On my tax form when I was hired at a new job it asked if I cared too have any extra taken out of my check. I've been in the mindset of it'll go too pay whichever taxes I owe but I'll also be getting back what they don't use. I provided a picture of the form I'm talking about. I was talking too my grandparents about it and now I'm worried I'm just given them 40$ every week, for the past 10 months and I'm not gonna see a dime of it back.
- Coffee DrinkerLv 710 months agoFavourite answer
Your grandparents are mistaken.
You will get that money back in the form of a larger tax refund. Unless of course the money is actually needed to cover your tax liability, but even if that happens you're not losing the money because it goes toward reducing a tax bill you would have had to pay out of pocket.
Lets make up some numbers to illustrate how this might work: Lets say you get paid weekly and using your filing status and allowances you would normally have $60 withheld each paycheck, but since you asked for an extra $40 your employer withholds $100.
Keep in mind that your paystub won't show how they calculated the withholding. It will just show $100 withheld for federal income tax, it isn't going to say $60+$40 or anything like that.
So at the end of the year you've paid $5200 in tax (52 x $100) so your W2 form will show $5200 in box 2.
If you had not asked for the extra withholding you would have only paid $3120 ($60 x 52) and that amount would be reflected on your W2
Now lets say your tax liability is $3000. When you file your return you'll get the excess payment refunded, so you'd get a refund of $2200. If you had not asked for the extra withholding you would only be getting a $120 refund.
So in this made-up example you paid $2080 extra, but got a refund exactly $2080 larger than you would have without the extra payments. So the money is not lost.
For what its worth, even though you don't lose the money, its not a great financial strategy. You are loaning money to the IRS at 0% interest and there is absolutely no way to get your money back if you need it before tax season. You'd be better off setting up direct deposit or automatic transfers to have $40 moved to a savings account every payday, then you can earn a few bucks interest and access your money if/when you need it.But don't freak out, you won't lose that $40/week you've been paying.
- SumDudeLv 710 months ago
Unless you had untaxed extra income (a side job) or owe back taxes, must pay for Obamacare subsidy balance, or have child support in arrears you will get most of your money back. The IRS is honest with its math.
- SlickterpLv 710 months ago
Any over payment will be refunded.
- Wayne ZLv 710 months ago
It all gets included in Box 2 of your W2 in January; the normal withholding and the extra.
This amount gets compared to your tax liability. If you had too much withheld, you will get a refund like anyone else.
My guess is that your grandparents really don't understand.
Tax advice gotten from friends, relatives and co-workers is normally wrong 98% of the time and that percentage is probably too low.
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- The TaxpayerLv 710 months ago
It all depends upon your income. You'll be fine. You'll pay what you owe, but no more.