why do we get income tax returns
If you filed through H R Block and also claimed an education credit and have been waiting to get your refund with no update you may want to check H R Blocks Facebook page. They released this statement as of 8pm or so:
H R Block has confirmed with the IRS that there was an issue with certain tax returns filed before February 22, 2013 that included certain education tax credits claimed on Form 8863. We have worked with the IRS to expedite a solution to this issue for all of our affected clients. If you received this letter of notice requesting additional information for Form 8863 and already responded to the IRS, or have not received a notification to date, there is no additional action needed at this time. For those clients who have received notification from the IRS and have yet to respond, please call your local H R Block office or 800-HRBLOCK. The office or customer service agent will be able to better serve you and provide next steps. For those clients who received the IRS notice regarding form 8863 that said it would take 6-8 week to receive a refund after this issue was resolved, we are assured it will not take that long. We continue to work with the IRS and as we have more specifics on timing and any other updated information, we will share it with our clients.
H R Block appreciates that this issue may cause problems for our clients. We will continue to update clients as more information becomes available. We thank clients for their patience while we work with the IRS to expedite the filing process on their behalf. H R Block messed up, the wait continues. The following is an excerpt from my book. Many taxpayers in the U. S. have come to expect a sizable refund check every tax season. To some people who donБt prepare their own tax returns, itБs a mystery how the refund is calculated. The idea is really quite simple. After calculating your taxable income, you use the information in the to determine your total income tax for the year. This amount is then compared to the amount that you actually paid throughout the year (in the form of withholdings from your paychecks). If the amount you paid is more than your tax, you are entitled to a refund for the difference. If the amount you paid is less than your tax, itБs time to get out the checkbook. If you work as an employee, youБre certainly aware that a large portion of your wages/salary doesnБt actually show up in your paycheck every two weeks.
Instead, it gets Бwithheld. Б The reason for this withholding is that the federal government wants to be absolutely sure that its gets its money. The government knows that many people have a tendency to spend literally all of the income they receive (if not more). As a result, the government set up the system so that it would get its share before taxpayers would have a chance to spend it. The amount of your pay that gets withheld is based upon an estimate of how much tax youБll be responsible for paying over the course of the year. (This is why you are required to fill out Form W-4, providing your employer with some tax-related information, when you start a new job. ) At this point you may be thinking, БOK. Well I just learned that IБm in the __% tax bracket, and itБs obvious that my employer is withholding way more than that! Б YouБre probably right. ThatБs because your employer isnБt just withholding for federal income tax. TheyБre also withholding for Social Security tax, Medicare tax, and (likely) state income tax. The Social Security tax is calculated as 6. 2% of your earnings, and the Medicare tax is calculated as 1. 45% of your earnings.
Before youБve even begun to pay your income taxes, 7. 65% of your income has been withheld. Your refund is determined by comparing your total income tax to the amount that was withheld for federal income tax. Assuming that the amount withheld for federal income tax was greater than your income tax for the year, you will receive a refund for the difference. EXAMPLE: NickБs total taxable income (after subtracting deductions) is $32,000. He is single. Using the tax table for single taxpayers, we can determine that his federal income tax is $3,649. 50. Over the course of the year, NickБs employer withheld a total of $8,500 from his pay, of which $4,000б wentб toward federal income tax. His refund will be $350. 50б (i. e. , $4,000 minus $3,649. 50). Every year, your refund is calculated as the amount withheld for federal income tax, minus your total federal income tax for the year. A large portion of the money being withheld from each of your paychecks does not actually go toward federal income tax. Instead, it goes to pay the Social Security tax, the Medicare tax, and possibly state income tax.
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