You must have been pleasantly surprised to find out you'd be getting a refund from the IRS — especially if it was a large sum. And while you may have considered this type of windfall a stroke of good fortune, is it really? The IRS issued over 112 million federal income tax refunds, averaging $2,895, for tax year 2016.1 You probably wouldn't pay someone $240 each month in order to receive $2,900 back, without interest, at the end of a year. But that's essentially what a tax refund is — a … [Read more...]

Tax deductions and credits are terms often used together when talking about taxes. While you probably know that they can lower your tax liability, you might wonder about the difference between the two. A tax deduction reduces your taxable income, so when you calculate your tax liability, you're doing so against a lower amount. Essentially, your tax obligation is reduced by an amount equal to your deductions multiplied by your marginal tax rate. For example, if you're in the 22% tax bracket … [Read more...]

We hear this question often, and our answer is always the same:  “It depends”.  There are many factors that go into determining what refund a taxpayer receives after the tax return is filed.  Change one of those factors even slightly, and the results can shift a lot.  Here are just some of the factors: Are your friends/co-workers/neighbors having a lot of tax withheld from their paychecks all year? And are you have much less withheld?  The biggest factor in determining a refund amount is … [Read more...]