Money Essentials

General tax information

Understanding tax fundamentals can save you money.


Doing your tax return isn't always as daunting as it seems. In fact, it actually can be a great opportunity to get your financial house in order.

If that opportunity lacks appeal or your finances are just too complicated to handle on your own, there are plenty of tax professionals who can do the work for you.

No matter which route you choose, however, you should understand tax basics for two reasons: You are legally responsible for your tax return; and being tax-savvy throughout the year can save you a great deal of money over time.

In this lesson we'll go over some tax essentials, including:

- How much you should withhold;

- What those oft-heard but rarely defined phrases on your 1040 mean;

- What tax records you should keep;

- How you can avoid an audit; and

- Some good tax-planning strategies.

Unless we note otherwise, we're talking primarily about federal taxes. State and local governments impose a variety of income, sales, and property taxes that are too complex and varied to address here.

Not every dollar of your income is taxed at the same rate.

glossary
Glossary
take the test
Take
the test
more lessons
More Money Essentials
lessons
Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
Criminal's muscle car collection auctioned for $2.5 million These valuable classic muscle cars were seized as part of a money laundering plea deal. More
Ferrari 458 Speciale - Raw speed This bare-bones Italian supercar drops pretty much everything not needed for driving fast. More
America's most dangerous jobs America's workplace got safer last year. But these workers were still at a much higher risk of fatal injuries, according to the Bureau of Labor Statistics. More

Updated 11/23/2011 with SEO tweaks - abell
Updated 7/27/2012 content changes - aross
Updated 7/30/2012 content changes - aross
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.