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
Welcome to the working world.
Here are some key points.
– Every year you have to pay income tax based on your whole years income.
– You also get some tax credits (discounts) for things like tuition or retirement investments.
– Your workplace is required to withhold a portion of your pay cheque and remit that to the government so that you do not have a huge tax bill at the end of the year.
Now your workplace will do an approximation of how much they need to take away from your pay to cover your taxes. But they do not know your full financial situation. So for most people they withhold the money like you’re a single person with no tax credits. But most people have some credits for various things.
During April you should file your taxes for the previous year to right size what taxes you have paid. And often that means you’re informing the government of credits you have and therefore are owed some of the money back your employer withheld. On the other hand you may owe more money if you have two jobs or have side income from a personal proprietorship.
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