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Why Withholdings?

withholdings
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Why Withholdings?

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missmagenta, filing tax returns serves two purposes: 1) It ensures that the withholdings for the year actually equal the taxes you owe. Most people either overpay or underpay, and there needs to be a fixed time to settle accounts. 2) It gives a fixed time when taxes that are due that are not subject to payroll taxes are to be collected, i.e. interest, dividends, capital gains, etc. No withholdings are assessed on these sources of income, but they’re still taxed just like everything else, so again, there needs to be a time when accounts are settled. This second point also explains in part why most Americans overpay with withholdings. The biggest part is that the government likes free loans, but part of the official justification is that it’s intended to account for those sources of income on which you don’t pay taxes as you go. smackfu, you’re wrong about when taxes are owed. Taxes are not actually owed until April 15 of the following year. Getting behind on your withholdings raises red

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