Tax Refund

A tax refund occurs when you pay more in taxes throughout the year than you owe based on your total income and deductions. Essentially, during the year, your employer withholds a portion of your earnings for taxes, which may be higher than necessary. When you file your annual tax return, the government calculates your actual tax liability. If it turns out you've overpaid, the IRS or your tax authority will refund the difference. This refund can be seen as a return of your excess payments, providing some financial relief or allowing for spending or saving opportunities.