The Beginner’s Guide to Taxes in New Mexico
April 5th, 2022 | Emma Frost
Tax season is here and if you are filing your taxes for the first time, you may need a beginner's guide to taxes to help guide you through this process. Taxes can be confusing and intimidating, but they do not need to be.
You can learn the essential information that you need to get started with this Beginner’s Guide to Taxes in New Mexico.
What Are Taxes For?
Before you continue this beginner's guide to taxes, you need to understand what taxes are and why they are collected.
Taxes are how the government is funded. This includes income tax, payroll tax, and sales tax. The government also collects corporate income tax from companies. This money is allotted to various agencies and departments, according to the guidelines of the federal budget.
Most state governments also collect income tax at the state level. Interestingly, New Mexico is one of the few states that do not charge an income tax at the state level. However, New Mexico residents are still required to pay income tax at the federal level.
How Are Income Taxes Collected?
If you receive a paycheck from an employer, the government is collecting taxes from you throughout the year by withholding a portion of each paycheck. At the end of the year, everyone who was paid income during the year must file a tax return. This is to determine if the government collected enough income or if they collected too much and owe you a refund.
What Are the Types of Taxable Income?
There are two main types of income that you can be taxed on. The IRS classifies these as “earned income” and “unearned income”.
Earned income is money that you earn through work. This includes your wages or salaries, as well as tips, commissions, and bonuses. It can also include sick pay, unemployment benefits, and other benefits from work.
Unearned income is money that you make through something other than your day job. This includes business income, interest and dividends from investments, real estate income, and any royalties that you might receive. Unearned income also includes gambling earnings and inheritance.
What Are Deductions?
But not all of your income counts towards your taxes. The government allows you to deduct some of your expenses from your adjusted gross income. You can use a standard deduction based on whether you file as single, married, or married filing separately.
There are also certain expenses that can count as itemized deductions. These can include mortgage interest, state and local taxes, medical bills, and donations to charity.
Play It Safe and Call a Tax Specialist
You do not want to mess around with the IRS. Even Al Capone went to prison for not doing his taxes properly. It is easy to make a mistake when you file your tax return, and your individual financial situation might complicate matters.
If you are unsure that you are filing correctly, it is best to play it safe and get help from a certified tax specialist in your area. This will make the process smoother and give you peace of mind that you are filing correctly.
Wait For Your Refund
No beginner’s guide to taxes is complete without talking about your tax refund. If the government has been withholding too much money from your paychecks throughout the year, you will likely be eligible for a tax refund. You can have this sent to you via a physical check or you can have it sent directly into your bank account electronically.
Tax refunds typically take a couple of weeks to a couple of months to process, so you might have to wait a little while before you get the money that the government owes you. This can be frustrating, especially if you need your tax refund money to help pay for an emergency expense, such as repairs to your home or vehicle, or even an unexpected medical or utility bill.
What can you do in this situation? One option that you can consider is seeking help from New Mexico Title Loans, Inc. in the form of a New Mexico title loan.
Items Needed for A Title Loan
There are just a few things that you need to apply for a New Mexico title loan. These are:
- Your driver’s license or another valid form of government-issued photo ID.
- The lien-free title to your vehicle.
- The vehicle itself, so it can be inspected by a loan specialist agent.
Title Loan Advantages
There are lots of advantages that come with applying for a car title loan while you wait for your tax refund.
- You can get the fast cash you need; up to $10,000 with your car title loan.
- You can get approved for your loan in half an hour or less.
- You can keep driving your car while you are paying off your loans.
The deadline for filing your tax return is coming up fast. If this is your first-time filing, use this beginner’s guide to taxes to help you get started.
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.