Tax refunds are provided to American taxpayers based upon various aspects of the tax burden which they faced in the applicable tax year and the ways in which they satisfied this obligation. A tax refund calculator can and commonly is used by taxpayers to determine the maximum degree to which they can offset their tax burden in this way.
Various companies offer the service of an income tax refund calculator to taxpayers for the payment of a fee. The use of a tax refund calculator can thus ensure that the taxpayer does not miss the opportunity to secure a tax refund, as well as to make sure that he or she does not ask for too much or too little from the government before filing a documentation, as a mistake can cause delays and make it more difficult to secure the desired tax refund. Taxpayers should thus be aware of the various factors that are taken into account by an income tax refund calculator.
One of the basic aspects of tax burdens taken into account by a tax refund calculator is the difference that may come to exist between the amount which an American taxpayer was actually required to pay to the government and the amount which she or he did pay. A difference between these two amounts will generally obligate either the taxpayer or the government to give money to the other. If the latter is the case, then the use of an income tax refund calculator may be required for determining the financial obligations which are due to the taxpayer.
To that end, the main consideration to be made consists of the taxes which have been withheld from the taxpayer’s paychecks (or other any other forms of payment) throughout the year. The amount which can be asked of taxpayers is determined by the tax brackets in which they are placed. Over the course of the year, initial steps toward the satisfaction of the tax burden thus imposed are made through the practice of withholding amounts from paychecks. The amount which should be withheld from a paycheck is indicated by a W-4 form, as pertains to matters such as dependents who may be claimed by the taxpayer.
An income tax refund calculator essentially works by comparing the income tax required of the taxpayer to the amount already withheld for this reason from the taxpayer’s paychecks. If the tax refund calculator determines that the first amount exceeds the second, then tax refunds are likely to be due to the taxpayer.
Other factors which may be considered by a tax refund calculator include estimated taxes, a broad category which includes every form of income tax not withheld throughout the year, and thus pertaining to those forms of employment other than those provided through regular paychecks, and refundable tax credits. An income tax refund calculator can thus be used by the informed taxpayer to ensure that he or she is aware of what to seek from the process of applying for tax refunds in filing returns.