Define: Tax Refund

UK Accounting Glossary

Definition: Tax Refund



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Full Definition of Tax Refund


A tax refund is a payment by the IRS or a state government due to the overpayment of taxes. A tax refund is generally the result of excess withholding from paychecks. However, a tax refund can also result from overpayment of estimated taxes, or the under-estimating of tax credits, deductions, and/or exemptions. When a W-4 form is filed with an employer, the amount of withholding allowances checked will determine the amount of taxes withheld and thus factors into the amount of a tax refund, if applicable. An accurate tax return that warrants a tax refund will result in such tax refund being received within 6 weeks of receipt of filed taxes. If taxes are filed electronically, a tax refund, if warranted, can be expected three weeks after the received date. A tax refund may be received either by direct deposit or via a mailed check. In some instances, a tax refund from the federal government may be considered income and must be reported on state taxes. While a tax refund at the end of the year is welcomed, it does amount to an interest-free loan to the governing body. In addition, consider that income earned in the early months of the year will take a year or more before it is returned by the taxing authority and inflation will have reduced the purchasing power of those excessive tax payments.


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Tax Refund. PayrollHeaven.com. Retrieved April 02, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/tax-refund/

Definition Sources


Definitions for Tax Refund are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th February 2020.