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Level 1
posted May 29, 2024 2:32:43 PM

Past refund

For the past two years I received a small refund can you tell me why?

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1 Replies
Employee Tax Expert
May 29, 2024 2:41:32 PM

Your refund is a dependent on (i) the amount of taxes you should have paid during the year based on your situation, and (ii) the amount of taxes withheld by your employers during the year.

 

Your employers estimate your tax liability based on the information you provide on your Form W-4. If your employer withholds a lot more than your eventual tax liability, then you get a big refund. If your employer withholds too little, then you may end up owing when you file. 

 

Typically employers aim to withhold just about the same amount as your eventual tax liability so that you break even when you file your tax return. A small refund or a small balance due reflects that your employer is estimating your tax liability correctly and is withholding just about the right amount needed to pay your tax liability.