Taxes

Each year, the Internal Revenue Service (IRS), which is part of the U.S. Treasury Department, collects federal taxes. And, the state tax agency for the state you live in collects state taxes. You pay federal and state taxes throughout the year by having your employer withhold taxes from your paycheck.

At the end of each year, your employer sends you and the IRS a W-2 form that reports the total amount of tax you paid that year. The IRS mails you a form that you need to fill out and return. The form tells the IRS how much you have already paid in taxes and how much more you owe or how much you should get back. You have to send the IRS your paperwork by April 15.

Paying your taxes every year is part of your effort to practice good citizenship. When you pay your federal income taxes, you're helping to pay for federally-funded projects, including interstate highways, armed forces and health care for the elderly. Your state taxes pay for projects that the state pays for, such as education, health care and welfare benefits.