#55: Tax Basics Everyone Should Know: Filing Status, Tax Brackets, Deductions, Credits, etc.

Sign-up for Roth IRA Office Hours  Book a 1:1 Coaching Discovery Call Taxes don’t just happen once a year — they shape your paycheck, side hustle income, investments, benefits, and long-term wealth. In this beginner-friendly episode, Rita-Soledad Fernández Paulino (they/them), queer Mexican-American money and self-care coach and founder of Wealth Para Todos, breaks down how taxes actually work in the United States so first- and second-generation wealth builders can stop guessing and start planning. If you’ve ever wondered why some people get large tax refunds while others owe money, what income must be reported, or how deductions and credits affect your tax bill, this episode provides a clear, compassionate foundation — no accounting background required. They explain who should file taxes (including people who may not be legally required but could receive refunds or refundable credits), how withholding and estimated tax payments determine whether you get a refund or a bill, and why refunds are not “free money” but the result of overpayment or tax credits. You’ll learn how filing status impacts your taxes — including single, married filing jointly, married filing separately, head of household, and qualifying surviving spouse — along with the 2025 standard deduction amounts (Single: $15,750; Married Filing Jointly: $31,500; Head of Household: $23,625). The episode also breaks down progressive tax brackets using a real example of a single filer with $50,000 in taxable income, showing how only portions of income are taxed at higher rates. Soledad clarifies the difference between gross income and taxable income and demonstrates how pre-tax retirement contributions can reduce the amount of income subject to tax. They compare the standard deduction versus itemized deductions and share a real-life example of itemizing due to significant mortgage interest ($50,127.44), property taxes (~$20,000), and charitable donations exceeding the standard deduction. You’ll also hear a clear explanation of deductions vs. tax credits — one of the most important concepts in tax planning. The episode covers common deductions and adjustments (such as student loan interest, IRA contributions, HSA contributions, and self-employed expenses) along with new or notable 2025 deductions, including qualified tips, overtime pay, passenger vehicle loan interest, and the enhanced senior deduction. Key tax credits discussed include: Earned Income Tax Credit (EITC) Child Tax Credit Credit for Other Dependents Child and Dependent Care Credit Adoption Tax Credit American Opportunity Credit Lifetime Learning Credit Premium Tax Credit for health insurance Saver’s Credit for retirement contributions Clean energy and home improvement credits Soledad emphasizes that credits reduce your tax bill dollar-for-dollar and that some are refundable, meaning you may receive money back even if you owe little or no tax. The episode also covers what income must be reported to the IRS, including: W-2 wages and salaries Freelance or side hustle income (even without a 1099) Business profits Interest from savings accounts Dividends and capital gains Rental income Unemployment benefits Bonuses, prizes, and gambling winnings They highlight that passive income from high-yield savings accounts and taxable brokerage accounts is taxable — using an example of $50,000 earning 4% interest generating $2,000 in taxable income. Additional topics include: How to estimate whether you’ll receive a refund or owe taxes Ensuring proper withholding from paychecks Paying quarterly estimated taxes if self-employed Key deadlines (typically April 15) Extensions (more time to file, not more time to pay) Late filing penalties (up to 25% of unpaid taxes) IRS payment plans Federal vs. state taxes (including states with no income tax) Recordkeeping best practices for audits A real experience with an IRS audit that resulted in an additional refund Throughout the episode, Soledad reframes taxes as an essential part of financial planning and dinero self-care — a system that can be understood and navigated with the right support. They close by encouraging listeners to seek professional guidance when needed, share the episode with someone who was never taught about taxes, and sign up for their free monthly Roth IRA Office Hours (held every second Tuesday). 00:00 — 1-Year Podcast Anniversary + Gratitude Through a Tough Year 01:19 — Welcome & What You’ll Learn About Taxes Today 02:39 — Breaking the “Don’t Earn More” Tax Myth 04:06 — Filing, Withholding, Refunds vs. Owing 04:46 — Who Should File Even If Not Required 05:42 — Filing Status & Standard Deduction Basics 07:40 — Tax Brackets Explained (Progressive System) 09:23 — Gross vs. Taxable Income + Retirement Strategies 11:55 — Standard vs. Itemized Deductions 13:33 — Deductions vs. Credits 15:55 — Major Tax Credits to Know 18:25 — Passive Income & Reporting Requirements 20:15 — Planning Ahead: Withholding & Estimated Taxes 21:09 — Federal vs. State Taxes + Recordkeeping 22:40 — Key Takeaways & Support Options 24:37 — Educational Disclaimer