What is a tax Refund?

The term "tax refund" refers to a reimbursement made to a taxpayer for any excess amount paid in taxes to the federal or state government. While taxpayers tend to look at a refund as a bonus or a stroke of luck, it often represents what is essentially an interest-free loan that the taxpayer made to the government. It’s often possible to avoid overpaying your taxes so you can keep more money in your pocket each paycheck—and avoid a refund when you file your tax return.

Lesson Summary

A tax refund is a reimbursement made to a taxpayer for paying too much in taxes. It may seem like a bonus when you receive it, but it’s essentially an interest-free loan you made to the government. You can keep more money in your pocket by avoiding overpaying your taxes, and avoid a refund when filing your tax return. Here are some points to remember:

• A tax refund is a reimbursement made to a taxpayer for excess taxes paid.
• It’s essentially an interest-free loan taxpayers make to the government.
• Avoid overpaying taxes to keep more money in your pocket each paycheck.
• Avoid a refund when filing your tax return.