What Is a Tax Refund? How to Save On Taxes

what is a tax refund taxes return irs accounting

When it comes time to file taxes, the ordeal can be a blessing or a curse. Sometimes you will get additional money and sometimes you won't. 

Last year, over 150 billion Americans filed a return and received an average refund of $2,800. What is a tax refund? What is the process and how do you get it? If you are still trying to figure out how it works, this guide can help you. 

What Is a Tax Refund?

Every adult, whether job or-self employed, are considered taxpayers. You are required to give a percentage of your income to the government every year. There are few exceptions where you aren't required to file, including the $600 rule. 

A tax refund is the money you receive back after the difference between taxes paid and taxes owed is calculated. Tax refunds in the US are usually due quarterly in April. 

You may file online or use a mail-in application for the IRS (Internal Revenue Service) to see. If you pay more than you owe, the government gives you a refund within 5-21 days. For W-2 workers, refunds are given because their employer held more than needed on their paycheck. 

Tax refunds are YOUR money; it's not free money the IRS gives you. You may think of any refund you receive an interest-free loan to Uncle Sam. 

Where Can I Find My Tax Refund?

Refunds are processed within a month of filing. If you are curious to see where your refund is, you can track its whereabouts using the "Where's My Refund" tool on IRS.gov. You could also use the IRS2Go app and track online or mail applications. 

If you are certain you should have a refund, it's possible the IRS held those funds as a tax refund offset. If you owe any outstanding debts from certain lenders such as a student loan or owe child support, the government will garnish your refund. This is a last resort the IRS may take if you are delinquent on an account and made no payment agreements. 

If you believe a refund is taken away from you in error, you can request a review to see if you can fight the offset and get your money back. If an offset wasn't the reason for missing refunds, the IRS could be auditing your tax return.

The government can go back several years and use your current refund to pay back the money you owed on a previous file (up to 5-7 years). 

Understand Filing to Get the Money You Deserve Back  

Most people wonder if they should file taxes on their own or get a professional in order to get the most out of their returns. If you understand "what is a tax refund" and how exemptions work, you could file without assistance. Many self-filing products like TurboTax help you along the way too with your taxes.

If you file the proper way there's a greater chance you will get money back to spend it on personal wants and needs. Or at least, reduce the likelihood you owe money to the Internal Revenue Service

Tax Time

If you found this article on tax refund tips helpful and have an interest in improving your finances, check other blog posts today. Visit the Finance section of the Bootstrap Business Blog to learn more about tax refunds, accounting, the IRS, and financial management.

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