Tax Refund
Definition
Money returned to you by the IRS when you've paid more in taxes during the year than you actually owe. Refunds typically result from excess withholding from paychecks or refundable tax credits. The average federal tax refund is approximately $3,100. While getting a refund feels good, it actually means you gave the government an interest-free loan throughout the year.
Example
If $10,000 was withheld from your paychecks for federal tax but you only owe $8,500, you'll receive a $1,500 refund.