Many believe when the tax season comes so does a generous check from Uncle Sam being direct deposited into their personal checking/savings account and the reason why is because almost half of the U.S. households pay no federal income taxes (~46% of households). This is mainly driven by low household's income. While the economy is relapsing with the outlook on employment being dismal and possible inflation in the marketplace, I believe we all should understand the basic of taxations and what to expect when filing them.

Not EVERYONE is entitled to a refund. When tax season knocks, some may change the definition of refund to "I'm guaranteed to get a check from the Internal Revenue Service". This isn't true, if you underpaid into the Federal and State/Local tax agencies then you may owe, but if you overpaid into Federal or State/Local then yes you'll receive a refund. How do you know if you've underpaying or overpaying, my rule of thumb when assessing a client's tax situation is adjusting their income for the standard deduction and exemption to get to a nominal tax rate (for example, someone who files single on their tax return earning $35,000.00 minus their standard deduction and exemption of $9,500.00 would have a nominal tax rate of approximately 15%). If the client's year-to-date federal income tax payments are much less than that 15% calculation then they will likely owe taxes and won't get a refund. I've seen this happen because people tell others to go six months of the year paying no taxes and the other six months paying some, this really could leave a person with a heavy tax burden at the end of the year and a federal tax payment due that they can't repay immediately so always consult a tax expert or just ask them how do they know you won't end up giving to the IRS at the end of year instead of receiving. Now I haven't factored in the most common tax credits under education (American Hope Credit) or children (Earned Income Credit) because if you qualify for these then you will likely receive a refund. I'm always baffled when a person tells me they want a certain amount in refunds from the IRS just because of their prior refunds, as an advisor, I can't guarantee anything until I crunch the numbers (which only takes 30 to 45 minutes to do once I have the information) and no taxpayer should believe a tax preparer can give them a magical number out the air just because the taxpayer requested it.