Tax Refund

AAA

DEFINITION of 'Tax Refund'

The return of excess amounts of income tax that a taxpayer has paid to the state or federal government throughout the past year. In certain cases, taxpayers may even receive a refund if they owed no taxes, because certain tax credits are fully refundable.

INVESTOPEDIA EXPLAINS 'Tax Refund'

Many taxpayers look on tax refunds as a "bonus" or a stroke of luck at tax time. In reality, a tax refund represents an interest-free loan that a taxpayer makes to the government. Ideally, a taxpayer will have just enough taxes deducted from his or her paycheck to avoid receiving a refund.

RELATED TERMS
  1. Withholding Allowance

    An allowance an individual claims on a W-4 Form. A withholding ...
  2. W-4 Form

    A form completed by an employee to indicate his or her tax situation ...
  3. Excess Employer Withholding

    When one or more employers withhold more than the aggregate maximum ...
  4. Withholding

    The portion of an employee's wages that is not included in his ...
  5. Estimated Tax

    Periodic advance payment of taxes which are based upon the amount ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
Related Articles
  1. Taxes

    5 Smart Ways To Use Your Tax Return

    This year, find out how to stretch your tax refund further to strengthen your future.
  2. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  3. Taxes

    Don't Let Inaccurate Tax Forms Get You Audited!

    Copying in numbers directly from your tax forms can end up with you paying more (or less) taxes than you owe.
  4. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  5. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  6. Economics

    EU Probes Tax Laws To Catch Corporate Cheaters

    Recently, the EU has launched an investigation into tax deals between Amazon and the country of Luxembourg.
  7. Taxes

    How To Deduct All Of Your Charitable Donations?

    Donations made to charitable organizations can reduce your taxable income, thus your overall tax bill. But not all donations qualify to be deductable.
  8. Taxes

    What is Value-Added Tax (VAT) and who pays it?

    Learn about the definition of value-added tax, the necessary circumstances that require a business to pay it and when a business is exempt.
  9. Taxes

    What is the difference between gross income and earned income?

    Being able to distinguish between earned income and gross income is an important tool in preparing for and filing your individual tax returns each year.
  10. Taxes

    What are the differences among gross income, adjusted gross income and modified adjusted gross income?

    Discover how calculating total taxable income is easier when gross income, adjusted gross income and modified adjusted gross income are fully understood.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center