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Do I Have to Pay Taxes on All of the Money I Make?

Photo Of Man Taking Notes On A Table With NotebookReal Madrid soccer star Cristiano Ronaldo has recently become agitated with the Spanish Government amongst accusations of €15M in unpaid taxes, on income generated from advertising image rights. Ronaldo claims that the image rights legislation in Spain is complicated, and has not remained consistent since he joined Real Madrid in 2009. The changes were allegedly not made clear to him.

In the US, there is also a complicated tax system that has different rules and regulations for types of income. Having knowledge of the tax system can be beneficial to saving money, and avoiding tax fraud accusations from the Internal Revenue Service (IRS). If you cannot afford to pay your taxes, the IRS will eventually start making collection efforts to get their money.

How Should You File Your Taxes?

  • Do you have enough time? A 2012 report by the IRS found that taxes take around 16 hours to prepare and file on average. Tax preparers can file for you and will have the knowledge to avoid filing errors that could cause you to lose money. However, preparers are not free.
  • Who do you work for? What kind of form you will need to file is determined by your employment status. Independent contractors, employees, and business owners will have to file different tax forms.

Is All Income Taxable?

Almost all income is taxable, but there are some exceptions.

  • Inheritances, gifts and bequests
  • Cash rebates on items you purchase from a retailer, manufacturer or dealer
  • Child support payments
  • Most healthcare benefits
  • Money that is reimbursed from qualifying adoptions
  • Welfare payments

Learning all you can about the tax system, including deductions and write-offs, can make a large financial difference. It is easy to make tax errors and find yourself in a position where you are paying too much for taxes, or you do not have the funds to pay them off. A Lewisville debt settlement attorney can help you deal with tax burdens and offer professional advice for tax filing.