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How do wages and tax work in the US? (lemmy.world)

submitted 2 days ago by [email protected] to c/[email protected]

18 comments fedilink hide all child comments

Sometimes I see on American TV that once a year (I think) they try to figure out how much tax they owe and send off a cheque. How does this really work?

Id struggle very much to calculate this. Do you keep receipts for everything?

Is there no system where taxes are automatically taken out of your monthly wages? Id be interested to hear some examples of what you pay, and how you calculate it all if possible.

In the UK pretty much every has monthly tax taken automatically, unless you are self employed.

The way it works for me for example last month I made:

£2282.58 and £435.92 was deducted. £247 in tax and 98.77 national insurance. £90.15 went to my pension.

So what would your payslip look like? No deductions? Or am I just getting the wrong idea from America TV shows?

Thanks

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[–] [email protected] 6 points 2 days ago (1 children)

A return is what you file. The money you get back for overpayment is a refund.

Sorry, pet peeve of mine that comes up every tax season.

[–] [email protected] 2 points 2 days ago (1 children)

I've had others correct me the other direction (specifically decrying the use of "refund" because it wasn't money owed in the first place). At some point it's just semantics.

[–] [email protected] 4 points 2 days ago

It is indeed called a refund by the IRS and all tax professionals. The person(s) attempting to correct your use of “refund” are wrong, but they were probably trying to make the point that giving a lot of extra money to the government interest-free is not a smart financial idea.