Personal Finance Basics — Where part of your paycheck goes, and why a refund is not free money.
Taxes fund public services and come out of money you earn. Understanding the basics keeps surprises off your paycheck and your tax return.
Gross vs net pay: Gross pay is your total earnings. Net pay is what actually lands in your account after taxes and deductions.
In a progressive system, moving into a higher bracket only taxes the income above that threshold at the higher rate, not all of your income. A raise never leaves you with less take home pay.
W-2 vs 1099: A W-2 employee has taxes withheld by their employer. A 1099 contractor receives full pay and must handle their own taxes.
A tax refund is not free money. It means you overpaid during the year and are getting your own money back.
15 practice questions with explanations. Free, and no account is needed to start.