18 Dec What Is the Purpose of Taxes If We Get Tax Returns?
People familiar with how other countries work usually know that most other countries have a pretty straightforward tax system. They have jobs and receive salaries for them just like we do, but in most cases, they don’t have to do their taxes. The employer withholds that part of their salary and sends it to the government, and there is nothing left for them to do.
That’s very similar in the US, but you already know that we still have to do our taxes.
So, you’re probably wondering, why do we have both taxes and tax returns. Why not have a similar system like the rest of the world? It sure sounds much easier.
However, in reality, there’s an excellent reason why we have both taxes and tax returns. Let’s explain:
Why Are Tax Returns Important?
Other countries have a straightforward system that doesn’t allow you to get something in return like you can in the US. While taxes are calculated, discrepancies can occur, and more importantly, you may have to pay less.
The tax code allows for deductions and credits, so it can frequently happen that you have fewer taxes to pay then the first breakdown determined. Alternatively, it can also happen that you have to pay more than was previously established.
A similar thing can happen in other countries, but nothing can be done about it, as the taxes are fixed. That’s why the US has an additional tax return system that allows for changes to be made.
That’s why we get the chance to determine if we have less or more taxes to pay, and we do it by filing tax returns. Yes, this is a double-edged sword, but it’s still better to have the option to get some money back every year. Plus, it’s much more common for you to get some money back than to end up owing more, especially when you consider the many deductions that you might be missing.
Many situations exist where you have to file a tax return, as the IRS requires you to do so. That’s mostly why people believe that tax returns are pointless. However, in reality, it’s always good to file tax returns because you have a high chance of getting a tax refund. For example, if some taxes are withheld from your income (withholding on wages or your retirement plan), then you will likely end up paying more in taxes than you should. The IRS is not going to return that money to you unless you file a tax return.
So, when you look at it like that, it’s much better to file tax returns every year than to file only when the IRS requires you to file.
The American tax system is very complicated, but as you can see, there’s a point to it. With it being the way it is, you get the chance to pay less than you initially thought you had to pay. As long as you know how things like tax returns work, you have a higher chance of getting more than you usually do.
If all of this sounds interesting, you should contact Golden Tax Relief and get some help in your dealings with the IRS as soon as possible!