How taxes work

Training 865 minuteshow taxes work

You are 31, a designer with a studio salary plus weekend gigs. Taxes apply to income, purchases and property, and every country has its own rules. Understand them and you skip the penalties.

Training goal: Pay your taxes on time, with no surprises

▶ Play this training

Situation

1. A new job: $4,000 a month in salary. A friend cheers: "That is $48,000 a year in your pocket!"

Work out what arrives after tax
Take a car loan sized for $4,000 a month
Assume everyone pays the same rate

2. A raise pushes part of your income into the next tax bracket. A coworker warns: "Now all your income gets taxed at the higher rate!"

Turn down the raise
Accept: only income above the line pays more
Ask for the raise in cash, off the books

3. Your side gigs bring $6,000 a year. Nobody withholds tax on it: filing and paying are on you.

Skip declaring it, nobody will know
Set aside 25% of every payment
Save nothing, pay from salary at the deadline

4. A letter: your annual return is due by the end of next month. Receipts and statements are scattered across drawers and email.

Leave it for the last evening
Pay $300 to the first adviser you find
Gather a folder, file a week early

What you will learn

Build your budget on take-home pay, not on gross salary.
A higher bracket applies only to income above the threshold.
Set aside tax from every side-gig payment right away.

Your real-life step

Look up your tax filing deadline on your country's tax office website and set a reminder one month ahead.

Questions and answers

What is gross vs net income?

Gross is the full amount earned. Net is what you take home after taxes and contributions.

How do tax brackets work?

Income is split into slices, each taxed at its own rate. The higher rate applies only to the part above the threshold, not to all of it.

What happens if you don't pay taxes?

Interest and fines pile up, the debt can be taken from your account, and travel may be restricted. Rules and amounts depend on the country.

▶ Play this training Track your budget in Hanimani

More trainings in this module

Numbers are illustrative. A game, not financial advice.