What Is a Tax Refund? Definition and When to Expect It

what is a tax refund

You can even use direct deposit if you are still filing by paper. The Where’s My Refund tool should be the first place people go for more information about checking the status of a tax refund. There’s no need to call the IRS to check on refund status unless it’s been more than 21 days since they filed the return, or the tool says the IRS can provide more information.

  • The IRS tools will show you one of three messages explaining your tax return status.
  • You have that choice—you can deduct either income taxes or sales taxes, but not both.
  • It’s also used if you received reimbursements for any other itemized deductions you took in previous years.
  • The IRS recommends that filers keep tax returns for at least three years.

You’ll need to wait about four weeks to receive a notice from the IRS explaining what you need to do to resolve the status. Today’s the last day to file your income taxes unless you’ve decided to file a tax extension. And whether you filed on your own using tax software or went through a tax pro, you could receive some money back through a tax refund. Tax changes in 2023 have led to slightly smaller refunds than last year, but the average tax refund is still $2,910 so far this season. Tool to check the status of your most recently filed tax return within the past two tax years.

Why does ‘Where’s My Refund’ show ‘Tax Topic 152’ or an IRS error message?

In a wider context, businesses and merchants issue refunds to customers who are dissatisfied with the goods or services they purchased. A tax refund is a reimbursement issued by the government when a taxpayer has overpaid their taxes. Delays can happen as a result of mistakes, budget cuts and overwhelmed tax preparers. The timelines that the IRS provides are only estimates, so it’s probably not a good idea to count on using a refund to make an important payment or purchase.

what is a tax refund

Use Direct Pay to securely pay your taxes from your checking or savings account. You can also refer to Topic No. 303 for a checklist of common errors made when preparing your tax return and for additional items that may delay the processing of your return. State taxing authorities also issue refunds, and most https://www.bookstime.com/articles/bookkeeping-san-antonio states have a system that allows taxpayers to verify the status of them. For more information about your taxes, here are 10 tax changes that could affect the size of your refund. SmartAsset Advisors, LLC (“SmartAsset”), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S.

Definition and Examples of a Tax Refund

If taxpayers use less PTC than they qualify for, they will get the difference as a refundable credit at tax time. “The IRS is proposing going back on thirty years of not treating TABOR what is a tax refund refunds as taxable income,” Polis’ statement said. The United States has a progressive tax system, meaning people with higher taxable incomes pay higher federal income tax rates.

Don’t get too excited; this could be a sign that you’re having too much tax withheld from your paycheck and living on less of your earnings all year. You can use Form W-4 to reduce your withholding easily now so you don’t have to wait for the government to give you your money back later. By registering for a NerdWallet account, you’ll have access to our tax product in partnership with Column Tax for a flat rate of $50, credit score tracking, personalized recommendations, timely alerts, and more. Make final estimated tax payments for 2021 by Tuesday, January 18, 2022, to help avoid a tax-time bill and possible penalties. WASHINGTON — The Internal Revenue Service announced that the nation’s tax season will start on Monday, January 24, 2022, when the tax agency will begin accepting and processing 2021 tax year returns. If you need other return information, view your Online Account.

Check your federal tax refund status

However, a tax return and a tax refund are different things, and it’s an important distinction to know. A tax refund is a reimbursement a taxpayer receives after overpaying taxes to the government in a tax year—usually due to an employer withholding too much in taxes from the employee’s paychecks. The taxpayer often receives the overpayment via direct deposit or a paper check.

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