The return of excess amounts of income tax that a taxpayer has paid to the state or federal government throughout the past year. In certain cases, taxpayers may even receive a refund if they owed no taxes, because certain tax credits are fully refundable.

Many taxpayers look on tax refunds as a "bonus" or a stroke of luck at tax time. In reality, a tax refund represents an interest-free loan that a taxpayer makes to the government. Ideally, a taxpayer will have just enough taxes deducted from his or her paycheck to avoid receiving a refund.