Why do we pay 10% of our paycheck to the government for taxes, and why/under what circumstances do we get it back in tax returns, or have to pay more in tax returns?

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Why do we pay 10% of our paycheck to the government for taxes, and why/under what circumstances do we get it back in tax returns, or have to pay more in tax returns?

In: Economics

11 Answers

Anonymous 0 Comments

You’re only getting taxed at 10%???

Anonymous 0 Comments

10%?!? God bless you, nerd. For in Canada it’s 40% of my moolah that gets taken away!

Anonymous 0 Comments

The civilized society you see constructed in our country isnt free to build or maintain. And furthermore with 30 years of “taxes are theft” from half the population we have failed to maintain our infrastructure, meaning it will cost much more to fix when it fails catastrophically.

Anonymous 0 Comments

I am guessing you referring to the federal income tax, as that os rated between 10%-35% (or is it now 37%), and not the payroll tax which is an additional 7.65% on your first 120ishk something (I forget the number but I think that is close).

Taxes go to provide many of the things the federal government provides you, or provides others which allow them to more easily provide you things. For example, while some of your money is spent on roads in area’s you will never drive, it allows workers, trucks, and other supplies to use them which can make a difference in you getting that thing-a-gig from Amazon.

There are also indirect benefits which they provide such as law enforcement who combat the cartel constantly, which if you want to see what happens if they lose look at Mexico (sorry but yeah you are losing/lost that fight). You have the military who helps to stop groups like the Taliban (they probably wouldn’t want to try and rule the US, just using them as an example) who keep foreign groups at bay. Then you have internal terrorist groups who help stop extremist groups from ruling the country (would you really want the KKK or CHAZ/CHOP to become the new norm? look at some parts of Africa for how it would turn out).

Finally you have direct benefits that help you, maybe you get the EIC (Earned Income Tax Credit), or schools which provide reduced and free lunches (via federal tax money, a few exceptions exist in terms of where they get their funding), Medicare, Medicaid, Social security (retirement and don’t forget disability). They make your milk cheaper, and they pay farmers for growing vegetables which creates a artificial surplus allowing them to be cheaper. Even during COVID that tax money went to developing the vaccine, and supplying it.

That is of course just highlighting the upsides of it, there are negatives too keep in mind which I think you can figure out.

To your second part, if you pay too much or too little you then owe them or they owe you the money. When you fill in your tax form that is when the calculation is ran and the amount owed is determined. Your taxes throughout the year are simply prepayments on it, because I doubt you would want to fill in a tax form every month, so it is estimated and then once a year we do the calculation to determine how close we are.

Anonymous 0 Comments

For a government to function it needs tax revenue. There are many ways we could pay these taxes, but governments like income taxes because they can be scaled to income allowing them to be progressive, and they are relatively easy to collect.

Whether you pay extra taxes, or get money back, is solely based on if you overpaid or underpaid your estimated taxes throughout the year.

Anonymous 0 Comments

We pay different amounts of income based on income to the government, as there are a number of marginal tax brackets. We pay 10% of our first $9,875 in income, 12% of income from 9,876 – $40,125, 22% of income from $40,126 – 85,525, with the top bracket being 37% on income above $518,401. Mariginal means we only pay the higher percentage on the income above that amount, not on all dollars earned.

Our employers withhold and submit an estimated amount, based on how we fill out forms telling them our filing status (single, marries, head of household), how many dependents, and other factors.

When we do our taxes, we determine what we actually owe vs. what was already paid through those withholding. This will change based on other income (investments, rental property, side gigs, etc), deductions (money set aside in retirement accounts, health insurance premiums, student loan interest, mortgage interest, charitable deductions, investment losses, etc), credits (child tax credit, buying an electric vehicle, educational expenses, etc.). If we overpaid our taxes, we get a refund. If we underpaid, we owe more.

Anonymous 0 Comments

Depending on your income level, you have to pay some percentage of that income in taxes. If you work for a company with an accounting department, this percentage is estimated by them and is deducted from your paychecks and sent to the government.

Then, when you do your taxes, you actually calculate the amount due. If the amount due is less than the amount estimated by your employer, then the difference will be sent back in a tax return check. If the amount is greater, then you have to attach the difference to your tax return.

Whether you pay or get paid when you do your taxes is entirely dependent on how good of an estimation your employer makes.

If you are self employed, you have to do all of the accounting yourself, or hire an external accountant.

Anonymous 0 Comments

You are paying an estimation of your end-of-year tax owing throughout the year on each paycheck.

At the end of the year, you calculate your actual tax burden, based on your total income, and your total deductions. You then compare that to what you actually paid in taxes over the year, and evaluate whether or not you need to pay more, or if you get money back.

Without taking money off of every paycheck, a lot of people would mismanage their funds and not save enough to pay their taxes at the end of the year.

Anonymous 0 Comments

The portion withheld from your paycheck is an estimation of what you owe, based on information given to your employer.

If that estimation isn’t exactly correct, you can (and may be required to) file to settle the difference.

Anonymous 0 Comments

A ) We pay taxes so the government has money to fund things like building roads, maintaining government services, having easy access to public utilities, and all the other things that governments could spend money on.

B ) If you pay the government too much or too little then they will either send a bill or give you back the money you overpaid.