Understanding Taxes - Education Credits

Module 12: Refund, Amount Due and Record Keeping

Page 3 of 10

When total tax payments are greater than the total tax, the taxpayer can

receive the refund by direct deposit to an account at a financial institution.
receive a split refund dividing your refund, in any proportion you want, and direct deposit the funds in up to three different accounts with U.S. financial institutions.
receive the refund by check in the mail.
apply the refund to the estimated tax for the following year.

Taxpayers can also:

Buy U.S. Treasury marketable securities and savings bonds by requesting a deposit of their refund to a TreasuryDirect® online account.
Use their refund to buy up to $5,000 in U.S. Series I Savings Bonds.
Use their refund to begin a savings program and to plan for retirement.

Direct Deposit Benefits
Speed	receive the refund fast
Security	no check to get lost
Convenience	no need to go to the financial institution to deposit a check
Cost	less than issuing a check

Angela had $2000 of gross wages, with $124 Federal income tax withheld, $29 medicare tax withheld, and $124 Social Security Tax withheld resulting in a net amount after taxes of $1723. Her employer also withheld $50 which went into her retirement fund account. Making her take home $1673.

When she files her return she reports $2000 in wages and $124 Federal income tax withheld on her return. Since the tax is "0" and she does not qualify for the Earned Income Credit, she will receive a refund of $124.