I agree, tax basics should be taught in school. The short of it is, when you make money as a US citizen, you're required to file a tax return annually (due April 15th) stating how much money you made, and how much money you owe the government. It's up to you to figure out how much you owe in taxes and pay the goverment that amount. Its not all that complicated usually. You can do it yourself with software like Turbotax.
Anyone who pays you more than $500 in a year (Yahoo) has to report your earnings to the IRS. This is why these companies ask you for your SSN.
1)what exactly is backup withholding. I did a search but I am not really clear.
Because you haven't provided Yahoo with enough information for them to report your earnings to the government, or some other special situation where its not clear that you'll be responsible for paying your own taxes, they're required by the IRS to hold a certain percentage of your earnings. 30% in this case is being held. Your actual tax rate is probably way lower than 30% of your gross income, so its in your best interest to give Yahoo the information they need or let them know that you're exempt from backup withholding.
2)is the taxes for federal taxes only? it's not being withheld for state.
Yes, Federal only I believe.
3) Do I still have to send in quarterly payments to the federal goverment if the taxes are being withheld?
No. (er..probably not) But again, you don't want to get stuck with Yahoo doing backup withholding. Resolve that first.
4) does that mean the goverment/state is taking half or more of my paycheck every month? 30% to federal, and then 30% (guessing) to state?
State taxes are typically a lot less than Federal taxes. I have no idea how much you're making, or how much you'll be paying in taxes so its hard to say. Usually 30% of your total earnings will more than cover taxes, so be careful not to get cash happy forget that you're going to owe Uncle Sam some money come next April.
Best of luck.
