I didn't really know how to fill out the worksheet when I hired on at my new job. My friend here makes the same rate as I do, but more taxes are withheld for me. I get about $300 taken out of a $1200 paycheck. I think I chose to have more taxes taken out now, so I will get a larger return - versus having less taken out now, and getting a smaller return. Can anyone share their knowledge on the subject? I'm getting lost in all the "itemized deductions", etc. as I research and I need some help. I would appreciate any good links as well! Thank you!
2007-11-01 10:55:14 · 6 answers · asked by cherribomb777 2 in Business & Finance ➔ Taxes ➔ United States
Your annual tax return is where you and the IRS settle up for the year. You calculate how much you should have paid in for the year, and then whoever owes whom pays up. If you overpaid, you get a refund from the IRS. If you underpaid, you write the IRS a check.
Many people treat their refund as "found money". I personally hate to get a refund, because it means I lent money interest-free to the government. I much rather write them a check in April, because it means I borrowed money from the government all year. And as long as you don't owe more than $1,000 there is no interest or penalty involved.
2007-11-01 11:31:15 · answer #1 · answered by shoredude2 7 · 0⤊ 0⤋
you've got it right. it isn't that complicated. in your case there are 2 things that determine what amount you will get for a refund or have to pay at the end of the year.
1) how much income you earned, and therefore the TAX you owe on that income.
2) taxes withheld during the year. this is subtracted from 1). if you have too much taken out, you will get a refund. if you have too little taken out you will have to make a payment.
i mean no offense, but it sounds like you don't have a lot of experience with taxes. it's late in the year, so play it safe and keep the higher withholding amount that you have set up. if you get a really big refund and don't want to loan your money to the IRS next year interest free, then reduce you withholding. that will increase your take home pay, and reduce your refund.
2007-11-01 13:08:16 · answer #2 · answered by Ovrtaxed 4 · 0⤊ 0⤋
Yes, if you pay anything toward taxes over and above your required liability, the government will refund you the difference after you file.
Many people like to receive large refund checks this way, but it is actually a mistake. Tax professionals recommend breaking as close to even as you possibly can in tax payments...you should not be paying more than $1000 at tax filing time, nor receiving more than a $1000 refund.
Why you should not pay so much, that's obvious...you may not have that much on hand at tax time.
But putting in more than you need to the point of getting such a refund is basically the equivalent of sticking that money under a mattress, when it could be put to much better use in retirement or college savings accounts to earn interest and grow. Your bank's financial advisor can recommend some good ways to put your money to use like this
2007-11-01 11:06:12 · answer #3 · answered by Vangorn2000 6 · 0⤊ 0⤋
Yes it will all come back to you. However in the meantime you have given your money on an interest free loan to the government. You would be better off in the long run claiming your one deduction and having the money in your pocket now instead of as a refund after you file your taxes.
2007-11-01 11:00:09 · answer #4 · answered by Rich Z 7 · 1⤊ 0⤋
No, not necessarily, if you had more taken out but still not enough to pay your taxes, you wouldn't get a refund. But if you have more taken out than you'll owe, you'll get it refunded to you. It's the same amount of money total - the only thing that changes is when you get it.
2007-11-01 11:19:57 · answer #5 · answered by Judy 7 · 1⤊ 0⤋
Yes. Your tax return is where you even things up - if you are short for the year, you have to pay the balance. If you have overwithheld, you claim the overage as a refund.
2007-11-01 11:06:45 · answer #6 · answered by Anonymous · 0⤊ 0⤋