During tax season, we are bombarded with financial terms such as credits, offsets, deductions, qualifying dependents, and so on. It’s all too much. So before you dive into the deep end of the tax pool, consider the fundamentals, such as the distinction between a tax return and a tax refund.
The two terms sound very similar and are frequently confused; for example, someone may say that their “tax return” has been deposited in their bank account. However, a tax return and a tax refund are not the same things, and it’s critical to understand the distinction before beginning your taxes.
We’ll go over each term in detail below, as well as how to find out if you’re eligible for a refund this year. Also, keep in mind that the deadline for filing your taxes this year is April 18, 2022. Here’s how to check the status of your refund after you’ve filed your tax return.
Tax Return
A tax return is a form you file with the IRS every year that details your adjusted gross income (AGI), expenses, and other financial information. Most of these details come from your W-2 statement, which your employer provides you with weeks before filing your taxes. But you may also have a 1099 or another form for recording your income.
According to CNET, your gross income will be reported on your tax return. How much you’ve already paid in taxes, as well as other crucial information you’ll need to file your taxes.
On the other hand, the tax return will balance deductions for your children. As well as how much you paid in student loan interest and health care coverage. It includes Roth IRA contributions, home office expenses, business expenses, charitable donations, and other items.
You must file a tax return in order to receive a refund. However, simply filing a return does not ensure that you will receive a tax refund.
Tax Refund
A tax refund is what the US Treasury gives you if you paid more in state or federal taxes than you needed to the previous year. For example, if your employer withheld more money from your paycheck than was necessary, or if you’re self-employed, you may have overpaid quarterly estimated taxes.
The difference between what you paid and what you owed will be reimbursed or “returned” to you as a lump sum payment by the government; in other words, your tax return. Also, any tax deductions (as discussed above) can increase the amount you can expect to receive, MSN posted.
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