DayCents

Tax Refund

A tax refund is money the government returns when you've paid more through withholding and estimated payments than you actually owed. It feels like a windfall, but it's really your own money coming back — an interest-free loan you made to the IRS all year.

A very large refund signals over-withholding; adjusting your W-4 puts that money in each paycheck instead. Some people prefer the forced-savings effect of a refund, but the same discipline in a high-yield account earns interest along the way.