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. Stock Analysis

    Why Should Investors Read The Annual Reports?

    All investors should read each year the annual report from their top stocks, which contains valuable information and facts they weren't probably aware of.
  7. Taxes

    Which Is Better? Tax Preparer Or Tax Software

    Every taxpayer โ€“ and every year โ€“ is different, so here are four factors to help you decide whether a tax pro or software is best for you.
  8. Taxes

    Taxes: H&R Block Vs. TurboTax Vs. Jackson Hewitt

    There are more and more tax services to help ease the pain of filing income taxes. Here's our take on three of the biggest.
  9. Taxes

    The Best Free Tax-Prep Software For April 15, 2015

    Filing state taxes online costs money, but many platforms let you file simple federal returns free. Some support more complex filings; others import data.
  10. Taxes

    Before You Visit Your Tax Preparer: Do This

    The earlier you start preparing your tax records and documents, the more likely you are to have a smooth tax return experience โ€“ and all the tax benefits you're due.

You May Also Like

Hot Definitions
  1. Risk Averse

    A description of an investor who, when faced with two investments with a similar expected return (but different risks), will ...
  2. Fixed-Charge Coverage Ratio

    A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. It is calculated ...
  3. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  4. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  5. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  6. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
Trading Center