i always see so many people talk about tax returns or tax season around this time and its so confusing. to me it seems like free money
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When you start working at a job you fill out a form called a W2. This is a tax form. And it tells the government how much money (roughly) you’ll be making, and how much they should take out of your paycheck.
The government would rather take too much of your money than not take enough, so typically they overestimate how much to tax you.
When tax time comes and you file your taxes there will be a discrepancy between how much you were supposed to pay this year and how much you actually paid this year. So the government will give you the money back.
Now keep in mind, the government took you money that you never owed them. And they didn’t pay you interest on it. So essentially it’s just a way for the government to get an interest free loan. Sure your $1,000 isn’t much. But over 100,000,000 working Americans, that’s $100 billion dollars of interest free money for the government.
Also, if your only income is W2 income. There’s no reason you should have to file your taxes. But you do if you want your tax return. But that’s a whole different issue.
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