The best part about filing your taxes is getting the tax refund check! Chances are, you have been paying your taxes directly, or your employer has been withholding tax dollars from your paychecks. Many individuals overpay on their taxes, so they quickly file their taxes to get their tax refunds and soon as possible.
How do tax refunds work?
Your employer withholds some of money from your paycheck, based on a formula and the information you provided on your W4 when you got hired. This withheld amount is applied towards your tax payment to the IRS.
Because the formula is only based on the allowances you showed on your W4 and of your paycheck, it doesnt take other factors of your life into consideration. For example, hospital expenses, tuition payments, and childcare expenses arent considered.
When you file your taxes, you have the opportunity to claim these expenses as deductions. A deduction reduces your overall income. Therefore, you owe less in taxes and are qualified for tax refunds.
Because you pay taxes to both the federal government and to the state, you might receive two tax refunds. The amount will depend on how much you have overpaid...
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