Welcome to the Listening Time Podcast.
Hey everybody, this is Connor and you're listening to episode 98 of the Listening Time Podcast.
I hope you're all doing very well.
I hope that your English learning is going great.
I hope that this podcast has been a useful resource for you.
And remember that if you want my specialized training to help you improve your English listening and pronunciation even more, then make sure to sign up for my membership.
You'll get my listening practice seminars which help you identify and understand the different sound patterns in English.
And if you sign up for one of the higher tiers, you'll also get my pronunciation seminars and other training as well.
And if you want my advanced podcast episodes, then make sure to sign up to become a Listening Time family member or VIP and you'll get two new advanced episodes every month where I speak at normal speed.
This is the resource that you need if you want to improve and reach a more advanced level of listening.
So make sure to sign up today if you're interested in that, and The link is in the episode description below this episode.
That's patreon.com slash listening time.
Okay, today we're going to talk about taxes, because at the time that this episode will be released, a lot of people are filing their taxes in the United States.
So this is tax season, as we call it.
And so a lot of people have this on their minds right now.
And maybe some of you live in the US and some of you have to file your taxes at this time.
And so I thought that this would be an interesting topic to talk about today.
This episode might have some new words or new terms that you're not accustomed to.
So I'm sure you'll learn something today.
And I need to mention as a disclaimer that this is not tax advice and I'm not a tax expert.
So don't take any of this as advice.
I'm just trying to give general info about taxes just as a topic for this episode.
Okay.
And remember that you have the transcript available for this episode.
That's below the episode in the episode description.
So go down and click on that if you need it.
And if you like this podcast and you appreciate this content, please give this podcast a five star rating, if you can, and write a review, and and please share it with anyone you know who's learning English.
That really helps me out, and it will help those other people as well.
All right, let's get started.
Are your ears ready?
You know what time it is.
It's listening time.
Okay, so let's talk a little bit about taxes in the US.
So I wanna give a little bit of an overview of this topic.
In English, when we say the word overview, we're talking about a general summary, a general look at something.
So I wanna give an overview of this topic and just talk about some of the major aspects here.
So first of all, let's talk about payroll tax or FICA tax.
You might hear a couple different terms for this.
So this is a tax that American workers will pay when they earn a salary or if they earn any type of significant income, and this is a tax that we all pay.
That's for a couple major programs in the us that are run through the federal government, so we all have to pay this amount if we earn Money.
I don't remember if there's a minimum amount of money that you have to earn, but anyone that makes any significant amount of money pays this tax, and usually it's split between the employer and the employee.
So right now in 2023, this tax is currently 15.3%.
And so this percentage is split evenly between the employer and the employee.
In English, when we say that something is split evenly, this means that it is divided into equal parts.
So this percentage is split evenly.
It's divided between the employer and the employees.
So the employer has to pay half of that amount to the government.
And the employee pays the other half.
So half of that rate is what most employees will pay in the United States.
And so that goes to the government.
And, of course, that's just part of your tax tax burden, and so that's money that you can expect to pay every year to the government.
And then, beyond that, there is another form of tax, which we call income tax, and so this tax will depend on how much money you make and it will depend on your filing status.
So what is your filing status?
This is the status that you put on your taxes.
That says that you're either filing as a single person or you're married, but you're filing separately from your spouse.
Or maybe you're married and you're going to file together with your spouse.
So you'll both file your taxes on the same return as a joint tax return, or there are a couple other statuses that you can have.
But this is what I'm referring to when I say your filing status.
So, for example, a single person who earns a certain amount of money is will have to pay a higher percentage than a married couple who are filing jointly, who earn that same amount of money together, right?
So if I'm a single person and I earn 80000 in one year and there are two other people, a husband and a wife who together earn that same amount of money 80000 and they file their taxes together, then of course I will pay more than they will, because I'm just one person and I'm earning that same amount that they're earning as two people.
So you can see how your filing status affects the amount of income tax that you'll pay.
And so your filing status is one thing, and then the amount of income is the other thing.
So you'll pay a lower percentage if you earn less money and you'll pay a higher percentage if you earn more money.
And so this is how income tax works.
It's not the same for everyone, right?
Payroll tax is the same.
That 15.3% that's split between the employer and the employee, that's the same.
But the income tax is not the same.
This depends on how much money you make and your filing status and all that.
And when talking about the income that you make, the amount of money that you earn, what's important to know is that not all of your income is always taxable income, right.
So there are certain deductions and things like that that can actually lower the amount of income that can be taxed right.
So even if...
It looks like I earn $80,000 per year, for example.
My taxable income might be lower than that.
There might be some things that deduct from that amount and really I only pay taxes on a lower amount than that 80000, for example.
So this is something that people have to think about every year and see what deductions they can take.
And sometimes they'll even get credits.
So a credit is different from a deduction, because a credit will actually lower the overall amount of taxes you pay.
It doesn't lower your taxable income, it just lowers your taxes overall.
So that's pretty cool for a lot of people that can claim some type of credit.
And so all of that is how we determine our taxes every year. how much tax we need to pay.
And we file our taxes every year, of course.
And we have to figure out some details of deductions and credits and other things like I mentioned.
And after we file this, we might actually owe the government more money if we didn't pay enough taxes, or we might get a refund if we paid too much in taxes.
So that's something that will be determined each year if you owe the government money, if they owe you money or if you paid the right amount.
And of course, it's not just your salary that gets taxed by the federal government.
You get taxed on things like capital gains and dividends.
What are these?
Well, a capital gain means that you have something, that you bought some investment or whatever and then later on you sold that and made money on it.
Right.
So that would be a capital gain and you would pay taxes on those earnings as well.
And then a dividend refers to money that maybe a company pays you for owning and holding shares of their company.
Right.
You own a stock and then you hold on to that.
And that company might actually pay you to own that stock.
So that's a dividend.
And if you receive money from dividends, of course, you have to pay taxes on that.
So when it comes to your income that you're taxed on, it's not just your salary from your employer.
Right.
You have to pay taxes on other things if you earned money through other means.
So that's something to keep in mind as well.
And we also have state taxes.
So state taxes are different from federal taxes because it's a different government entity that's collecting the tax and they'll tax others different things and they'll have different rates from the federal government.
So you also have to know what the state tax laws are wherever you live.
So I live in California so of course I have to pay attention to what I owe the California government, or Maybe the local government if there are local taxes.
So all of that also needs to be taken care of.
And now let me talk about my situation because I'm actually self-employed.
I don't have an employer.
So there are some good things about that and there are some bad things about that.
So the number one negative thing about being self-employed and paying taxes is that we have what we call self-employment tax.
So what this means is that, instead of the employer paying half of of that 153 right the payroll tax that we owe to the government, because I don't have an employer, I have to pay the full amount.
So no one pays the other half of that.
I have to pay that whole 15.3% because I'm the employer and the employee in this situation.
So that's not good for me, of course, because I have to pay a higher amount, and than other people who are employees and they have employers who pay the other half.
So that's the big con when it comes to being self-employed and paying taxes.
And another thing that's not very good, I would say, is that I have to make estimated tax payments.
So I have to estimate how much money I'm going to earn over the next year.
And I have to find what that amount will probably be more or less and then I need to set up quarterly payments that I pay to the government where they take money from me.
I pay taxes in four different installments.
English the word installment refers to one session of paying something.
So if I pay some bill in ten installments, this just means that it's divided into ten different payments and I pay a percentage in each time I pay one of those 10 payments.
So those are installments.
So I have to pay my taxes in four installments, four times per year, based on the amount that I calculated when I calculated my estimated income.
But this is very hard for me because I don't know how much money I'm going to make.
I don't have a job or a business that's very predictable when it comes to how much money I'll make each month.
And so that can be very hard to do this estimated tax calculation.
And so I have to really analyze my situation and try to make my best possible estimation of what I'm gonna earn, but that's not easy, and so this isn't something that I really like doing, but I have to do it.
But there's one very good thing about filing taxes as a self-employed person, And that is that we can deduct business expenses from our taxable income.
So any expense that I have throughout the year that is business related let's say I bought a computer for my job, for example that amount that I paid on that computer is deductible when it comes to my taxable income.
So I can reduce the amount of taxable income that I have by subtracting all of my business expenses.
So this is really cool because I spend a lot of money every year on things related to my job and so all of that money gets deducted for my taxable income and so, even though I earn a certain amount of money every year, if I have a lot of deductions, then I won't have to pay taxes based on that overall amount, and it will be a lower amount, which will lower my taxes.
So that's something that's really cool and that has helped me with my taxes and it's helped me not pay too much because I can deduct all of those business expenses.
So I like that part of being self-employed.
And if you are a business owner and you have employees and things like that, you're obviously going to have a lot of other things to consider when it comes to paying taxes.
So I don't know anything about that, so I won't talk about that.
I just know about being self-employed and how that works.
And there are other taxes that we pay as well besides our income tax, besides the payroll tax.
We have taxes that are on other things, for example, sales tax.
So when you buy something, there is probably a tax attached to that item that you buy.
And this is different in different states.
So there is a different sales tax rate depending on where you live.
And in the US that amount is usually not shown when you look at the price in the supermarket, for example.
If you see a certain price on an item in the supermarket, you're probably going to pay more than what that price says, because that price does not reflect the sales tax that's added onto that.
So, of course, all of you know about this type of tax, I'm sure.
But in your countries, it's probably already shown in the price.
So that's a little bit different.
And then we have to pay property tax sometimes, depending on where we live.
You might have to pay tax depending on if you own property and property now what type of property, how much it's worth, etc.
This is another tax that you have to consider as well.
So, in addition to the tax that we pay on our income and things like that, we also have to pay taxes when we buy things, when we own property, and so there are various different forms of taxes at different levels local taxes, state taxes, federal taxes.
So there is a lot to consider here.
And so how do people do their taxes?
Some people prefer to go to professionals because it can be very confusing if you don't know what you're doing.
And so around this time of year, you see many advertisements from different companies that are offering to do your taxes for you.
So that's pretty common.
And some people do it by themselves, but they use software that makes it much easier and that does all the calculations for them.
And so that can really help you out.
And I guess some people might do it manually.
They might do the calculations on their own.
And maybe some people like this.
People that like math or finances or things like that, they might even do it manually.
I don't know people that do this, but I'm sure there are people out there that still do it like this.
And so there are different ways that we can do our taxes.
It just depends on if you want to do it yourself or you want to pay for some software or pay someone else to do it.
And so I've done my taxes in the last few years with software, and I do it myself with my dad and we kind of figure it out together.
So that's how I usually do mine.
All right.
Why don't we stop there for today?
I hope this episode was interesting for you and I hope it was good practice for your listening skills.
Remember that if you want my advanced podcast episodes, You can sign up to become a Listening Time family member or VIP and you'll get two new advanced episodes every month.
So go down and click on the link in the episode description.
That's patreon.com slash listening time.
And of course, if you like this podcast, please give it a five-star rating and write a review.
And please share it with your friends, your family members, anyone you know who wants to learn English.
All right, thank you for listening to this episode and I'll talk to you on the next episode of Listening Time.
