The American system of taxation allows for the availability of a tax refund option, both at the federal and the state level, as is also the case in several other countries. As they operate in relation to American taxpayers, tax refunds are given when the payment made by an individual taxpayer surpasses the amount which he or she owes to the government.
A tax refund may come in several different, according to the preference of the taxpayer and as may include the direct payment of the amount at stake to them and the later withdrawing of that same tax refund amount from tax liability owed at a later time.
People may be able to claim tax refunds from states or from the federal government according to credits for tax refunds which have been provided to them and the size of the estimated and withholding taxes paid over the course of that year. Tax refunds are sometimes referred to as effectively the same as a loan given to the government which is later paid back on request.
As it is operated, the American taxation system tends to allow for a majority of taxpayers to have at least some form of tax refund due to them. In the 2010s, it has thus far been the case that approximately three-fourths of the taxpaying population have been obligated to a tax refund. In 2004, for instance, the IRS reported that it had given out tax refunds for seventy-seven percent of the returns which it had processed that year.
The application for a tax refund should be made in a taxpayer's return. Services which assist in the preparation of these returns may also help taxpayers determine the amount of the tax refund which is due to them and successfully request it in documentation. Laws have been passed which prohibit these services from scaling the size of the claimed tax refund to the fee which they ask of their clients.
The system for tax refunds as is available to American taxpayers has been noted for increasing in speed and efficiency in recent decades, in part due to the expanded use of electronically-based information services. A maximum period of twelve weeks was adhered to by the 1990s American tax refund system for answering and fulfilling applications by American taxpayers, in contrast to which the 2010s established a maximum period of six weeks as the time in which a taxpayer applying for a tax refund through paper-based documentation could expect to be required.
A period of only three weeks, on the other hand, has been established as the ceiling for tax refunds which are requested through a digital tax return. As an electronic means for aiding the ease of use of the tax refund option, the IRS website offers a service, known as "Where's My Refund," as well as a hotline, where taxpayers can check the status of their pending application and get an idea of when to expect that a payment will be provided to them.