Completing your taxes is tricky, especially if you file without the help of tax software or a tax preparer. It can get even more confusing when you see the terms "tax return" and "tax refund" used interchangeably when really, there's a significant difference.
"Tax return" and "tax refund" do sound similar, and you may have even heard someone say they've received their tax return from the IRS when really they're referring to their tax refund. So what's the distinction between the two? Below, I'll break down how they're different, and show you how to find out if you're getting money back this tax season.
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What is a tax return?
A tax return is the form — typically the 1040 — that you file with the IRS each year and that provides an overview of your finances, such as adjusted gross income, or AGI, expenses and other financial information. (Each state also has its own tax return form.)
Most of these details come from your W-2, which your employer is legally required to send you by the end of January each year to help you file your taxes. You may also use other forms, such as a 1099, to report additional income, like money made from freelance or contract work.
Your tax return outlines key information, such as:
- Total income earned (different from your AGI)
- How much you've already paid in taxes (either through your employer's withholding or estimated taxes if you're self-employed)
- Deductions for things like dependent children, student loan interest, health care coverage, Roth IRA contributions, home office expenses, business costs and charitable donations
- Other crucial details for calculating your final tax liability
Filing a tax return is required for you to receive a tax refund, but filing a return doesn't guarantee you'll receive a tax refund.
What is a tax refund?
A tax refund is money returned to you by the US Treasury if you overpaid your state or federal taxes during the previous year. For instance, if your employer withheld more taxes than necessary from your paycheck or if you're self-employed and overpaid your quarterly estimated taxes, then you can get that money back via the refund.
The government calculates the difference between what you paid, which is reported in your tax return, and what you actually owed. The reimbursement comes as a lump sum that can be received electronically or as a paper refund check.
How do I know If I'm getting a tax refund this year?
If you're using tax filing software or a service, you'll get an estimate of your tax refund amount after submitting your tax return. Once the IRS processes your return and confirms there are no errors, it'll notify you via email or text message with your final refund amount. The notification means your refund is on its way to your bank account or mailbox.
You can track your refund from the moment you file until it arrives. Note that it may take anywhere from one to three weeks to receive your refund from the IRS. For more tax tips, here's how to get your tax refund up to five days sooner and here are all the states with tax filing deadlines later than April 15.