I noticed that there are a lot of articles written today and over the last couple of days about people being upset that their refund is less than last year even though President Trump passed the Tax and Jobs Act.
The thing people are forgetting is that the IRS issues a tax refund for the amount of which you overpaid in taxes over the year based off the exemptions that you can claim. When you pay in less over the year, there is less to refund. Therefore refunds might be smaller.
Most Americans noticed less federal income taxes being withheld from their paychecks after the Tax Cuts Act went into effect. That means they were able to keep more of their own money without having to lend it to the government in the form of paying income taxes on every paycheck.
What really should matter to you, is the total amount of money you had to pay in federal taxes. Did you pay more this year or last year or what about the year before? That is the real meat and potatoes.
It really depends on your preference. Would you rather keep your money or would you rather have a bigger refund?
As Reported By Vox:
Whether you get a refund or owe extra to the IRS at filing time is a function not just of your total taxes owed, but also of how much tax is withheld from your paycheck by your employer on paydays. And the big story here is that as a result of the new tax law, the Treasury Department tweaked things so that on average taxpayers’ withholdings fell by more than their actual taxes owed.
This was all explained in a Government Accountability Office report last summer, but it turns out that many people are not regular readers of GAO reports and did not take the GAO’s official advice to check their withholding status. The result? Surprise tax bills!
People hit with a surprise request to pay extra to the IRS may feel like Trump surprisingly raised their taxes, but in most cases that’s not what’s happening.
*Your refunds may take a little longer to be processed due to the government shut down. But you will more than likely get them in an timely manner if you e-file.
Related Links:
Average Tax Refunds Down 8.4 Percent As Angry Taxpayers Vent On Twitter
Tax refunds issued so far are smaller than last year, IRS data show
Were You Screwed on Your 2018 Tax Refund?
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