If you have recently changed jobs, you’re probably familiar with the W-4 form, where you declare how many exemptions you have, for things like having dependent children, being married, or holding multiple jobs. These allowances are meant to offset the amount of tax withheld, based on approximately how much tax you will be able to deduct.
It is this withholding of taxes out of your paycheck that makes tax refunds possible every spring — the government isn’t actually paying you (unless you live in Alaska, make a small enough income to be eligible for the Earned Income Tax Credit, or have had devastating financial losses over the past year), but rather returning your money that you have already set aside for taxes and didn’t turn out to owe. Read more.