refund
verb (1)
, ˈrē-ˌfənd\
Definition of refund
(Entry 1 of 3)
refund
noun
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refund
verb (2)
\
Definition of refund (Entry 3 of 3)
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Other Words from refund
Verb (1)
, (ˌ)rē- \
noun
, (ˌ)rē- \
adjective
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More Definitions for refund
refund
nounFinancial Definition of refund
How It Works
During the year, a taxpayer is obligated to make estimated tax payments to the Internal Revenue Service. This may be done directly by the taxpayer or through an arrangement with the taxpayer's employer to pay that tax on his or her behalf. At the end of the year, the taxpayer files his or her tax return to the Internal Revenue Service with exemptions, deductions, and tax credits. These may reduce the annual tax obligation and the IRS will refund the difference.
With respect to the later definition, a bond issuer may decide to reduce the interest cost or to remove a covenant imposed by the terms of a bond. By refunding the bonds, the issuer actually issues new bonds and uses the proceeds to repay the debt service or retire the outstanding bonds of the prior issue (i.e. original bond issue being refunded).
Why It Matters
Tax refunds are an important boost for a taxpayer. By overpaying the IRS, the taxpayer gets a sudden shot of cash; however, it is without interest. To that end, it is important to elect to designate all eligible exemptions on employer withholdings and to accurately estimate quarterly tax payments to the IRS.
Bond refunding is an important strategy for issuers to use when the terms and conditions of a bond issue become too onerous, especially when market conditions change. Important to note that refunded bonds are not considered part of the issuer's debt because the lien of the holders on the refunded bonds is on the deposited bond proceeds (i.e. from the refunding), and not on the issuers source of revenues to pay the original bonds.
Source: Investing Answers
refund
noun
English Language Learners Definition of refund
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refund
verb
\
Kids Definition of refund
(Entry 1 of 2)
refund
noun
\
Kids Definition of refund (Entry 2 of 2)
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