A tax refund is the money returned to a taxpayer by the government when they have overpaid their taxes during the year. This can happen if too much money was withheld from their paycheck or if they qualified for certain deductions and credits that reduced their overall tax liability. When taxpayers file their annual tax return, they calculate their total income and the taxes owed. If the amount paid throughout the year exceeds what they owe, the government issues a refund. Taxpayers can receive their refund via direct deposit, check, or other methods, depending on their preference.