As you probably know, taxes are no laughing matter.
In fact, they can be pretty darn confusing and intimidating, especially if you’ve never had to deal with them before. But don’t worry, we’re here to help. This blog post will give you a brief overview of the seven types of taxes you’re likely to encounter as a college student.
- Income Tax
This is the big one. Income tax is the tax you pay on the money you earn from your job (or jobs). The amount of income tax you pay depends on how much money you make and what tax bracket you fall into.
- Payroll Tax
Payroll tax is a type of income tax that’s deducted from your paycheck by your employer. The money that’s deducted from your paycheck goes towards things like Social Security and Medicare.
- Sales Tax
This is the tax you pay on items that you purchase from stores. The amount of sales tax varies from state to state (and sometimes even from city to city), so be sure to keep an eye out for it when you’re doing your shopping!
- Property Tax
Property tax is a type of tax that’s paid on, well, property! If you’re lucky enough to own a house or land, chances are you’ll have to pay property tax on it every year. The amount of property tax you’ll have to pay depends on things like the value of your property and where it’s located.
- Capital Gains Tax
A capital gain is the profit that you make from selling an investment (like stocks or bonds). If your capital gains are greater than $500, then chances are you’ll have to pay capital gains tax on them.
- Estate Tax
An estate tax is a type of tax that’s paid on an inheritance after someone dies. So, if you inherit money or property from a relative who passes away, chances are you’ll have to pay estate tax on it (although there are some exceptions).
- Gift Tax
A gift tax is a type of tax that’s paid on gifts that are valued at more than $14,000 (as of 2018). So, if someone gives you a really nice car or piece of jewelry that’s worth more than $14k, then chances are they’ll have to pay gift tax on it.
As a college student, there’s a good chance that you’ll have to deal with at least one (if not all) of these types of taxes at some point in time.
But don’t let taxes get you down! Just remember that knowledge is power, so arm yourself with as much information as possible and stay organized throughout the year (we suggest using a trusty old spreadsheet). If all else fails, there’s always TurboTax 😉