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How does taxes work?

How do taxes work?

  • I've never had a job. I've heard that your taxes are taken out of your paycheck before you are paid. Then I know that people do their taxes once a year. But why do you taxes when taxes are taken out of your paycheck? I still don't understand how taxes work.

  • Answer:

    The tax taken out of your paycheck is an estimate of what you'll owe on the amount you earned, and might be higher or lower than you actually owe. Also, there are many items of income besides paychecks, and some don't take out taxes. At the end of the year, you file a return totalling up all of your income, and calculate the total tax based on that. If what was withheld is too much, you get the extra back as a refund. If not enough was taken out, then you pay the difference.

anonymou... at Yahoo! Answers Visit the source

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Other answers

taxes don't work -- people do *** the amounts deducted from your pay packet/cheque are only an estimate [and to make sure you do pay and not waste it all at Ladbroke's or the pubs]. the annual return then, corrects the estimate and you get the difference back [or have to pay it if you owe more].

Spock (rhp)

u fill out a w4 based on that the government takes out ur taxes. In feb all ur employers send u w4 then u have to file those to see whether or not u owe money or get a refund. U could buy a tax program on cd but as first timer got to hr block with ur w2's and they will do it for u costs a bit but much easier and they can help u see if u qualify for deductions On w4 the more deductions u claim the less they take out and the more u will owe. If u claim untrue deductions ( children u dont have ) its illegal

Leprechaun of Jupiter

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