A tax refund is the amount of money you over-pay in taxes throughout the year. Get a tax refund with help from TurboTax in this video clip.
Hello, I'm Jeremy from TurboTax with important news about your income tax refunds.
Getting a tax refund is usually a happy time for most people but do you always know why you end up getting one or how long you have to claim it?
Tax refunds can result from different situations. But most commonly, it occurs when you pay more tax during the year than you actually owe. Since the majority of taxpayers are employed, this happens when too much is withheld from your paycheck each week. This is because withholding only estimates your tax but does not always reflect every credit and deduction you're going to take.
If you find that you are consistently overpaying your taxes each year, you can update your W4 to reduce your withholding. This will put more money in each paycheck but will reduce or possibly eliminate your tax refund at tax time.
Sometimes, a tax credit can create a refund for you even when you'd otherwise owe taxes. This is because some tax credits are refundable which means that if the credit amount is larger than the total tax you owe for the year, the IRS will give you all or a portion of the excess credit as an actual cash refund.
Be aware though that you have a limited time to claim a tax refund. For most taxpayers, you must claim the refund no later than three years from the time you originally file the tax returns or within two years of paying the tax, whichever is later.
For more tax tips and guidance, visit TurboTax.com.