![]() ![]() ![]() ![]() You could lose your job and make far less than you anticipated. You could’ve garnered a pay raise that bumped you into the next tax bracket. Now, in that example, you owe money, and the government knows you received that income because you underpaid the taxes on that handpay.Įven if the math was done perfectly at the time you won the handpay, your circumstances could change. Now take that same handpay example and let’s now say your handpay would need to be taxed at 20 percent based on your income for the year. By filing and including the handpay, you’d actually qualify for a refund, because you paid more taxes than was obligated to be paid based on your income. At the end of the year, let’s say your income would require that handpay to be taxed at 10 percent (picking round numbers to keep the example simple). Let’s say you have 15 percent taken out of your handpay. The more you earn, the higher each additional dollar is taxed, and your tax jackpot stacks atop the rest of your income. The reason for this is that your tax rate depends on your income. To elaborate, though: Taxes taken out are effectively an estimate. If you have taxes taken out right away, do you still have to file the jackpot at the end of the year? It’s that time of year where taxes get into peoples’ minds again, and this question came up recently: ![]()
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