(Part of the No Sweat Solutions series.)
Before discussing water savings, we need to define what we mean by "use." The EPA refers to withdrawal and consumption. Withdrawal is the amount taken from surface water and the water table. Consumption refers to the amount chemically combined with something (so that it is no longer fresh water) or evaporated. Water discarded instead of consumed is referred to as "returns," because it is supposedly reusable. This does not even approximate the impact of water use.
One example the EPA gives is power plant cooling. The water is withdrawn and used to cool the plant. A little evaporates, and the rest returned (still more or less clean) to the source. This overlooks a certain amount of impact (fish killed during withdrawals, aquatic plant, fungal, and microbial growth encouraged by the change in water temperature), but is basically correct. However, they apply the same logic to water used for irrigation. With very few exceptions, irrigation water "returns" are loaded with fertilizer salts, growth hormones, microbes, and often pesticides and herbicides as well. Even runoff from organic farms usually contains salts from the manure and composts used.
So the proper way to count water is consumption plus polluted returns -- in most cases, all withdrawals.