Four W’s to Know at Tax Time

Wage Base

The wage base changes every year, and is the at which the full of 15.30% will apply to withhold and taxes. In 2015, the 15.30% rate (a combination paid by employers and employees) is applicable to the first $118,500 of income or self-employment earnings. After that, 2.9% applies to over the base. Employees pay ½ of the tax rate, and employers pay the other half. Self-employed taxpayers pay the full amount and then get an for half.

Wash Sale

If you sell stocks, mutual fund shares, or bonds for a loss, and have purchased identical or substantially similar securities within thirty days prior to or after the sale, then the loss occurred from the sale is considered a wash. You are not able to deduct the loss.

Withholdings

Any amount taken from your salary every payday in order to cover your share of income and social security taxes for the year is called a withholding. When you start your job, you’ll file a Form W-4 with your employer, which in conjunction with the amount you earn will determine how much each withholding is.

Worthless Security

Do you own stock? If any of it became completely worthless at any point during the tax year, you are entitled to claim a capital loss. It’s as if you sold the stock on December 31st for nothing, which would net you no profit. Claim the loss the year the stock became worthless.