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Tax refunds are paid out to U.S. taxpayers if the amount of tax they owe is less than the sum of the total amount of withholding that they paid and the total amount of refundable tax credits that they claim. Tax refunds are quite common as 77% of the tax returns filed in 2004 received a tax refund. Tax refund checks can be directly deposited into the taxpayer’s bank, be mailed to them, or be applied to the following year’s income tax. In addition, tax refunds can now be split in up to three separate accounts with three different financial institutions.
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