 TITLE: What Is a Tax Refund? CONTENT: How Do Tax Refunds Work?\n------------------------\nWhile there's only one federal tax deadline date, most of us accrue and pay taxes throughout the year. As you earn income, that income incurs tax liability. Typically, you also pay taxes—either in the form of withholding (money taken out of your paycheck or other payments) or estimates (tax payments you send to the government)—as you receive income.\nYour tax return reconciles these four things:\n1.  Income: The amount of money you earned in wages, business income, investment gains, unemployment benefits and so on.\n2.  Taxes: What you owe the federal and—in some cases—state or local government based on your total income, minus any deductions or allowances that may apply.\n3.  Payments: Any money you've paid to the government toward your taxes.\n4.  Credits: Money you may deduct directly from your tax bill. Examples include:\n    *   **Earned income tax credit**, which provides relief to low-income taxpayers and their families. The IRS has a tool to help you figure out if you qualify. For the 2020 tax year only, you may use either your 2020 or 2019 income to qualify.\n    *   **Child tax credit**, which offers $2,000 per qualified dependent in income tax credits for taxpayers who meet IRS income guidelines.\n    *   **COVID-19 stimulus payments**, which are also technically tax credits. Most eligible taxpayers have already received their COVID-19 credits in the form of stimulus payments, but if you haven't—and you qualify—you can use the Recovery Rebate Credit to apply stimulus payments to reduce your tax bill or increase your refund.\nYour completed tax return should tell you whether you owe the government additional money, paid the correct amount already or can expect a tax refund. END