U.S. tax Q&A,
in plain English.

Gross pay is what you earn before anything is taken out. Net pay (take-home pay) is what's left after federal income tax, Social Security, Medicare, state and local taxes, and deductions like health insurance or a 401(k). Try our paycheck calculator.

FICA is Social Security (6.2%) plus Medicare (1.45%), for 7.65% taken from most paychecks. Your employer pays the same amount. Social Security only applies up to a yearly wage limit. Medicare has no limit, and high earners pay an extra 0.9%.

The W-4 tells your employer how much federal tax to withhold. Too little withheld and you may owe at tax time. Too much and you get a refund, which means you lent the government money for free. Update it after big life changes like marriage, a new child or a second job.

It's an amount of income that isn't taxed. Most people take it instead of itemizing. For 2026 it is $16,100 for single filers, $32,200 for married filing jointly and $24,150 for head of household.

No. U.S. brackets are marginal: each rate only applies to the part of income inside that bracket. A raise only taxes the extra dollars at the higher rate, so you never take home less because of a raise.

Individual returns are normally due April 15, moving to the next business day if it falls on a weekend or holiday. An extension gives you more time to file, but not more time to pay what you owe.

Employers withhold taxes and pay payroll taxes for W-2 employees. A 1099 contractor is paid in full and handles their own taxes. Classification depends on how much control you have over the work, not just what you call the person, and getting it wrong can lead to penalties.

Generally when you pay a non-employee (usually not a corporation) for services above the IRS reporting threshold during the year. Collect a W-9 before you pay contractors. 1099-NEC forms are due to recipients and the IRS by January 31.

An S corp election can lower self-employment tax once profits are high enough, because owners take a reasonable salary through payroll and the rest as distributions. It also adds payroll, filing and bookkeeping costs. It is usually worth reviewing with a tax professional when profits grow. We can handle the filing and setup.

If you're self-employed you pay both halves of Social Security and Medicare, about 15.3% of net earnings, on top of income tax. You can deduct half of it when figuring your income tax.

If no one withholds tax from your income and you expect to owe $1,000 or more, you usually pay quarterly estimates. Typical due dates are April 15, June 15, September 15 and January 15.

Expenses that are ordinary and necessary for your business, such as supplies, software, rent, insurance, advertising, professional fees and business mileage. Personal expenses aren't deductible. Keep receipts for every deduction.

At least 3 years after filing for most records, longer in some cases (for example employment tax records for at least 4 years). Many owners keep everything for 7 years to be safe.

Yes. Mixing personal and business money makes bookkeeping harder, can cost you deductions, and makes it harder to prove what's business if the IRS asks.

When your books are reconciled monthly, your tax preparer gets accurate numbers right away: fewer questions, fewer missed deductions, a lower prep bill and fewer surprises. Talk to us about monthly bookkeeping.