What Are Taxes?
By Arkansas NEXT: Money on Thursday, March 20, 2025
Understanding taxes and how to file them is essential, yet this topic is often not covered in high school or college core classes.
A recent survey conducted by Intuit (parent company of TurboTax®) showed that 50% of Gen Z (ages 18-24) were unsure of how to file taxes correctly. Fortunately, we’ve got you!
Speak Fluent Tax: Top Terms to Master
Tax Brackets: The government taxes income ranges differently. Typically, the more money you bring home, the more taxes you pay.
Tax Benefits: Refers to laws that help reduce what you owe or pay on taxes.
Tax Credit: Money from the government to pay taxes.
Earned Income: Wages, salaries, tips and gross income.
Exemptions: A certain amount that taxpayers can claim for themselves or other dependents, which reduces the income subject to be taxed.
Dependent: A child or relative who meets specific requirements for tax credits or deductions.
Deduction: A tax benefit for specific items that reduce your yearly income.
Expert Advice
“(A W-2 is) an official tax document your employer must give you and report to the Internal Revenue Service (IRS). The W-2 form shows how much money you were paid to work over the tax year and how much money your employer kept from your paycheck for your social security and state and federal income taxes.” — Dr. Michael Casey, University of Central Arkansas Finance Professor and Dean of the College of Business at UCA
Why should students file a tax return?
Dr. Casey: “Most people should file a tax return because you could get 100% of the taxes withheld from your check as a tax refund.”
Explain Boxes 7 and 8.
Dr. Casey: “Boxes 7 and 8 on the W-2 form record tips you earned during the tax year. Tips in Box 7 are those you got that you reported to your employer. Box 8 shows allocated tips.”
Understanding taxes and how to file them is essential, yet this topic is often not covered in high school or college core classes. A recent survey conducted by Intuit (parent company of TurboTax®) showed that 50% of Gen Z (ages 18-24) were unsure of how to file taxes correctly. Fortunately, we’ve got you!
