These Aren't Your Parents' Taxes (Part 8--The Grand Finale)--Renter's Credit and Take Home Pay

The Top 10 Things for 18-25 Year-olds to Know About Taxes

9)  Renter's Credit
This one depends on the state where you live.  You can't claim this one on your federal return (this only applies to your state taxes), but, if you live in a participating state, it's worth looking into.  Here's a TurboTax article to help you figure what the situation is in your state (good luck, I’m crossing my fingers for you):
http://turbotax.intuit.com/support/kb/general-program-issues/entering-your-data/1274.html

10)  Take Home Pay
Here's a hypothetical—you take a job that promises $50,000 a year.  On a bi-weekly pay schedule, your check should be about $1900.  Yeah right.  If we didn’t have taxes and other withholdings, it would be.  But, depending on how much you elect to take out for federal, the check could be as low as $1400-1500.  So be prepared (yes, I'm implying that you shouldn't go out and buy that Bentley right away—at least wait a while).  Here's a very brief breakdown of what's being withheld from your checks:

Federal—Amount is based on the information you provided on your W-4 Form.

State—Varies from state to state, but is usually a certain percentage of your Federal withholding.  To view the withholding form for your state, go here:

http://www.statew4.com/content/taxforms.php

Medicare—A straight 1.45% of your gross pay.

Social Security—This is 6.2% of your wages, unless you make over $106, 800.  If you make that much, you don’t pay any Social Security taxes.

For help budgeting that money that you're actually able to take home after all of this stuff is taken out, you should check out some of the stuff Quicken Online offers (another shameless plug, but it's definitely worth the mouse click—and it's free to boot!):
http://quicken.intuit.com/online-banking-finances.jsp?lid=site_banner

There it is.  See, painless.  And hopefully a little enlightening.  When you go to fill out your returns, you should have a little more ammo to use.  Here's hoping your returns flow like wine and you're finally able to buy that 1080p HD flat screen.

Comments

[Jessica]

Tip #9 doesn't really give you an article to help you figure out the situation, it takes you to your state's webpage. I could have done that on my own. Thanks for the help...

[TtaxColleen]

Ok...So I'm a little bias since I'm with TurboTax, but these blog entries have been great. Valuable content and conversational in tone. Lots of "hmmm...I didn't know" that and a few addtions to my "to-do" list. Thanks for providing!
Colleen from TurboTax