Definition of Tax Refund

What is a tax refund? What is the definition of the term tax refund?

A tax refund occurs when a person or company pays more taxes than they should have and subsequently receive money back from the government.

For instance, let’s say that you are self-employed and decide to pay the government in four quarterly installments. You over-estimate the total amount that you are going to owe, and you end up getting a refund check of $2,000 after your accountant does your taxes.

Or, let’s say that you work at a standard 9-5 job and your employer deducts your taxes at source. You have a couple of deductions which lowers your tax burden, which results in you receiving an income tax refund in the mail.

Millions of Americans receive income tax refunds every year. Some save the money, but most will spend it on trips, electronics or other purchases.

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