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
In: 9
People are required to report to the IRS:
* their income
* any tax deductions they qualify for
This is what goes on a tax return.
As for why refunds are a thing:
The vast majority of people are what are called “W-2” employees. Basically, this means that you work for a company and get a wage/salary (which the company reports to both you and the IRS on a form called the W-2 form).
W-2 employees fill out a form when they start their job laying out which basic deductions they qualify for to arrive at a rough estimate of their tax bill. Rather than paying their taxes all at once they just get money deducted out of every paycheck. Once they file their return (i.e., declare which tax deductions they qualify for), they’re likely to be found to have overpaid their taxes and get a refund.
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