So, if you owe $1,000 but qualify for a $500 tax credit, your tax bill goes down to $500. A tax credit is a dollar-for-dollar discount on your tax bill. Remember that a tax deduction reduces your taxable income, cutting your tax bill indirectly by reducing the income that's subject to a marginal tax rate. A tax return calculator takes all this into account to show you whether you can expect a refund or not, and give you an estimate of how much to expect. You might also qualify for so many tax deductions and tax credits that you eliminate your tax liability and are eligible for a refund. You might have overpaid your estimated taxes or had too much withheld from your paycheck at work.

Why would the IRS owe you a tax refund? There are several possible scenarios. SmartAsset's tax return estimator can help you figure out how much money could be coming your way, or how much you’re likely to owe. However, if you owe the IRS, you’ll have a bill to pay. If the IRS owes you money it will come in the form of a tax refund. You can learn that you owe the IRS money, that the IRS owes you money or that you’re about even, having paid the right amount in taxes throughout the year. How to Calculate Your Tax RefundĮvery year when you file your income taxes, three things can happen. To find a financial advisor who serves your area, try our free online matching tool. If you want to estimate how big your refund will be this year, you’ll be well served by our free tax return calculator.Ī financial advisor can help you understand how taxes fit into your overall financial goals. Many Americans depend on their tax refund as an important part of their annual budget.

Whether you save it for retirement, use it to pay down credit card debt or spend it immediately, a tax refund can be a great financial boost. Tax Return Estimator Photo credit: © iStock/DNY59

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