Video: What Are Federal Taxes?
Hello I'm Jeremy from TurboTax with some information about the various types of federal taxes you may be responsible for.
Most Americans are familiar with the federal income tax but did you know that there are many other types of federal taxes people pay each year? The income tax is by far the most important federal tax since it provides the government with the majority of the revenue it collects each year and without it the country could not prosper.
Employment taxes may be lower in amount but a majority of you pay these too. These taxes support Social Security insurance and Medicare. If you are employed, this tax is withheld from your paycheck in addition to your income taxes. The federal government collects 12.4 percent of your wages to fund those Social Security benefits you receive during retirement. However, you only pay half of that and your employer pays the other half.
Less common are the estate and gift tax that a majority of taxpayers will never pay. These taxes only affect those who leave behind a significant amount of money and property upon their death or who make gifts of substantial value during their lifetime. Unless you are in the top 2 percent of the wealthiest Americans, these taxes are not likely to be of concern to you.
For more tax tips and guidance, visit TurboTax.com.