34 - estimate of the total tax liability that will be due...

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40. When taxpayers file a tax return, they will either pay an additional amount or receive a refund of excess taxes paid. Briefly explain how this “settling up” process works. Why might a taxpayer pay too much during the year? Answer: When a tax return is filed, the taxpayer determines the total amount of tax liability. Normally, during the year, taxpayers pay this liability to the government through income tax withholdings. These withholdings (or other payments) are an
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Unformatted text preview: estimate of the total tax liability that will be due at the end of the year. There will almost always be a difference between the actual amount due and the amount estimated. The amount due or overpaid is determined when the final tax return is filed. A taxpayer will pay too much during the year if he or she estimates a higher tax liability than is actually due. Sometimes taxpayers choose to pay “too much” as a method of forced savings....
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