So what's the point of deducting taxes from your check if you get it back at the end of the year?
- Thread starter Nocturnal
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BrunoPuntzJones
Lifer
- Feb 24, 2001
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No advantage....except it kinda forces you to save money, but that would be better to put in an account you draw interest on.
But still you are giving the government a free loan on YOUR money till the end of the year. So you should adjust your deductions so you can expect a minimal return, or have to pay a little bit, otherwise your just doing Uncle Sam a favor.
But still you are giving the government a free loan on YOUR money till the end of the year. So you should adjust your deductions so you can expect a minimal return, or have to pay a little bit, otherwise your just doing Uncle Sam a favor.
Frankly I wish there were NO withholding, and everyone had to pony up a check for good ole Uncle Sam on April 15th. You can bet there would be some sad stories that day.
Since most of my income comes from self-employment/partnership arrangement, I have to write a check for almost the whole amount of my tax liability on tax day. You can rest assured that there would be a lot more yelling for tax reform if people really knew how much they were paying in taxes, and had to write the check themselves. It really hurts to actually have the money in the bank to buy a nice new BMW, then have to write the check out to the government.
Of course the government prefers the withholding system, since there are still a large number of people who dont understand the system, and act all happy that they are "getting" a check from the government after they file their taxes. I find it horribly humorous to hear people brag to each other about how big their refund is, they act they have somehow managed to scam the government out of a large check, when in fact it is they who have been scammed.
Since most of my income comes from self-employment/partnership arrangement, I have to write a check for almost the whole amount of my tax liability on tax day. You can rest assured that there would be a lot more yelling for tax reform if people really knew how much they were paying in taxes, and had to write the check themselves. It really hurts to actually have the money in the bank to buy a nice new BMW, then have to write the check out to the government.
Of course the government prefers the withholding system, since there are still a large number of people who dont understand the system, and act all happy that they are "getting" a check from the government after they file their taxes. I find it horribly humorous to hear people brag to each other about how big their refund is, they act they have somehow managed to scam the government out of a large check, when in fact it is they who have been scammed.
I'm sure you can't possibly be that naive. The government will always take every penny they can extort from you and then still spend even more. That is why you should always vote against any tax increase for any reason.
As mentioned above, if you get back more than a few $100 then you need to adjust your withholding. I try to owe about $200-$300 myself.
There's a provision in the Internal Revenue Code requiring withholding or estimated tax. I believe that the reasoning behind it is that you are supposed to be paying tax as you are earning income. If you pay only on the 4th month of the next year, you are basically getting a 13 month interest free loan from the government, and they aren't gonna allow that! I could be wrong, but I believe that you are supposed to be withheld about 90% of your tax liability of the year.
But, unfortunately, if you "under-withold" by too great of an amount, they'll jab with with penalties.
BrunoPuntzJones
Lifer
- Feb 24, 2001
- 14,513
- 4
- 81
Yup, what's great is you don't get jack for overpaying and them having your money. But if you owe you can get stabbed with interest penalties
CPA
Elite Member
- Nov 19, 2001
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I have harped on this with co-workers and friends for years. It makes absolutely NO SENSE to overpay becasue "it forces me to save". That is such a crock. You should always do a mid-year check on your tax situation and file a new W-4 if you are being overwithheld. You can file as many W-4s as you want throughout the year and your employer has to accept them.
I actually will be paying about 4K this year and I have no problem with that. I would rather have a 0% interest loan then loaning to the government at 0%.
how do you/when do you get the tax return?
i'm british, and worked in america over the summer, and alot of my money went to taxes? i am unsure how to do this myself. My dad knows, but he's too lazy. btw i made 2000, before taxes. ow much would i expect to get back (massachusetes)
i'm british, and worked in america over the summer, and alot of my money went to taxes? i am unsure how to do this myself. My dad knows, but he's too lazy. btw i made 2000, before taxes. ow much would i expect to get back (massachusetes)
kranky
Elite Member
- Oct 9, 1999
- 21,019
- 156
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Sluggo, I know just what you mean about people bragging about big refunds. They don't have a clue about what's really happening. It's kind of scary. The people getting big refunds think they somehow know how to beat the system, when the exact opposite is what's really happening!
I've been half-tempted to tell people that for $100 I'll show them how to increase their refunds by $1000 next year. That "it forces me to save" excuse just makes me think people are becoming more dependent on Big Brother than I already thought. Help me, Mr. Taxman, I have no self-discipline! Please take extra money from me all year and give it back later! Oh, thank you!
To the original question, the way you have your withholding corrected is by filing a new W-4 form with your employer.
I've been half-tempted to tell people that for $100 I'll show them how to increase their refunds by $1000 next year. That "it forces me to save" excuse just makes me think people are becoming more dependent on Big Brother than I already thought. Help me, Mr. Taxman, I have no self-discipline! Please take extra money from me all year and give it back later! Oh, thank you!
To the original question, the way you have your withholding corrected is by filing a new W-4 form with your employer.
Amen...I have heard this some many times over the last five years where I work (an accounting firm) it's not EVEN funny!
You mean Taxachusettes. Expect a letter from the IRS wanting about $1500 from you.
Actually you might get it all back, seeing as how you are not an American citizen.
He'll get the entire amount back, not because he is not an American citizen, but because there is a threshold you have to meet in order to be taxed. If you make under $4,500 (unsure of the exact amount, but it's in that range), then you are exempt from income tax and receive all your witholding back.
The company you worked for will send you a form (called a W-2) stating how much you made and how much money was taken out for taxes. If I remember correctly, all W-2 should be mailed no later than 30 Jan. Since you only made $2000 for the entire year, I would expect you'd get back most if not all of your federal tax withholdings. You'll probably get back most/all of your state withholdings too.
Dave
When I take a look at the great country I live in because of Uncle Sam and all his boys that have died to keep it that way I think I can spot him a few dollars interest free.
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