johnbarrycpa

Refunds generally come from two sources:

Refunds generally come from three sources:

1. Federal income tax is withheld from your paycheck. If too much was withheld during the year, the US Treasury returns your overpayment to you once you file your return.

2. You qualify for a refundable tax credit. The most common refundable tax credits are the Additional Child Tax Credit, Earned Income Tax Credit, Advanced Premium Tax Credit, American Opportunity Tax Credit (partially refundable).

3. You made quarterly estimated tax payments and your tax liability was less than expected. If this is the case, it would be beneficial to review your current estimated tax amounts to ensure they are in line with your projected tax liability.

If the majority of your Federal overpayment is due to overwithholding during the year, we recommend that you adjust your allowances to reduce the amount of tax withheld. This can be done by completing an updated Form W-4 and submitting it to the person who handles your payroll or your company’s HR/payroll department.

If you expect to continue to receive one or more refundable tax credits and you have income tax withheld from your paycheck, you might consider withholding less from your paycheck to offset the refundable tax credit.

If your refund only comes from one or more refundable tax credits, we don’t recommend that you take any action.