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I was using the IRS tax caclulator and came across this oddity. If I'm overpaying on my taxes, i.e. paying money I don't owe, then why is the expected amount I will be given back less than half by the IRS? Shouldn't I be getting back the full $2,467?

"Based on the information you previously entered, your anticipated income tax for 2014 is $5,350. If you do not change your current withholding arrangement, you will have $7,817 withheld for 2014 resulting in an overpayment of $2,467 when you file your return. If you want your withholding to more closely match your anticipated tax, adjust your withholding on a new Form W-4 as follows: For the only job you entered (which has a projected salary of $29,861): 15 allowances. Check the “Single” box on your Form W-4 Assuming this recommendation is in effect for the rest of 2014 your expected refund should be about $950. Following this recommendation will ensure that the amount withheld from your wages will cover all of your projected tax liability while minimizing your refund."

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Read more closely:

If you do not change your current withholding arrangement, you will have $7,817 withheld for 2014 resulting in an overpayment of $2,467.

and later...

Assuming this recommendation is in effect for the rest of 2014...

If you do nothing you would get a refund of the full $2,467. If you follow the advice of whoever wrote that you wouldn't pay as much tax for the rest of the year and consequently will get back less when you file, because you are getting it back now.

  • So the question should be: "Why does the IRS only help you eliminate half of a current year overpayment of taxes?" – DJohnM Oct 29 '14 at 5:50
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    Perhaps because you have already overpaid and they can't deduct less than 0 from future paychecks? – JohnFx Oct 29 '14 at 14:18
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    The overpayment is projected for the entire year, not on the current total deducted.. – DJohnM Oct 29 '14 at 16:21
  • The quoted text is saying to update your W-4 to decrease the amount of tax withheld. So if you do this, you will NOT be overpaying by $2,467. That number is a project of what you would overpay if you did nothing. If you make the change, than you are overpaying less, and so your refund will be smaller. – Jay Oct 29 '14 at 19:38

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