In the United States, Federal income tax is a percentage of money earned by working or from other sources, such as interest on investments, commissions and payments issued from social security or retirements investments. You will receive a federal income tax if you pay too much income tax throughout the year.

Background

There are two ways to pay federal income tax: as a deduction from your pay check, or via direct payments to the IRS on a quarterly basis if you are self-employed. The amount withheld or submitted to the IRS varies based on the estimated taxes you will owe at the end of the year.

Calculating

When you prepare to file your federal income taxes for the previous year, you add up how much money you made, how much tax you paid and subtract any deductions that the Internal Revenue Service (IRS) allows you to claim. If you paid more than the total amount that you owe, you receive a payment back from the IRS in the form of a federal income tax refund.

Types

The Internal Revenue Service issues federal income tax refunds in two forms: as a direct deposit into a checking or savings account or as a paper check sent through the U.S. mail.

Time Frame

The IRS typically issues refunds to taxpayers who file their tax returns on paper within six weeks and to taxpayers with electronically-filed returns within three weeks. Paper checks require extra handling time to arrive in the U.S. mail.

Considerations

If you receive a federal income tax refund that is more than you anticipate, the IRS recommends that you refrain from spending the money until you receive a letter explaining the reason for the extra funds. If it is smaller than you expected and no notice as to why arrives within two weeks, the IRS suggests you contact them at (800) 829-1040.

Source:

IRS: Tax Topics-Topic 152 - Refund Information

IRS: Tax Withholding