Basic tax questions...?
Hi, I have a few basic tax questions, pretty new at filing.
1. Do you get all the taxes you paid throughout the year refunded or just a part of it?
2. If I am an independent contractor or my own boss, for example delivering for Postmates, I am putting aside calculated money for taxes. When time comes at the end of the year to pay taxes, do I get any of this money refunded to me?
3. Does filing earlier to later make a difference on the amount of the refund?
I’m in Oregon, if that makes a difference.
- mercedesLv 72 months ago
You pay income tax on your profit. You also pay both halves of Social Security and Medicare tax. Don't plan on getting a refund.
- AmyLv 72 months ago
There are two taxes based on your earnings:
One tax is for social security. This is a classic pyramid scheme: you pay tax which pays old people's benefits now, and you get credit towards collecting benefits in the future.
This tax only applies to earned income, and is at a constant rate. Both employee and employer pay this tax, so if you are an independent contractor, you pay twice.
One is "income tax". This covers all forms of income including bank interest, gambling winnings, alimony, some scholarships, etc.
The federal income tax uses a "progressive" system where the more you earn, the more tax you pay. If your total income is below $12,000 then you don't owe any tax. This means you don't actually know how much tax you owe until the end of the year when you know how much you earned. Your payments were only estimates.
When you file an income tax return, you calculate exactly how much you earned and thus how much income tax you owed. If you are self-employed then you also add to your tax bill the social security tax you owed.
You pay tax during the year. Either it's withheld from your paycheck or you pay directly to the IRS. If you paid more than the amount you finally calculate that you owed, you get the rest refunded. If you underpaid, you have to pay the rest and possibly a penalty if you underpaid by a lot.
Thus, if you are an employee earning less than $12000 per year, you get back any income tax that you paid, but you don't get back the social security tax that you paid.
Except for that late-payment penalty, it does not matter when you file. You actually have 3 years to claim a refund.
- JudyLv 72 months ago
1. Maybe all, maybe some, maybe none, maybe owe more. 2. depends on how much you owe and how much you put aside. You aren't supposed to just put it aside you're supposed to pay it quarterly. 3 no.
- Rick BLv 72 months ago
You get back any OVERpayment in taxes. If you pay $20,000 throughout the year for taxes and then you find in April that your tax liability was only $19,000, you would get back $1,000.
No, when you file does not make any difference. All numbers are as of the last day of the year.