What determines if you are getting a tax refund or bill?
About this video
Using a W-2 for a fictional taxpayer, Darian, and the 2026 federal tax brackets, the video subtracts the $16,100 standard deduction from $38,500 of wages to get $22,400 of taxable income. It calculates the tax owed ($2,440) and compares it with the $3,100 already withheld, showing that Darian gets a $660 refund.
You'll be able to
- find taxable income by subtracting the standard deduction from wages.
- use tax brackets to calculate total federal income tax owed.
- compare tax owed with tax withheld to decide whether someone gets a refund or owes more.
- calculate the size of the refund or bill.
Key words
- W-2
- A form from your employer showing your wages and how much tax was withheld during the year.
- Standard deduction
- A fixed amount subtracted from income before tax is calculated; $16,100 for a single filer in 2026.
- Taxable income
- Income left after deductions; this is what the tax brackets are applied to.
- Federal income tax withheld
- Tax your employer already took out of your paychecks and sent to the government.
- Tax refund
- Money returned to you when you paid more tax during the year than you actually owe.
Transcript
- [Narrator] What I wanna do in this video is look at the W-2 from this fictional taxpayer and try to figure out if they owe taxes or if they're going to get a tax refund. And if you want, you can pause this video, have a go at this, and there's all the information you need, including, at least at the time of this video, or I'm making this video in 2026, and so here we have the 2026 federal income tax bracket and the 2026 federal standard deduction.
So all the information here is available to figure out how much does Darian need to pay in taxes, and has he paid that much or has he overpaid or does he need more to pay? All right, now let's do it together. So the key thing here is his wages, tips and other compensation, $38,500.
Now we're going to assume that Darian is filing as a single person, and so he's going to get the $16,100 standard deduction. So what does that mean? Well, we take out the standard deduction, and that's going to be his taxable income. So if we take, I'll just do the math over here, 38,500 minus the standard deduction.
Another way to think about it is that just reduces your taxable income by that amount. So minus $16,100 standard deduction. We are going to be left with, what is this? $22,400 is going to be his taxable income. From there, we can go to the tax brackets. So 22,400 of taxable income.
So we can see the first 12,400 is going to be taxed at 10%. And then after that, let's see, if I take 22,400 and I subtract 12,400, I have another $10,000 to be taxed. And all of that is going to sit in this bracket right over here. So then we're going to have another 10K, another $10,000 at the 12%.
If his taxable income went above 50,400, then we'd be looking at more and more brackets. But now we know enough to figure out how much taxes he owes. 10% on 12,400. We can actually do this by hand. We don't need the calculator for this. If we say 10% of 12,400, that's equal to 1,200, or $1,240.
And then if we say 12% of 10,000, 12% of 10,000, that's going to be another $1,200. So if we add this and this, we see that he needs to pay $2,440 in taxes. Now, that's not what I originally asked. I said, does he have to pay more taxes? Does he need to get a refund?
And so to figure out whether he gets a refund or not, we have to figure out how much in tax he's already paid. And that we can see right over here with federal income tax withheld, $3,100. So he's already paid more than he owes, so he's gonna get a refund. And the refund is going to be the difference of these two values.
So if I do $3,100. $3,100 minus $2,440, that's going to be equal to $660. I think I did that right. I did that in my head. You could not do that in your head if you wanna be more careful. But I think that's right, yes. $660 is correct. So that's how much of a refund he should get.
Video © Khan Academy, used under CC BY-NC-SA. Watch on Khan Academy. Puzzicle is not affiliated with Khan Academy.