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Categories: General Tax Terms

Overpayment

Overpayment refers to the situation where a taxpayer pays more tax than is actually owed to the government for a specific tax period.

In accounting and taxation, an overpayment can occur due to various reasons, such as errors in the calculation of tax liability, incorrect withholding amounts, or advance payments exceeding the required taxes. Taxpayers who overpay their taxes are typically entitled to a refund from the tax authority. For example, if an individual calculates their income tax liability to be $2,000 but has $2,500 withheld from their paycheck, they have overpaid by $500 and can claim that amount as a refund when they file their tax return.

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