Definition: Taxes are mandatory payments made to the government by individuals and businesses. These payments are based on income, property, and sales, and they are used to fund government services. Understanding taxes is essential for young people to navigate the complexities of filing, managing deductions, and minimizing liabilities, allowing them to keep more of their earnings.

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Tax Basics:

• Tax Brackets: Different levels of income are taxed at different rates. Understanding where you fall in the tax brackets helps you anticipate how much you’ll owe.
• Deductions and Credits: Deductions lower your taxable income, and credits directly reduce the amount of tax you owe. More about tax credits and deductions can be found on IRS.gov.
• Filing Taxes: Taxpayers must file taxes annually, reporting their income and any eligible deductions or credits. Use TurboTax or H&R Block to file taxes.

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Why it’s important: Managing taxes wisely ensures compliance, reduces the tax burden, and helps young people keep more of their earnings.