Federal tax - how does it work? (user search)
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  Federal tax - how does it work? (search mode)
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Author Topic: Federal tax - how does it work?  (Read 1342 times)
I spent the winter writing songs about getting better
BRTD
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Posts: 113,382
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« on: March 19, 2018, 09:43:39 AM »

You only have to pay more money before April 15 if you haven't paid enough taxes (through withholding) for the year or you're self-employed. Most people probably get a refund on or before April 15, and likely think that giving the government an interest-free loan of their money is a good thing. It's not.

A lot of people can't avoid that. Like people who get paid heavily based on commission or people that get very different sized checks throughout the year due to bouts of overtime.
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I spent the winter writing songs about getting better
BRTD
Atlas Prophet
*****
Posts: 113,382
Ukraine


Political Matrix
E: -6.50, S: -6.67

P P
« Reply #1 on: March 19, 2018, 07:29:15 PM »

You only have to pay more money before April 15 if you haven't paid enough taxes (through withholding) for the year or you're self-employed. Most people probably get a refund on or before April 15, and likely think that giving the government an interest-free loan of their money is a good thing. It's not.

A lot of people can't avoid that. Like people who get paid heavily based on commission or people that get very different sized checks throughout the year due to bouts of overtime.

Actually, it is avoidable.  If your wages are based on commission, and/or you reasonably expect to have those bouts of overtime, you can take fewer allowances and/or ask to have extra taken out of your paycheck.

...that would just result in more being taken out and thus a return, hence the "interest free loan" even moreso.

I've been told by employees of Verizon retail stores that they receive two and sometimes three checks a month, but commission is paid only once a month. And commission is often half of their pay. In other words the check including commission is usually about three times the other check. There's no way to avoid paying way higher taxes on that commission included check.
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