 and so now you're to the bottom line in essence where you would think you can now apply the tax calculation on like the bottom line of in essence the income statement which is what happens here but the tax calculation as we saw briefly because of a progressive tax system is quite complicated so as we saw that complication then means that we're usually going to be reliant on tax software to do this actual calculation so in practice all oftentimes recalculate all this information down to the taxable income to double check the data input using an excel worksheet but dependent to a large degree on the tax code to apply the actual tax calculation because of the progressive tax system involved and it's even more complex than that progressive tax system multiple tax rates being applied to the tax calculation using tables possibly because you might have other income subject to other kinds of taxes such as dividends might be subject to a different tax rate you might have like passive income kind of situation capital gains might be subject to a different tax rate and so on so it can get quite complex even if you get to the taxable income correctly to basically think about what that tax rate will be and we're dependent on the software to some degree so then we've got the tax before credits and other taxes so you might think hey this is the bottom line this is it there's the calculation of the taxes but no for a couple reasons one is because we on the income tax system it's a pay as you go as they say type of system so for the tax year 2022 we cannot wait until we do the tax return by April 15th or April 18th or whatever of 2023 to calculate the tax and then just pay it at that point in time you might say well they're helping us out they're helping us out to do that by withholding during the year well no they're not just helping us out they want their money sooner right you can't do that or else you'll get hit with penalties and interest you have to pay during 2022 in order to avoid the stick of penalties and interest so most people do that with withholdings throughout the year the w2s withholdings or if you're have a sole proprietorship then you have to pay estimated taxes so we're going to of course have to compare the tax that we owe to the tax that we already paid now if it was a perfect world if it was a flat tax if it was a simple system if we didn't have millions of deductions and credits to kind of muddy up the waters then it would be like payroll taxes the amount that we owe and the amount that we pay would match and we would get no refund we would get no amount that is due but the tax code is way too complicated for that we can't possibly hit it on the nose and therefore we usually shoot for a refund the other reason we can't stop here of course is that there could be other taxes we might have other taxes such as self-employment tax being one of the big ones that could be included and we could have credits so credits are different than deductions because credits are going to be below the tax calculation you'll get a dollar for dollar benefit on the credits versus the deduction where you just get a reduction of the tax so