I’ve only recently joined the working force, and I am still not sure of this entire concept.
I know I am supposed to go to an accountant and show him a slip from my job for the returns, and also slips from my stocks that show all the net changes.
What I don’t understand is \*why\* I receive a certain amount after doing all of that.
In: 8
You don’t get a refund if you set everything just right, and you won’t owe any when you file either. Everyone who earns money has to pay a tax on their earnings to the government. Your employer sends a portion of your pay to the government every paycheck for the taxes on the money you earned and hopefully they send the correct amount for your situation. What you put on your w-4 form determines that.
If you have the numbers exactly right, then when you file taxes for the year, you will owe 0 and get back 0 because it was paid all year out of your paycheck in correct amounts.
Of course, it’s never perfect, since so many things can throw it off a bit, like interest earnings on your savings account that your employer has no idea about, or you have deductions you can take to reduce your total tax , but the goal is to make the difference between what was paid from your paycheck and the tax amount owed on your earnings as close to 0 as possible.
If you get a refund, that means you overpaid during the year and gave the government a no interest loan they are paying back to you as a refund. If you owe money, then you underpaid your taxes during the year, and the government wants their money plus interest, so you have to pay up a bit more when you file.
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