Taxes might seem complicated, but knowing the basics can help you avoid costly mistakes, make smart financial decisions, and even save money. Whether you’re just starting your first job or have been working for years, here’s what every employee should know about taxes.
1. Know What’s Being Deducted from Your Paycheck
Your paycheck isn’t just your salary—it includes several mandatory deductions:
Income Tax (federal, state, or local depending on your country)
Social Security and Medicare (U.S.)
Pag-IBIG, SSS, and PhilHealth (Philippines)
Withholding Tax: A portion of your income is withheld and sent to the government as advance tax payment.
Always check your payslip to make sure deductions are accurate.
2. Understand Your Tax Identification Number (TIN)
This number is unique to you and is used by tax authorities to track your records. Make sure yours is correct and consistent across all tax-related documents.
3. File Your Tax Return Annually
Even if your employer withholds taxes, you may still need to file a tax return at the end of the year:
To report additional income (freelance, rental, etc.)
To claim deductions and refunds
To ensure your taxes were calculated correctly
4. Keep Track of Your Tax Documents
Important documents include:
Payslips
BIR Form 2316 (Philippines) or W-2 Form (U.S.)
Receipts for allowable deductions (education, insurance, donations, etc.)
Keep them organized for filing season or for audits.
5. Learn About Tax Deductions and Credits
You might be eligible for deductions that can lower your taxable income, such as:
Health insurance premiums
Tuition fees
Charitable contributions
Tax credits can also directly reduce the amount of tax you owe.
6. Avoid Penalties by Filing and Paying On Time
Late filings or missed payments can lead to fines and interest. Mark tax deadlines on your calendar and aim to file early.
7. Ask Questions When in Doubt
If you’re unsure about something, don’t guess. Ask your HR department, consult a tax professional, or visit your local tax agency’s website.
Bottom Line: Taxes don’t have to be intimidating. The more you understand how they work, the more control you have over your finances.
