So how much federal income taxes did you actually pay?
Just because you received a tax refund doesn’t mean that you
paid no taxes. It simply means that you
overpaid your tax liability, which is the amount you owe the government, and
the Internal Revenue Service has given you a refund of your overpayment.
So how do you determine what your tax liability actually was?
If you filed a 1040 form in –
Tax Year 2019 – look at line 16 “Total Tax”
Tax Year 2018 – look at line 15 “Total Tax”
Tax Year 2017 / 2016 – look at line 63 “Total Tax”
Your total tax liability could be further reduced by various
credits which will reduce your liability, e.g. an earned income credit,
portions of a child tax credit, or an education credit among others. A credit is a dollar for dollar reduction of
your tax liability.
If you filed a different form – look for the line that says
total tax, for example on the 2016 1040-EZ – see line 12.
Some folks choose to use the IRS as their savings account, because
they prefer to get a refund each year and that’s fine if that’s what you want
to do, but if you are constantly overpaying your taxes, you may want to
consider other ways to corral those funds rather than giving a loan to the
federal government.