8 Reasons Why it is Important to be Knowledgeable About Tax

As a child, you are given little to no idea about what the word ‘tax’ is. Usually, the first time you’ll hear the word are through religious education classes where there are (biblical) figures known as ‘tax collectors’, and that it involves giving money.

As you mature, however, you come to realize tax plays an important role even in the present day. There are even tax seminars in the Philippines which focuses on how taxation works, where does tax go, or why is it important—especially when one starts to work.

It has even shown up in daily newspapers of issues revolving around it so you can have a fair idea that the word ‘tax’ is pretty much a big deal for you to give thought. Why should you not be ignorant of tax? Here are reasons to help you realize why it’s important to be knowledgeable about the subject.

 

You Are a Taxpayer

First, to understand what taxes are in the most basic sense, you have to have the knowledge that you are a taxpayer. This means that you are required to contribute to state revenue, as stated by the government through your incomes and/or business profit. Nowadays, even children are being informed of what taxes are so they are aware that, when they work in the future, they are the citizens who pay for buildings (like schools) or roads, for instance.

 

You Won’t Be Surprised

Knowledge of tax will prevent you from the initial surprise why products you buy in your local convenience store’s prices are slightly expensive than you used to remember them. That’s because there are instances when government have to raise taxes to cope with expenses that should benefit the country’s everyday needs and uses. You also won’t find it surprising why, when you compute your salary, you won’t receive the exact amount computed because tax has already been deducted from your income.

 

It Supports Wants and Needs

Other than federal and state taxes, there are other taxes you are also required to contribute for your future needs and wants. Say, for example, you want to buy a car or loan for a house-and-lot in the near future? You have to pay taxes for those as well. This is called property tax, and you pay it on your local government. Once you’ve owned these stuff, you are then required to pay the government yearly of the tax due.

 

Know When to Complain

During tax seminars in the Philippines, or for any other countries nationwide, it is part of the seminar to inform attendees when they are being cheated. In what forms? As simple as your income or profit getting deducted (sometimes in copious amounts) just to receive inconveniences from products or services where your tax is going.

 

So You Don’t Forget your Dues

You can commit crime for not obliging to pay your taxes. Remember, the first knowledge on taxes is that you are a taxpayer, and you are required to fulfill that role. It applies to even the richest person you can think of. Should you refuse or dodge your tax dues, you may be penalized by the government.

 

Know How to File for Taxes

In light of remembering to pay your tax dues, you can’t start fulfilling this obligation if you haven’t registered as a taxpayer yourself. Should you ignore the filing for taxes, the government can file order to claim parts of your property (such as business property), make you give up refunds, and worse, even revoke important documents such as passports or licenses.

 

It Helps Prepare for Retirement

If you want to prepare for your future retirement or know someone who is about too, then you can both benefit with the knowledge that taxes should be a part of your retirement plan. Some of the money, which includes funds from traditional retirement accounts, can be taxable upon requirement. Social Security (SSS) benefits can also be partially taxed. In a simple sense, you can get a lot from filing these things upon your retirement.

 

Foreign Individuals Also Pay Taxes

On the road to learning about taxes, you should also have knowledge that it’s not only Filipino citizens within their own country paying taxes—even alien individuals too, resident or non-resident. They are taxes only on income derived sources from the Philippines. Foreign corporations, engaged or not in trade, are the same.

 

Key Takeaway

Taxes are important to the country and to the people of the nation. You benefit from it, and you should know that the government should also play their role of properly allocating taxes paid, and that it should reflect on products and services as expected from the amount of taxes contributed. It also gives you an idea that, as much as the government should uphold their duty, so should you help in the betterment of your future, and the future of the Philippines.