I Want A Refund
I Want a Refund! If I had a dollar for every time I heard those 4 words strung together I’d be a wealthy woman. Well, maybe not wealthy but I’d have a nice stack of dollar bills, that’s for sure. Consider if you will the following hypothetical conversation. Sometimes it’s in my office and sometimes it’s in the grocery store or even at a wedding or a funeral. It can happen anywhere anytime.
“Hey, I have a question for you. You work for the IRS don’t you?”
“No, actually, I’m a Tax Preparer.”
“Well, anyway, I have a tax related question for you. I do my own taxes every year and every year I end up owing Uncle Sam money. My name is Joe Bob KnowItAll. Now my neighbor Billy Bob does his own taxes too but he gets money back every year. He makes less money than I do but he gets more money back. What’s wrong with this picture? I mean if I make more money, then shouldn’t I get more money back? I told him last year that he better take his tax stuff to a professional because there’s no way that he’s doing it right if he’s getting money back because I owe money and I know I did mine right so his has to be wrong.”
“Well Sir, there are many things that come into play that determine whether you get a refund or not. It really has more to do with how much of what you earn you have withheld to be credited against your tax liability due. After you calculate your taxable income based on your total income minus all of your eligible reductions then your tax is calculated based on the total taxable income remaining and the tax percentage that applies to that amount. If the tax is larger than the amount of money that you had withheld from your gross or total earnings combined with any estimated tax payments that you submitted and any credits from a prior year’s overpayment of tax, then YOU OWE MONEY. Now if the total amount of money you have paid in throughout the year is larger than the calculated tax due, then YOU GET A REFUND. There’s also another factor call the Earned Income Tax Credit for lower income wage earners that comes into the picture as well as other refundable credits (credits that can be given to a taxpayer even if they didn’t have tax withheld or pay any estimated tax payments. It’s really like one of those pictures that you look at that has many hidden items or a certain number of things that are not quite right with a caption below them that reads something like can you find all the hidden items in the picture? Completing a tax return properly is like looking at one of those pictures with a caption below it that reads, CAN YOU FIND ALL THE HIDDEN REFUND DOLLARS. Some people find all the hidden refund dollars and some people find some of the hidden refund dollars; and some people don’t find any HIDDEN REFUND DOLLARS because their picture doesn’t have any to find. But Mr. KnowItAll I think that you gave your neighbor Billy Bob excellent advice when you suggested that he get a second opinion on his return and perhaps you would benefit from taking your own advice.”
If you complete your own tax return and understand your tax return and feel satisfied that your return is complete and accurate upon completion then BRAVO; file it. But if, like Mr. KnowItAll, you don’t really have a clue how you arrived at your refund or balance due then you should call the IRS and ask questions, do research online, seek out free advice where it’s available, or see a professional preparer. None of these options guarantee a refund but at least you have a better than average possibility that if you are eligible for a refund that when you file your return you’ll get one!
I hope you're enjoying Tax Facts on the Taxing Subject of Taxes!
Any U.S. tax advice contained in this electronic communication was not intended or written to be used, nor can be used, by any recipient of this communication for the purpose of avoiding penalties that might be imposed pursuant to the Internal Revenue Code or U.S. Treasury Regulations, or any other state or local law or regulation.
Content of this site is not intended to replace professional consultation.
This site needs an editor - click to learn more!
You Should Also Read:
Subscribe to Bellaonline Taxes Newsletter
Editor's Picks Articles
Top Ten Articles
Content copyright © 2022 by Kate Woods. All rights reserved.
This content was written by Kate Woods. If you wish to use this content in any manner, you need written permission. Contact BellaOnline Administration for details.