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Inflation Quiz

What do you really know & can you get a perfect score?

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What do you really know about taxes?

How familiar are you with the basics? What about the intricacies?

It’s no secret most of us aren’t tax pros.

Many of us have some pretty big knowledge gaps when it comes to key tax issues, like different tax brackets, charitable giving, and tax liabilities.1

And that gap can interfere with our everyday financial decisions.

It can also affect how we feel about taxes and how we handle them.2

So, do you know as much as the next taxpayer? More importantly, do you know all you should about taxes?

Let’s find out — take the short quiz now to see if you’re ahead of the curve!

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Do You Know More About Taxes Than Most Americans? Find Out!

one

How much of the federal government's revenue is expected to come from personal income taxes in 2023?

Answer: 51%

The federal government's fiscal year runs from October to September. During FY 2023 (October 1st, 2022 - September 30th, 2023), about half of the federal government's funding is expected to come from personal income taxes. About 49% — or approximately $289 billion!3

Other funding sources like Social Security taxes, corporate income tax, excise tax, and estate taxes make up the remaining 51%.

two

True or False: I can take the standard deduction if I itemize my tax deductions.

Answer: False

"The standard deduction isn't available to certain taxpayers. You can't take the standard deduction if you itemize your deductions."5

That said, the standard deduction has been increased in 2023 — to $27,700 for married couples filing jointly and $13,850 for single taxpayers.6

three

Which strategy will NOT reduce your tax bill?

Answer: Filing for a tax extension

While filing an extension can give you more time to prepare and file your tax return, it may not change or reduce those obligations (unless you use that extra time to exercise options that could reduce your tax bill).4

Did you catch this exception?

While donating to a charity can reduce your tax liability, it will ONLY reduce your taxable income IF you itemize deductions on Schedule A. With a standard deduction, charitable donations do not reduce the amount of tax due.

four

True or False: Tax brackets will stay the same in 2023 as they were in 2022.

Answer: False

The IRS has released higher federal tax brackets for 2023 to adjust for inflation. The top tax rate remains 37% for taxpayers with income over $578,125 ($693,750 for married couples filing jointly), but the other tax rates have been raised for 2023 to reduce the burden of inflation.6

five

How long does it take the IRS to issue tax refunds?

Answer: 21 days

The IRS issues most refunds in less than 21 days. However, the IRS (and I!) caution against relying on receiving federal tax refunds by a certain date, especially when making major purchases or paying bills. Some returns may require additional review, especially if the IRS flags errors, possible identity theft, or potential fraud.7

six

True or False: The IRS will text or email me regarding tax delinquency or to verify certain information.

Answer: False

According to the IRS, it "does not initiate contact with taxpayers by email to request personal or financial information. The IRS initiates most contacts through regular mail."8 Generally, if the IRS needs more information or if you're delinquent on your taxes, you'll receive a letter (or several letters over time). Though it rarely reaches out by phone, the IRS may call you for certain types of tax delinquency issues.

Watch out for scams like texts threatening to "suspend" your Social Security number or emails that use urgent stories related to the COVID-19 pandemic to try to get you to open a link or attachment.9

seven

After I file my taxes, I should keep my tax returns and supporting documents

Answer: For at least 3 years

Retaining tax returns and supporting documents for at least 3 years is recommended. Keeping your tax documents allows you to use previous years' tax information on the current year's forms — eliminating unnecessary calculations! This information is also crucial in case of an audit.4

It's OK not to know everything about taxes. But…

Financial Lesson:

Growing Your Tax Knowledge Can Be Fruitful in the Future

How'd you do on the quiz?

Are you surprised by what you know? Or what you don’t know?

No matter which answers you got right or wrong, you probably need to know A LOT more than the basics at tax time — and it’s never too late to learn more.

Getting better at navigating all sorts of tax matters can mean reducing your risks and discovering better tax strategies.2

Beyond compliance, improving your tax literacy can also pay off in the big picture.

How?

It could help you make better decisions before, during, and after tax time, and it could result in better financial performance in the long run.2, 10

That’s not the end of the growth, though.

Why?

Because learning about taxes isn’t a one-and-done deal.

One quiz doesn’t cover it all. (Neither can the most intensive college-level course, for that matter!)

Plus, tax codes, deadlines, forms, and so much more are constantly evolving. That can make today’s facts about taxes misleading fictions months or years down the line.

So, how can you keep it all straight and make the right moves?

Start by recognizing what you don’t know and realizing that it’s OK to not know everything about taxes.

It also helps if you’re open to expanding your knowledge. And if you know who you can turn to and lean on when you need some tax advice or guidance — someone who can apply general tax facts to your specific situation.

Sincerely,

Your Team at Woodson Wealth Management

https://woodsonwm.com

Office: (760) 566-8533 or Text: (858) 923-4500

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Your Team at Woodson Wealth Management

Woodson Wealth Management

Not receiving our newsletter?

Get insightful info on finances and more in your inbox every month with the

VISUAL INSIGHTS NEWSLETTER

We never spam. By clicking this button, you consent to be contacted by Woodson Wealth Management by phone, email, and/or automated SMS. You may unsubscribe at any time. Consent is not a condition of receiving services.