Pay Taxes, What!?!

We gotta pay taxes, what!?! Many kids are shocked to learn just how much is taken out of that first paycheck. In this episode, we break down the basics of what are taxes, why we pay them, and what's with all those "W" forms. Oh, and who is Uncle Sam? Let's talk taxes in this episode of the Cash Kid Podcast. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

There are only two certains in life…. death and taxes. - Said everyone as I’m told it’s a pretty old joke. 

What are taxes, who pays them, why are there so many W forms involved, and why do we pay taxes? 

Oh, and who is Uncle Sam?

Well, you’re about to find out in this episode of the Cash Kid Podcast. The Cash Kid Podcast is underway!

Intro tease:

So you’ve got some cash. Maybe from an allowance, or that money your grandma gave you for your 7th birthday. Here you go, sweetie. Thanks, Grandma.

Whatever it is, what are you going to do with it? Spend it, hide it away… or maybe invest it? Let’s start learning how to make that money grow.

Time to learn how to be a cash kid.

Okay. So let's talk about taxes. I hear this topic causes a lot of anxiety in adults. I'm hoping we can educate my generation about it earlier to have a better understanding of it and maybe develop less anxiety. 

Joining us today is Joe Proffitt with Dark Horse CPAs. Mr. Proffitt, welcome to the show.

Joe Proffitt:

Hey, great to be here, Cash Kid. I very much appreciate the time. And I agree if we can start talking about taxes younger, maybe I wouldn't have freaked out about them when I got to be an adult as well.

Cash Kid:

Yeah. So welcome. And first off, just tell us a little bit about yourself.

Joe Proffitt:

Sure. I'm a CPA based out of Little Rock, Arkansas. I work with clients all over the country, from small business owners to individuals that don't necessarily own a business but need help with their tax planning and filing. And the main thing for people to do what I do. Basically, the U.S. tax system is complicated and sometimes you need a little bit of help and things get to be more than you can handle on your own.

Cash Kid:

Yeah. So what does Dark Horse CPAs do for its clients?

Joe Proffitt:

Great question. So Dark Horse specializes in serving small business owners. Specifically, we provide tax and accounting services ranging from basic bookkeeping to what we refer to as CFO engagements. We essentially help business owners compile their financial information and put it into a format that allows them to know where they're at financially to help them with projections as needed, or on the side of the tax work we do, compliance work with the basic business tax filings or just essentially try to help make sense of the really complicated tax structure we have here in the U.S..

Cash Kid:

All right. Let's talk about taxes, Mr. Proffitt. We’ll, start simple. What is the basic reason why we pay taxes?

Joe Proffitt:

Great question again. So taxes provide money to the government so that they can provide services for we the people. In an ideal world, taxes provide a range of services, whether it be assistance for individuals needing a little bit more help provides money for constructed roadways. Essentially, taxes are the way the government gets money from its citizens so that it can continue to function as the government.

Cash Kid:

What all do we pay taxes on?

Joe Proffitt:

Pretty much anything that you're going to spend any time you spend money or receive money, you're probably going to be subject to some sort of tax. So you get sales tax on groceries, cars. You have various tax for major purchases like a home purchase, you pay property taxes, or when you do own various pieces of personal property. So the major categories of taxes across the U.S. are going to be your income tax, your property taxes and your sales are what we refer to as excise taxes.

And the sales and excise is based on things that you actually go out to purchase and are based on the usage that way.

Cash Kid:

In episode one of of season 2, a financial teacher at a local high school stated a lot of his students were shocked when they got their first pay check to see how much they paid in taxes, leaving them with a lot less than what they thought they would take home. Can we break down the different taxes in what we pay for and why we pay them from our paycheck?

Joe Proffitt:

Absolutely. And I remember it hurt my feelings the first paycheck I got and when I was a kid, seeing how much they hold out. And so when you receive any anyone that goes out and works f