TAX: Basic confusion

2009 is over and we already welcomed 2010 with open arms. Healthy economy, wide range of employment opportunity and steady income are some of the factors that every single person is looking forward in this year. However, we still need to file our 2009 tax return and plan 2010 finances.
There is always a big confusion arises between the tax return and Federal withholding. I will try to answer some of the common confusion between Tax return that few people receive after filing their tax return and the federal withholding that most of the people pay in their every pay checks.
Keep in mind an individual could or should keep federal tax withholding at a level where it does not exceed the amount necessary to pay his/her annual tax liability.

What is Tax Liabilities? How do we calculate this, and to whom we owe this liability?
“The total amount of tax that an entity is legally obligated to pay to an authority as the result of the occurrence of a taxable event. Taxable events include, but are not limited to, annual income, the sale of an asset, a fiscal year-end or an inheritance. Tax liability can be calculated by applying the appropriate tax rate to the taxable event's tax base.” answers.com [common Q&A]
What is a Federal withholding and how it works?
When a person is hired by a company employee was asked to fill up a W-4 withholding form and many other forms. In W-4 form tax payer can indicate the numbers of exemptions, e.g. lines A-H personal allowances, Totaled in line # 5 (that is adding line A through H). Tax will be deducted on the basis of your W-4 form. (Suggestion: Read line by line very carefully while filling the W-4 form). Please do not hesitate to filling marital status; it is very important to fill correct status. If your filing status is single, you can expect your tax withholding to be greater than if you file as married (everything else will remain the same).

How do I get refund and why do I owe money?
In simple language federal withholding that is taken out from every pay checks are the money we get refunds. If the tax liabilities are greater than the withholding we owe the money. If the tax liabilities are less then withholding we receive money. Tax refund is nothing but the money from the withholding. But keep in mind Medicare, FUTA SUTA, FICA, 401k, retirement fund are not withholding and we don’t get refunds of such things.
April 15 2010 is the due date for the filings your Federal Tax returns make sure you have your W-2 from your employer. If you don’t have it gets it quickly.
Tax Refund calculator Click here.