During the year, the IRS requires employers to withhold money from their employees' paychecks to pay for their estimated taxes as the end of the year. However, for many people the amount withheld from their paychecks exceeds their tax liability at the end of the year, so they are due a refund from the IRS. To determine if you are due a refund, you need to determine your total tax bill and the amount of money that you have had withheld during the year.

Calculate Adjusted Gross Income

Your taxable income includes all the money you earn during the year including wages and any interest you earn on your accounts. Each company that you work for should send you a W-2 form at the end of the year that will tell you how much taxable income you earned from the company during the year. If you are self-employed, you need to keep track of your own income. Add all of the income that you have earned together to find your total taxable income. To find your adjusted gross income, you need to subtract any deductions and exemptions that you are eligible to take. The most common deduction is the standard deduction that everyone is eligible for. This deduction is adjusted annually and depends on your filing status. Other deductions are categorized by the IRS as either itemized deductions or above-the-line deductions. In order to take itemized deductions, you must give up the standard deduction. Itemized deductions include mortgage interest, charitable donations and state sales tax. Above-the-line deductions can be taken on top of the standard deduction and include certain retirement account contributions, educator expenses and student loan interest.

Calculate Total Tax Bill

Use your adjusted gross income total to calculate your tax bill. The tax system in the United States is a progressive system, meaning that higher levels of income are taxed at a higher percentage. Your income tax brackets depend on your filing status. For example, in 2009, for singles income up to $8,350 is taxed at 10 percent, income from $8,350 to $33,950 is taxed at 15 percent, income from $33,950 to $82,250 is taxed at 25 percent, income from $82,250 to $171,550 is taxed at 28 percent, income from $171,550 to $372,950 is taxed at 33 percent and any income over $372,950 is taxed at 35 percent. For example, if your taxable income was $35,000, your tax would be $4,938. From this amount, subtract any tax credits that you are eligible to take. Examples of credits include the Lifetime Learning Credit and Hope Credit for educational expenses, the Energy Efficiency Credit for making eco-friendly repairs and the Earned Income Credit.

Calculate Tax Refund

To determine whether you owe the government money or you are entitled to a refund, you need to determine the total amount money you have either had withheld for taxes or made in estimated payments during the year. You can find this information on your W-2 forms. Only include the amount withheld for taxes, not for FICA. Subtract the amount of your have had from the tax bill you owe. If the amount is negative, you are entitled to a refund. If it is positive, you owe the government money. For example, if your total tax bill was $3,000 and you had $4,200 withheld during the year, you would get -$1,200, meaning you are entitled to a $1,200 refund.

Source:

Tax Deductions

2009 Tax Brackets