What Is a Tax Refund?
A tax refund is money returned to a taxpayer when the tax paid during the year, through withholding or estimated payments, exceeds the actual tax owed, or when refundable credits exceed the tax. A refund is not extra income; it is a return of overpaid tax.
Refund vs. Balance Due
Refund or amount owed = total payments and refundable credits − total tax. Adjusting withholding changes the size of the refund or balance due.
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🔗 Related Terms
More Taxes Terms
- Additional Medicare Tax
- Adjusted Gross Income (AGI)
- Alternative Minimum Tax (AMT)
- Capital Gains Tax
- Capital Loss
- Child Tax Credit
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Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.