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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In the US, people tell their employer to set aside a chunk of their paycheck to cover their income tax requirements. You fill out a paper when you get hired that tells the business how much of the paycheck they should be setting aside and sending to the government, based on a series of questions like “are you single? Do you have a family? Is this your only job?”
Then, when you fill out your tax forms, you add information like “did you donate to charity this year, did you have any major expenses for business?” And figure out exactly how much you owe in taxes.
For most people, the amount that was set aside by your employer is more than exactly how much you owe after finishing the paperwork. The government will then send you a check with the difference.
The trick is that precisely estimating the exact amount of money needed to cover your taxes is hard, since there’s a lot of variables involved. Most people feel it’s better to err on the side of caution and have their employer take a bit more than is necessary to send to the government, rather than the opposite, where you might discover that you owe the government more money than they had been setting aside.
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