Lesson
In this lesson, you’ll learn why you may or may not get a tax refund after filing your tax return. There will be a short quiz at the end of this lesson to make sure you understand the material before moving onto the next lesson.
Because taxes are withheld from our paychecks and paid to the IRS throughout the year, it’s possible that we paid too much. When this happens, the IRS pays us back when we file a tax return that accurately reports the overpayment. If we’re able to claim any partially or fully refundable tax credits, we may receive more money than we overpaid.
Similarly, if our employer didn’t withhold enough throughout the year, it’s possible that we haven’t paid enough. When this happens, the IRS charges us when we file a tax return that accurately reports the underpayment. The IRS allows us to resolve this by paying the amount we owe in full, or by setting up an installment plan to pay throughout the year.
Tax Refund Example
Jack and Jill are married and file a joint return. After itemizing and claiming tax credits, Jack and Jill’s tax return shows that they owe $4,689. Their employers, however, withheld $8,386.20 because they were unaware of Jack and Jill’s additional expenses. When the IRS accepts their return, it will refund them $3,697.20 because of the overpayment.