Growing up, I associated “doing your taxes” with being a grown man. Whenever tax season rolled around, I’d see my dad sitting at the dining room table on weekends, hunched over a coffee-stained 1040 instruction book made out of its distinctively cheap pulp, figuring out how much his and my mom’s adjusted gross income would be for the year. The charts, tables, and worksheets in the 1040 instruction book made figuring out your taxes seem like some sort of exercise in esoteric astrology that only the initiated could understand.

Being the dork that I was, I couldn’t wait until I could fill out my own taxes. Fast forward to high school and I got my first real job busing tables at Chili’s. The money was good, and I had my share of all the free Chicken Crispers I wanted. When tax season rolled around, I asked my dad if he could initiate me into the secret teachings of the 1040 form and accompanying instruction book. I remember going through the worksheets and filling out the different lines with pencil first, and then having my mom double check my calculations, just like dad did. When I signed my name at the bottom of the form declaring that the numbers I reported were correct, I felt like I was taking a step into manhood.

Yeah, totally geeky. I know.

I also remember thinking, “Doing your taxes is actually pretty easy. Why do people gripe about it so much?”

Well, now that I’m an adult with a home and other assets, I can understand why people gripe about filing taxes. They’re a pain. The more complicated your financial life gets, the more complicated your taxes become. Or as the late, great Notorious B.I.G stated so eloquently, “Mo Money, Mo Problems.”

I’ve completely lost the childhood mystique of “doing your taxes.” Luckily, when you’re young and just starting out in life, filing your taxes is simple. So simple, in fact, that there really isn’t an excuse for a young man not to take on this adult responsibility.

Yet in the past few years I’ve noticed a growing number of adult men whose dads still do their taxes for them. Seriously. I know guys in their late 20s and early 30s who’ve never filed their own taxes because their parents do it for them. Of course, this observation is completely anecdotal, but I’ve talked to other people about this, and they’ve seen the same thing: grown men who don’t know how to do their own taxes.

So to help those young men who have never filed their own income taxes before, I offer this beginner’s guide to help them ease into this responsibility. This post covers the bare essentials. The U.S. Tax Code is an amazingly complicated labyrinth of regulations. Tomes as thick as telephone books are written to help people navigate it. For the purpose of this post, I’m assuming you’re young, just starting your career and family, and make all your income from wages. We’ll save the intricacies of taxes on capital gains and losses for another day.

Before that day comes, perhaps both political parties will join hands and reform the tax code. And maybe one day I’ll don a pair of skinny jeans.

Basic Tax Lingo You Need to Know

One of the most intimidating things about doing your taxes is the tax jargon. Below I hit on some of the basic terms you’ll need to know to understand how income taxes work.

Witholding Allowances. You’ve probably noticed that when you get your paycheck you don’t actually get all the money you earned. Your employer subtracts, or withholds, taxes from your paycheck and pays the IRS the taxes you owe on your income.

You can control how much or how little your employer withholds from your paycheck using a Form W-4. A W-4 helps you determine your withholding allowances which tell your employer how much or how little money they should subtract from your paycheck for taxes. The more witholding allowances you have, the less income tax your employer withholds; fewer allowances and they withhold more. There are pros and cons for having more or less withholding exemptions. Maybe we’ll tackle them in a future post.

Adjusted gross income and taxable income.When you pay your taxes, you don’t actually pay taxes on the full amount you made during the year. Your adjusted gross income is your income after you subtract certain deductions like IRA contributions or payment on student loan interest. Taxable income is your income after you subtract the exemptions and itemized deductions (see below) that you’re eligible for from your adjusted gross income.

Tax bracket. In our graduated income tax system, the amount you pay in income taxes increases as you earn more money. The IRS has divided income levels into several income ranges called tax brackets. Tax rates are assigned to each bracket.

Here are the federal tax brackets for 2011:

Tax Bracket Married Filing Jointly Single 10% Bracket $0 – $17,000 $0 – $8,500 15% Bracket $17,001 – $69,000 $8,501 – $34,500 25% Bracket $69,001 – $139,350 $34,501 – $83,600 28% Bracket $139,351 – $212,300 $83,601 – $174,400 33% Bracket $212,301 – $379,150 $174,401 – $379,150 35% Bracket Over $379,150 Over $379,150

So, if you’re single and made $34,000 in 2011, you fall within the 15% tax bracket. All you need to do now is multiple .15 by $34,000 to get what you owe in taxes and then send a check for that amount to the IRS, right?

Well, no. There’s a catch. Not all of your $34,000 is taxed at that 15% rate. That 15% is what’s known in the business as your…

Marginal tax rate. I’ll be honest. It took me awhile to wrap my mind around the concept of the marginal tax rate. I always figured that if you fall in the 15% tax bracket, you pay 15% on all your income. It’s a common misconception that many people have.

A concise definition of your marginal tax rate is “the rate on the last dollar of income earned.” Okay, what does that mean? I think it’s easier to understand the marginal tax rate when you see it in action. Let’s again say you earned $34,000 in 2011 and are single. Here’s how the marginal tax rate would work:

The first $8,500 of your $34,000 will be taxed at 10%.

The remaining $25,500 will be taxed at 15%.

The last dollar(s) of income earned in this example is the $25,500 above and beyond the first $8,500 of income. To solidify this concept, let’s look at another example. This time let’s say you’re filing jointly with your spouse, and have a combined income of $80,000. According to the chart above, the marginal tax rate is 25%. Here’s how your income would be taxed: