question about taxes from recent grad

[lespauldude]

Hi, I just started working and have a few fundamental questions about income taxes. Sorry, yes, I tried searching but still don't quite understand the process.

Do I need to file a tax return? I earn about $60k before taxes (approx salary). I'm currently getting taxes withheld from my paycheck every month. I entered "2" for my W4 (1 or single/job + 1 for independent).

Will I get any money back when I file a tax return? Any way in the world to predict this?

What's the point of tax returns? IE. Why does the government take taxes from you every month and then return (some? none?) of it next year? Why don't they just take what they need and forget the tax return process?

If I decide instead not to not get taxes withheld, will this work to my advantage? Won't I be able to keep my money now and basically pay later? To me, getting taxes withheld appears to be a free loan to the government every month. Does this hold any truth?

One of the other new employees told me that because we started working with only a few months left this year (5 mo. total), we are earning much less than our annual salary. Therefore, we should be in a lower tax bracket, and we shouldn't have to pay that much in taxes. Does this make any sense? As a side q: Does the tax year count from Jan-Dec?

Thanks

[SnerpGoodWord]

Yes you MUST file. If you're single and don't own a house you probably won't get money back. I'd guess you'll end up owing somewhere between $0-$1500 for a full year, but that's just a guess.

The reason you have to file is that the government doesn't know everything about your tax situation upfront, so the witholding isn't always the right amount. The tax return forms calculate the true value, and you pay the difference. IMO it's retardedly complicated for people with simple taxes, but that's how the law works.

You can't not do withholding. Your employer shouldn't let you, and if they do you'll just end up paying a penalty to the IRS down the road. The law says you owe a penalty if your quarterly payments to the IRS (either via withholding or quarterly filing) are substantially less than your total tax bill.

Your friend is probably right if you worked only part of they year, your taxes will be lower and the withholding is probably too high. Which might mean you'll get a little bit back.

The tax year is the calendar year for individuals. Corporations can be on a different schedule because they can have an offset "fiscal year" I think.

[lespauldude]

Thanks that helps a lot.

[lespauldude]

posting a related story here about taxes because hopefully it may help someone else as clueless as me:

so i actually didn't file my taxes for last year (year before i made this thread) and just recently (after this thread, and in part due to this thread) realized i should. i didn't file because i only worked for like 5 months after college so i thought i didn't need to, but then i was able to correct that thought and worked with an accountant to file a late return. i ended up getting a few thousand dollars back having previously put only 1 exemption on my w2. i was not expecting such a big return in other words, or any money AT ALL. at the end, i was very very glad that it wasn't too late and that i was barely penalized AFAIK.

so to all the newly grads out there, even if you've only worked for a few months and haven't earned that much money, FILE YOUR TAXES. it's the law and you could get a SWEET refund.

[mikethedrummer44]

Are refunds really that sweet? Seems to me like your just getting your money back when it was just sitting around doing nothing.

Instead of working for you or earning interest.