A tax refund is a reimbursement to a taxpayer of any excess amount paid to the federal government or a state government.
Taxpayers tend to look at a refund as a bonus or a stroke of luck, but it most often represents an interest-free loan that the taxpayer made to the government. In most cases, it is avoidable.
- If you get a tax refund, it means you overpaid your taxes last year.
- Regular employees can avoid them by accurately filling out Form W-4 and keeping it up to date.
- Self-employed people can avoid it by estimating their taxes more accurately for quarterly estimated tax payments.