Quote:
Originally Posted by HarryT
Why do get a tax refund? Why not just pay the correct amount of tax in the first place?
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Tax withholding on wages is required by federal law, but it's only an estimate. You won't know your final tax bill until the end of the year. That's when you know how much you earned (salary, investments, interest, etc) and how much you can deduct (losses, exemptions, children, etc).
If you over estimate how much to be withheld, then you'll get a refund. If you under estimate, you'll owe taxes. Either way, it's impossible to have the exact amount withheld.