When filing each years taxes, a person is due a refund if her tax liability is lower than the actual taxes paid. The IRS, as well as accounting entities such as H&R Block, offer online calculators to help determine if an individual has paid more taxes than she actually owes.
In most situations, an individual has a small portion of her gross earnings removed from each pay check as an estimated tax payment. These deductions are calculated at the end of each year and reported in form W-2. This amount is compared to the individual's tax liability, the amount she owns in taxes, to determine if she is due a refund or if she owes more taxes. The IRS determines an individuals tax liability based on several factors, including filing status, applicable tax credits, number of jobs worked and total income earned in a fiscal year.
There are several other factors that go into determining if someone is due a tax refund, such as federal and state tax credits. One common credit is the Earned Income Credit, which is a federal reimbursement for working low-income families. For example, if a person has a tax liability of $100, but qualifies for an Earned Income Credit of $150, her tax liability would be reduced to zero and she would be due a $50 tax refund.