybody. Everybody sends in what they think they're gonna owe in proportional amounts during the year.

At the end of the year, when the calendar year is over, we have three and a half months in this country up until April fifteenth to turn in our tax return for the prior calendar year.

So that's what we're in the process of right now for twenty twenty four, and it and it happens every year. So what happens is you fill out your your ten forty, as we mentioned, and you list all your sources of income. And by the way, it's not just your earnings. If you have maybe a a some interest on your savings account or an investment or maybe even sold a property or a stock, any kind of income or gain that you have will be reported on your tax return.

Now there's also a place on the tax return. We'll go over this a little bit later for deductions or expenses that you had, and the government does that as sort of a a way to help you, ease your tax burden. If you had a lot of expenses, let's say you had maybe a lot of medical bills or you paid, you know, taxes on your on your house that you owned or something like that. There's some tax breaks, we call those. There's even some tax credits that they offer to people in in special situations.

Maybe you maybe you put solar panels on your roof, for example, or maybe you have a child, that's in school or even with special needs. So the government does its best to to offer some tax breaks to people also. And when you get all those balanced out, you've listed all your income and you've listed all your deductions, then you you figure out your tax that's due.

And I'll just use a number to give you an example. I like I like examples. Let's say that your tax return came up and said you owed a you owe a thousand dollars in total taxes.

And then we'd look at how many dollars you could you sent in during the year. Remember those contributions we talked about through your paycheck?

And once those are done, let's say you sent in nine hundred dollars during the year. So the difference is a hundred dollars in my simple example here. And so you would have to just send in one hundred more dollars with your tax return in April, and that would square your account. Every everything would be even.

Alternatively, if you sent in a little bit extra, maybe you sent in twelve hundred dollars because you were just guessing like we all do during the year, and your total tax was only a thousand, then they owe you a two hundred dollar refund.

So, again, the tax return is just to figure out and settle up on who owes who at the end of the year.

Okay. Let's take a look at the next slide where we can talk a little bit more about these layers of tax.

So in in when in your income world, when you have payroll or pay, there's a couple of kinds of tax that we wanna focus on just for a moment. One's called the Social Security tax, and one's called Medicare.

Now together, these have an acronym. It's called FICA, f I c a. You may see that that acronym. But, really, this is our country's way of of may of taking some a little bit of money out of your paycheck and making a deposit into an account for way down the road when you retire.

That's what the Social Security tax is set up for. So in the United States, people contribute during their entire careers into this Social Security account. And then when they retire, the government sends them a check back each month for the rest of their life. It's called our Social Security retirement system.

And so that Social Security tax is just your way of making contributions.

By the way, in case you're interested, that contribution is half from you and half from your employer. And so that's kinda nice that whoever you're working for, you you go halfsies on that as I as we say, you know, you you you can go halfway each way. The Medicare tax is a similar amount. It's a smaller amount, and it's to help pay for specifically for medical, and and, medical bills during retirement.

So through payroll, you have automatic on the left side of the payroll, you have automatic deductions for Social Security. That's the retirement. And then the Medicare, that's for health care, during your working years.

On the right hand side, then we have these layers of tax that I mentioned earlier. So the federal tax, again, that goes for, you know, big government projects.

Really, who knows what they spend it on? We sort of wonder ourselves sometimes in the United States, but it is a it's an important thing to have infrastructure and and all the things that we enjoy. And I mentioned the state income tax. Not all states have that.

Right? So some states don't have a state income tax. I live in Texas. We actually don't have a state income tax, but we do pay higher things for things like property taxes and other things that are not related to your payroll.

And then I mentioned, finally, local income tax, and that's just a handful of places around the United States that might have a local income tax as well. Again, on the right hand side, these are the ones these are the types of taxes that you have the ability to control the amount or sometimes I say the volume of how much you have withheld from your check. In that way, you have the ability to to help manage that process.

Our our goal is really to try to get as close to zero as far as who owes who at the end of the year.

Some people consider that to be a success if they got it exactly right. I don't know anybody that's ever done that in my entire career, actually.

And I know, some people actually love to get refunds. They love to send in a little bit extra because they know the government will send them a check back at the end of the year.

Just to say Not to interject here, but that is typically how I always have it set up too because I like not only to get the money back, but it almost feels like I'm intentionally saving it up, without necessarily knowing it throughout the year too.

I know the goal is ultimately to break even, but it is nice to kinda get that, you know, bonus in the beginning of the year. So I always try to make sure to file my taxes as soon as I possibly can so I can get my, you know, refund back quicker.

And then just to let everyone know too, if you do have questions, I wanna encourage you to make sure that you're dropping them in the chat. We're very lucky to have Brian joy join us today, and he'll be happy to answer any questions about any of the information that he's covering. So if you are confused about a topic that Brian has, and, Brian, the example that you gave earlier about, the refund or about what they might owe, I think that was great, and it really puts into perspective for all of our health care professionals joining and gives them an idea of kind of what to expect.

So we'll continue on, but, definitely, don't be shy and drop some questions in the chat so that way Brian can answer them for you, while we have them on the broadcast.

Absolutely. Thanks, Courtney. That was great. I think that, as we continue on to the next slide, one of the things that we wanna get into is a little bit more detail on these three layers that I've mentioned before, the federal, state, and possibly local income taxes.

So just a bit just to review, everybody will pay the federal income tax who works in the United States, whether you're a citizen or you're here working. And that's just applied nationwide based on the amount of your income. And I I mentioned before that and we'll get into a little bit later about how much tax that is, in just a moment. The state income tax will depend on where you live and work.

It's interesting that there are some cities in our in our country that that straddle or or on the border of two different states.

I used to live in Kansas City, for example, and that's half in Kansas and that's half in Missouri. So it's always interesting that some people may live and work in different places. And so that may have an impact on the state income tax that you pay.

And then finally, the local, again, I said it's not very many. I I believe Philadelphia, for example, is one, and I just don't know them all. But I I can tell you that there's just a handful of places. So you could have potentially three layers of those. And again, those will be managed for you by your employer. They'll be taken out and, and you can make those contributions at whatever level you think is gonna be a good guess to get you to zero at the end of the year.

Alright. Let's go to the next slide because I think what we wanna do is have a good discussion about these tax rates. You know, it's interesting with the tax rates in our country, There's something called progressive, and, don't be afraid of that word. I think you probably understand the concept, which is in our country, they want to tax people with lower income at lower, rates and higher with people with higher income at higher rates. And so it's not a flat system in our country. There's been great debates about this, but it's been a progressive system since the beginning.

And I'll just explain a couple of of points about this chart to give you an example. And so you see that for the first eleven thousand six hundred dollars of income that you make in a year, there it's only taxed at ten percent.

So they'll take basically, if you made eleven thousand six hundred, they would take eleven hundred and sixty dollars would be your tax bill for the year.

Now once you go over eleven thousand six hundred all the way up to forty seven thousand one fifty, all of those dollars are taxed at twelve percent.

So we call that a layer or a tier. So notice that tier of of your income is taxed just slightly higher from ten up to twelve percent.

Now anything over the forty seven one fifty one all the way up to just over a little over a hundred thousand dollars jumps up to twenty two percent. That's a bigger jump, isn't it? And so that's where you start to see their kind of the ramping up. Now it does sort of level out for a couple of brackets after that, and it jumps up.

You can see the thirty two and thirty five. And even that thirty seven bracket, if you're, I'm gonna say, fortunate enough to have over six hundred and nine thousand dollars of income. First of all, congratulations. That's awesome.

So it's something to brag about if you're in the highest tax bracket. But notice that if you did, I'll just make an example. Let's say somehow you made six hundred and, say, ten thousand dollars for the year. Not all of those dollars were taxed at thirty seven percent. It was only the dollars over the six zero nine three fifty number.

So if you if you think about our system, it does give, tax breaks, really, in the sense of lower tax rates. It gives them to people with lower income. And sometimes people who have maybe an hourly work system where they may be able to either take more hours or take less hours from an employer, in some ways, you can kind of control your income for the year and, therefore, maybe even what bracket you're in. I always say to people, don't be afraid of taxes because, you know, even at the let's just say the twenty two percent bracket, I'll pick that one.

Even if you're paying twenty two percent, you know, you're still keeping seventy eight percent of the dollars to yourself. So it's it's I shouldn't be afraid of taking more hours or working more. People sometimes say, well, I don't wanna get into a higher tax bracket, but all of the tax brackets, even the thirty seven, you're still keeping sixty three percent of the dollars in your pocket. So that's how our brackets work in the in the United States for for taxes.

Again, this is the federal tax bracket system that we're talking about, and these can change a little bit. In fact, those those income ranges each year do tend to get, adjusted a little bit for inflation.

So by the time maybe you're working here, you may see the brackets be just a slightly different. And every now and then, Congress may decide to change the numbers on the right hand column in general. That sometimes gets discussed almost every year. We've been pretty steady for the last few years with our brackets, but this is there's always a possibility for provoke the left and the right hand side of this chart to have changed potentially by the time that you that you get here. Okay?

And, Brian, we're starting to see some questions come in the chat, which I absolutely love, so definitely keep them coming.

Stalin had actually asked a good one.

He's wondering, do we pay the taxes manually, or is it auto deducted?

Great question. Thank you for so remember what we talked about with with the employer and the employee. So whoever you're working for, the employer, you will make arrangements with them to automatically deduct taxes at whatever, estimate you think is gonna be your bracket for the year. Now this is such a great question because notice on the chart we're looking at right now, you may not know that in the in the second half of the year, your employer wants you to work a lot more shifts, and, therefore, you're gonna end up in a different bracket.

So it it's kind of a guess throughout the year. But to answer your question, these are auto deducted from your paycheck by your employer, but you do have a say in how much gets deducted.

Awesome. Thank you so much, Brian. Mhmm.

Alright. Let's take a look at just a little bit more, conversation around these tax brackets on the next slide with this concept of, how your your income is taxed. So I'm gonna use an example of a fifty thousand dollar salary. And, again, this is for the entire calendar year. Everything we're talking about is by calendar year.

And you may remember from our our slide just before that the first eleven thousand six hundred is taxed at ten percent.

So on the right hand side of this slide, I'm giving you an estimate, actually, a calculation of how much tax would be due on that first tier or that first layer of your income. And I mentioned it was a thousand one hundred and sixty dollars.

But since we earned fifty thousand dollars, we have to now go into the second bracket as well. And every dollar that's earned between eleven thousand six zero one and forty seven thousand one fifty is taxed at twelve percent.

So I'll just I'll just ask you to trust me that I did the math correctly, and the answer on the right hand side is four thousand two hundred sixty six dollars of tax owed just for that layer of income.

Okay? And then if you noticed, we had fifty thousand dollars of income, so that's just a little bit higher than that forty seven one fifty number. So we did just slip into the third layer of taxes with a with a little bit of our income. And so everything over the forty seven thousand one fifty one, which is just a little under three thousand dollars, is taxed at twenty two percent. And that's why that tax, on the right hand side of six twenty seven is much smaller.

So we can add up everything on the right hand side with the eleven sixty, the forty two sixty six, and the six twenty seven, And that's a grand total of six thousand and fifty three dollars taxes owed.

Now we we arrived at that conclusion, and this is this is how you would you would fill out on your tax return.

Now there may be some, some deductions. Again, we'll talk about that in just a moment. There may be some deductions or credits. Those are the two things that actually help you on your tax return.

But for now, the preliminary tax due is just a little over six thousand dollars. And I put a a parenthesis I put a a percentage in parenthesis by that to show you that that is an average of twelve point one percent of taxes. We sometimes call that an effective rate. It's just a fancy word that means average.

So if you if you take that some of our income was taxed at ten percent, and then the bulk of it was really taxed at that twelve and then a little bit at actually twenty two. If you take the average, it's we call it a weighted average, really. That's where you get the twelve point one percent. So if you were interested in making this comment, you can say, I basically paid twelve cents on the dollar of my income that year in taxes. That's that's what we call the effective or the average or the weighted average rate.

So that that is our tax due. Now this is said this says nothing about, how much do we owe the government when we send in our final tax return because we haven't talked on this slide at least about the money that was being withheld behind the scenes with each of our paychecks throughout the year. And so just before we leave this slide, I'll make an example.

If if this ended up being our our total tax for the year, six thousand and fifty three dollars, but we had withheld sixty five hundred dollars throughout the year, we would have a little bit of a refund back, a little under forty five I mean, four hundred and fifty dollars of refund coming back to us. But to get that refund, because in my made up example, we have sent in too much money, we have to fill out the tax return and basically ask the government to send me back a refund check. So the withholding is automatic, but the truing up or the final calculations is done by you sending in your tax return and reporting in, about who owes who. Either you owe the government a little bit or they owe you a little bit back. Okay?

Awesome. Thanks, Brian. And I know that you've kind of gotten a little bit into the topic of tax breaks and talking about, you know, when that will help our health care professionals out. We did get a question, and you might be diving into this a little bit deeper.

But just to kind of provide clarification, it was asked if I am burdened with a lot of expenses in a particular month.

Can I take a tax break? So maybe defining, you know, what a tax break is, and then what instances that's applied.

Sure. That's a great question. And and so I wanna use, and and they use the word tax break. And so I wanna just clarify, when you're doing your withholding through the year, you are allowed to either increase or decrease that withholding at throughout the year and and and really different pay periods if you'd like. If you have an estimate that you think the rest of the year is gonna be less hours worked or more hours worth, then you could do that. But if you had let's say, your car broke down and you had some expenses to repair your car, and that's a that's an unfortunate thing, that is probably not gonna be one of those tax breaks that the government will give you, an an allowance for or a reduction in your taxes.

Right or wrong, the government has decided which categories to give you tax breaks on, and they, medical expenses is one. But even that one, you have to have a lot of medical expenses to get a deduction.

Other examples of deductions include things like property taxes paid, charitable contributions because the country does wanna the government wants you to encourage you to give money to to charities. And so those are the kind of examples that could give you a a reduction in your taxes. And then there's some unusual ones I mentioned, the solar interest or buying an electric car maybe or something like that. Those are just things that their government sort of runs specials on every now and then when they're trying to incentivize behavior in our country. But unfortunately, it's probably not for I I call them the whoops expenses of our life. If we, if we had, you know, some, car repairs or or, you know, our water heater broke in our apartment or something like that. So hope hopefully, that explains the difference.

Yes. It does. Thank you so much for providing that clarification. And, you know, unfortunately, those life expenses do happen. I had some car issues, you know, before, the beginning of the year that definitely cost me a pretty penny.

But that's also why I like to file my taxes early because then I get my refund back, and I can use that to help me out. But thank you, Brian, for providing that clarification for us.

Well, and and that's a great that's a great example. If you don't mind, a little bit of a bonus point on this, because I am a certified financial planner. I work with people all the time on helping them manage their monthly money, and it's it's not easy.

You know, they don't sometimes they don't teach it in schools, but I always encourage people, whatever you say, you know, your money whatever your income is gonna be, let's say that you you think you're gonna earn two thousand dollars for the month, we have to take away right away from that the auto withholding of federal and maybe state and local taxes from that two thousand dollars. And then my point is also I love when people also set aside savings on their own for those whoops expenses, those car repairs. Because as we like to say, it's usually not a matter of if they happen. It's just when they happen. Right?

Exactly. Because they're bound to happen at some point.

Sometimes it seems like we have some really heavy months of of expenses. So, I just wanted to leave you with that quick point, which is in addition to the auto withholding from your payroll for taxes, I always suggest you do some manual withholding after you receive your paycheck for some savings so those those can be paid as well. But, great example, Courtney. Thank you.

Yeah.

But one wanna take a point.

Oh, go ahead. You're good.

No. I wanted to say, this conversation is so good because it leads us to the next slide where we're gonna take a look at even more specifics of different states. So remember I was talking about states that have taxes, and I said some states do and some states don't. By the way, in case you're interested, a little bit of trivia, there's one state that actually sends you money every month just for or not every year, and that's Alaska because they have all this oil revenue. It's it's a it's an unusual situation. So out of the fifty states, choose wisely. Right?

So Yeah.

But there are there are states, not that many. I wanna say it's around fifteen, don't quote me on that, that of states that have state income taxes.

And I will say.

In in in different levels of states, so we chose the state of Ohio. We could have chosen any state for this example versus Texas. And I mentioned that we happen to not have a state income tax, but I also mentioned because I don't want you to take that take that wrong. We do have taxes for other things.

Sometimes our sales taxes are higher when we go to the store and buy a shirt, you know, or maybe a little bit higher. And so let's just look at it this way. Every state has to have money to run their schools and build their roads. So they're gonna get it one way or the other.

But from an income standpoint, some states choose not to tax your income. They choose to get it from other things that, like I said, that you may own. So in this example, we're gonna use the same example of the fifty thousand dollar salary, and we're gonna have an example of someone living in Ohio versus Texas.

And you remember that six thousand and fifty three dollar number from the last slide that we concluded was the total federal income tax that was due for that person. So notice how that's the same in both states. There's no difference there.

And now we go to the second line of this chart where we show that the state of Ohio, if you worked through the math for that state income tax, return, they that person would owe about twelve hundred and fifty dollars, which is roughly two and a half percent. So I just put that in parentheses to give you an idea. It's a much smaller percent. If you do happen to work in a state that has state income tax, it's usually a number that's somewhere between roughly zero and five percent is my experience in most states.

So a lesser number than the, you know, twelve, twenty two, and even thirty five percent brackets that you can see on the federal government. And then off to the right notice, we have a zero for Texas because we mentioned there's no state income tax. Then I also wanna show you remember the Medicare and the Social Security? And I told you that the nickname for those was FICA.

That's for that stands for Federal Insurance Corporation.

That's but that's what the tax is. And notice how that's the same no matter what state you work in. Now this is a this is an obligatory or a mandatory tax.

You don't have to estimate it, and you don't have a choice about it. And I can see that it's about thirty eight hundred and twenty five dollars of tax in both states that you're in. So the grand total for both of those is roughly eleven thousand versus nine thousand dollars of total tax. The difference really just being that state income tax piece. Notice how all the other pieces were the same. The federal line, the Medicare and Social Security line are the same. And so your take home, and and and we use that phrase is how much do you actually get to put in your pocket, is a couple thousand dollars different again or or about twelve hundred and fifty, I should say, in this case because of the difference in the state taxes.

So that's why I mentioned a minute ago, just as a bonus item, whatever your salary is, you need to plan on living on less than your than your total pay. And I think that's probably true for most places in the world where you work. There's gonna be something extracted from your pay. So I know that people wanna just do the best they can and estimate how much am I gonna finally end up with. Now I will tell you that for people who work on a salary basis, this is a little bit easier because you know probably exactly how much you're gonna have after all these taxes at the end of the month. So you can you can plan on, you know, how much do I go out to eat and how much do I plan on maybe going to a concert or fun things like that.

For people that work hourly, it's probably pretty steady, but I know for sure, especially with nurses, you you may pick up a dip an extra shift or maybe change a shift, or maybe you got sick and couldn't work a shift. And so your income could be a little bit more different each month or per pay period. So that's just something to keep in mind, I think, as well. Okay?

Alright. I think we're doing great. I think y'all are doing great on the on the understanding here so far. I just wanna move to a next slide and where we'll get into a little bit more about, how you file the tax return.

Now you you heard me say earlier, that your paycheck is done through what's called a payroll system, and your employer is obligated to report to the government and maybe the state if you're in a taxable state how much income you earned.

So some people say they're telling on me, and I say, well, no. They're they're actually obligated to do that. And from a corporate standpoint, they wanna report how many wages they paid. It helps them on their corporate taxes, of course, as well. So you're gonna there's gonna be a report sent to either the federal and maybe also the state or local about your earnings, and it's done through the payroll process.

Now at the end of the year, there's a form that comes out called a w two. We have a lot of funny names and numbers for our forms here. So the w two is the is the final scorecard of how much that employer paid you for that calendar year. Now if you happen to work for two or even three different employers different during the year, you will end up with two or three of these form w twos at the end of the year. So all of these w twos have to be included on your federal, tax return. That's the that form ten forty we mentioned earlier.

They might also have to be reported on this on a state tax return. I just wanna keep saying that if you happen to be in one of those states. But that's how the process works. So the the reporting is automatic by your employer to the government.

And so think of it this way. The federal government, they got reported by your employer that you made, let's just say, fifty thousand dollars this year. So now the government is waiting on you to fill out your own form ten forty and and show that, hopefully, matching number. They're looking for that confirmation from you with you filing your own tax return.

And then so and so the computer systems actually can, you know, find out if there's a there's there's not matching. So I guess if somebody decided to report a lower income than their employer did, they would probably, you know, start the the matching process with the government. They'd probably get a notice about that. So I know we don't wanna do that. We're just gonna report what's on our w two and put it on our form ten forty.

We talked about the timing of that. So the income is added up for the entire calendar year, and then we have this three and a half month window until April fifteenth to file the tax return.

Now if for some reason you're having trouble getting all of your data together and filed by April fifteenth, you can file for an extension.

And our federal government allows an automatic six month extension, so all the way from April fifteenth to October fifteenth.

They used to ask they used to make you, write a little note on your tax return and explain why you couldn't get your tax return done. I I remember days and days back, years and back, we used to have to write a big, you know, sob story about, you know, what happened in your life if my dog died or, you know, something like that. I don't know. And, and and, anyway, it's automatic now. You just turn in the form if you need to. But here's the important point of this story. If you apply for an extension, it does not extend the time that you have to pay your taxes.

So it's kind of an interesting thing.

Basically, if you file for an extension, you're saying, I'm gonna turn in the form later, but here's what I think I'm gonna owe you when I do turn in the form in October or anytime between now and October. So by April fifteenth, you still have to pay what you think you're gonna owe or there could be penalties. So I did I just I wanted to address that whole extension con concept, to see if that helps you with that.

So that's the time period. It's a fifteen and a half month total time period, the twelve months of the calendar year, and then the three and a half months that you have to turn in all your documentation of, of of yours of your reports. Okay?

Alright. We doing okay on questions, Courtney?

Yeah. We do have a few that are coming through, and you're doing a great job at providing them examples. I think we're able to answer some questions that are coming through, you know, during the presentation here. Nina actually had a really good one, and she had asked if I'm still earning income from my home country, since, as you know, all of our health care professionals are living elsewhere and traveling to the United States, while they're working in the United States, do I need to report that that income as well?

Nina, that's such a good question. And I will tell you that that my answer is gonna be it depends.

And, I will say it usually does need to be reported, but income from two different countries, many countries have what's called tax treaties with each other where they make a deal so that people are as much as possible, we would so they're not double taxed. Now there's a these tax treaties will dictate on which country's tax return do you need to show which country's income.

And so every country is different, so it would be an example of something that you should, you know, get a professional to give you advice on this. But it is a really good question, but but the good news is that most of these countries try not to double tax you on on that income. Okay?

Yeah. I agree.

And I think, oh, and I think too for for our health care professionals, that's good information to know, you know, since this will be something that's new for you once you start working in the United States. And we've mentioned several times that it can be confusing. You know, it's good to seek out a professional, that you can sit with, and they can kind of look at your own unique, situation because everyone's taxes are different.

It depends on what's going on in your life and where you're working. So it's really good to seek out a professional.

I know I'm no tax specialist, so I always seek out someone that is able to help me with my taxes during this time of the year that can answer any questions that I might have. So if you do have a special scenario, you know, in an instance like Nina, I think it's good to seek out a professional to help guide you, to make sure that your or your taxes are filed correctly.

Absolutely.

Well, y'all are doing great. By the way, if you come to Texas, you have to learn to say y'all. So I just I apologize that that that's how that works. One of the I have two a couple of concepts left I wanna get, through, but y'all are doing great. We're gonna go to the next slide. We're gonna talk just a little bit about these deductions and credits that I referred to. So, again, this is the government's way of trying to help and ease the tax burden, on tax payers.

So the income category, I think we all understand that. It's the it's the earnings that I got from my employer, maybe some interest or dividends on my investments if I have any in in my savings accounts and things like that.

Even some crazy things like if you have gambling winnings, it's there's a whole long list in our in our country of of things for income.

Deductions and credits. Here's the thing.

You can either add up your deductions for yourself or you can say, you know what? I'm just gonna take the standard deduction that the government gives you. So every taxpayer, whether you are a citizen here or just working here, everybody gets what's called a standard deduction.

And this is for for the people who their government says, look. If you just don't wanna keep track of your charitable contributions and your property or your vehicle tax, you know, during the year, if you don't wanna spend time adding all those up, then you don't have to. We're just gonna give you the standard deduction. And there's a different amount of that depending on whether you are a single person filing a tax return or what's called a married filing joint.

So a married couple filing a tax return where they include both of their incomes on the same thing. Obviously, the married, couple would get a higher standard deduction than a single person would. So just know that if you don't intend to or you don't just have the interest in tracking expenses, you can take the standard deduction. I will tell you personally, the standard deduction is a pretty good deal.

And for most people, they've actually raised the standard deduction as the years have gone by to encourage and actually allow more people to not have to track all their expenses during the year. So I'm just gonna tell you, I think the majority of people in our country just take the standard deduction.

The other the other items are called credits, and those may or they're only they're called, I I say, situational credits. So they're only if you happen to have that situation. Maybe you have a child that's in school or actually just having a child at all. There's something called the child tax credit, for example.

And this is to help people because it's expensive to have a child. Right? There's there's diapers and sometimes day care. It just seems like it goes on and on.

So the government is just trying to help people that have usually smaller children, but children at all, there's a child tax credit. There's a credit if they have if you have some in school like college.

I mentioned some of the other different ones about, you know, different vehicles and energy credits and so forth. So you can you can look at the list, and then the taxes paid is the result of the first two boxes on the left. Income less deductions and credits will result in your final tax.

Again, we're gonna compare that with the contributions or the the donations, I like to call them. That's probably not the right word. But the contributions during the year, they'll compare and see who owes who. Now most people do those contributions through their paycheck, and it'll show up on their w two at the end of the year. One quick comment for people that happen to be self employed or maybe what we call independent contractors.

You will instead of getting a w two, there's another form. I'll just mention the name, but it's a form ten ninety nine. And that's just what we call for independent contractors, people that are not, employees of an organization, but they are working there as an independent contractor where that name comes from. And those folks generally need to send in what's called estimated payments.

Those are done or required to be done four times a year every three months or so. Not exactly, but almost. So every three months or so, you're it's encouraged for independent contractors to send in a contribution. It's the same concept.

Brian, I think our connection is breaking up a bit. So I'm just gonna do a split.

Are you still there? Are we good, Courtney?

Yeah. The connection's breaking up a little bit, so I just wanna give it a second to reload.

Load, so that way we we can pick back up on your presentation here.

I think, my clock is ticking perfectly without a gap, Courtney, so I may continue if that's okay. You, the connection is just a little So I think, I think I think, Cole, a couple people have told me that my connection is good.

I'm just gonna go ahead and finish. Let's go ahead and go to the next slide, just so we can make sure we get the information. I wanted to just answer that last question about how tax returns are are prepared.

You are allowed to, complete your own tax return. There's even some people that like to fill them out by hand. Most people in our country use a software system. A couple of names maybe you've heard like TurboTax or H and R Block or something like that, is what the majority of our country uses.

And it's some people actually go to a a CPA, a certified public accountant, and have a professional do them, but you usually don't need to do that unless you have a complex situation, maybe a lot of assets that you own or some strange kinds of income and so forth. So I will tell you that for most of you, you're probably gonna be using, you know, some sort of a tax preparation software, and those are very cheap. Some of them are even almost free, when you do that, and they have, a lot of good guidance and and people to support you during that process. So just wanted to finish that last topic about, how the tax return is actually prepared.

Okay?

Alright. Courtney, are you still with us? Are you doing okay?

Alright. We may be we may be losing, Courtney a little bit.

I'll see if I can see any of the questions in the in the chat to help with this.

I think we talked about the traveling. We talked about income from different countries.

Yeah. I think we're, I think we're good. I'll just say as a as a final point, one of the things about our tax system is that, they do try to make it as fair as possible. It does always change just a little bit, throughout the years.

So what we're providing to you is the information about how the tax, brackets work now, and it might adjust a little bit by the time you get here. But just remember, earning income is a good thing. Don't be afraid of the taxes. We we all wanna make sure we we do pay our fair share, but just know that when you when you get here and and you start earning money, there's a lot of support and a lot of people to help you through this process.

Thank you, Brian. I really appreciate you taking the time. I've learned so much myself about taxes today, so I appreciate you taking so much time to dig deeper, explain the concepts, and I hope that all of our listeners are able to take something with them today. So thank you, Brian.

You're welcome.

Alright, Brian. Well, we definitely appreciate you breaking down taxes in the United States and giving our health care professionals a little more information. So we'll go ahead and proceed with our live q and a since we did have a couple that we were not able to get to.

So just to jump into some of the questions, we did have a question here by Gia Dyle who asked if we are going to pay those taxes every month. So I know you kind of, talked about, you know, how taxes are on their, ten forty form that they're gonna fill out, but are they going to have to pay those taxes each month from their paycheck? And then at the end of the year when they file their taxes, what happens?

So great question. I'm gonna try to answer all these questions very succinctly so we can take as many as we can. Remember, the tax that you pay is calculated on an annual basis, and you make contributions on a weekly or biweekly or monthly basis as contributions toward those.

So you are taxed on all your income. You're making contributions throughout the month, and then we'll see at the end of the year if you've overpaid or underpaid those contributions.

Awesome. Thank you. And we do have some health care professionals that ask if they can work at another job while they're also working in the hospital.

So a lady here asked if she's working in two places, are they gonna be double taxed?

Oh, good question. The answer is not a double taxed. Remember, if you have two or even three jobs or more, you're gonna get a w two from each of those jobs. And at the end of the year, we're simply gonna add up those w twos altogether and then apply them to those brackets.

Remember the brackets, the tiered schedule we walked through? So if you have more than one job, it could increase your taxes, but I don't think it's gonna double them. So I wouldn't be afraid of that. I think if you if you need the income and you enjoy working, you should do that.

Yeah. Absolutely.

And, you know, given if someone is working in two different places, Nina had also brought up a good point. Are there tax implications if I send money back home to support my family?

A lot of our nurses will work and send money home to their families, to try and support them even though they're living in the US. So I think it's, a good plan ahead, you know, if it affects them in any way.

Well, first of all, what a wonderful thing if you're able to do that and and to help your families back home. But the the answer to this question about federal and state income taxes is there's no impact on that. That's just something that you choose you may choose to do personally with whatever money winds up in your pocket after all the tax system has been has been calculated.

Alright. Perfect. And then I know we kinda broke this down a little bit, when you were talking about, you know, if they were to pay too much and get a refund back or if they were to not pay enough in taxes and then owe. So Janet was wondering, are there ever instances whereby, you know, you may be overtaxed?

Well, I don't think so. Only because the system is pretty, detailed. The rules are spelled out. When you fill out your tax return, you're gonna fill it out, and you're gonna fill it out based on the rules that are applied.

Your employer is gonna withhold income taxes based on those rules. So I can't really think of an example where you'll be overtaxed, at least not on purpose. Now some people actually make errors on their tax return when they fill them out, but that's a different story. That's more of a clerical or a math error sometimes.

But, no, overtax should not be an issue in most cases. I don't think.

Alright. Perfect. Thank you.

And then I did wanna highlight this question that came in from Rosemary. And this might be a question that I might be able to answer for you too, Rosemary. But is the amount of money that nurses earn from PassportUSA tax, or is the government taxes take or does the government tax the company? So when you're working at your facility, you know, health care, as well, doesn't take anything out of your paycheck.

So the money that you earn is gonna be the money that you earn. Brian talked about federal, state, local tax. So all of that is gonna be taxed from a paycheck from anyone that's working in the United States. So you'll see those deductions coming out of your paycheck.

But from, you know, Health Carousel as an agency, we don't remove anything from your paycheck. So that is gonna be your hard earned money that you are going to be able to keep.

And then Sadek here did ask, is someone from PassportUSA, able to help us file income tax? So as part of our full circle of support, we wanna make sure that we're setting you up with success, and having you feel confident when you're filing your taxes.

You know, we are so lucky to be joined by Brian here today so he could dive a little bit deeper, and we wanna be able to guide you and direct you, on who you can contact in order to help you file your taxes.

Along with plenty of tax specialists out there. There are also online platforms if you're looking to file your taxes yourself.

So you'll be working with an international employee supervisor, and they will be able to guide you on the resources that you can use when it comes time to filing your taxes to make sure that you meet the deadline of April fifteenth, and that you're filing your taxes accurately and confidently.

So, Brian, those are all the questions that we got today, and I think you were able to cover a lot of information that is gonna be extremely helpful for our health care professionals when planning on, you know, working in the United States and kind of adjusting to that and what they can expect.

So I appreciate the time that you took to join our broadcast. I know I learned a little bit about taxes, so I hope our audience did too.

We are very grateful for your time today and all of your insight on the US tax system.

Thanks for having me. I love being here with y'all. Good luck.

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