A Taxing Education
People pay the taxes they deserve?
Some 57% of taxpayers don’t know what a W-4 is, the Nerdwallet survey found, and 59% don’t know that April 18, 2017 is the deadline for making a tax-deductible contribution to a traditional individual retirement account for the 2016 tax year. What’s more, 58% of taxpayers incorrectly believe that getting a tax extension means they can delay the due date of their income tax payment.As perhaps they were designed to be...
The majority knew about tax withholdings from their paycheck, but they understandably struggled with more complex questions about Roth IRA and individual retirement accounts, says Alex McAdams, product manager at NerdWallet. People shouldn’t be too quick to celebrate an income tax refund, which averaged $2,860 in 2016. “You are essentially giving the government a free loan as opposed to having control of that money all year long and putting it in a savings account or maybe even investing it,” he says.
“Some of the questions were easy, but others I wouldn’t expect people to know,” says Ian Gillespie, founder of IGG Software and creator of iBank, an online personal finance manager. “American tax law is extremely complicated and a lot of these feel like they could be trick questions.”