Why Your Tax Refund is Less Than Last Year’s
Should you be upset about a smaller refund for this year’s tax season? On average, refunds are 9% lower this tax season. With the Tax Cuts and Jobs Act (TCJA) passed in December 2017, individuals are seeing lower tax rates and virtually double standard deductions. Corporate tax rates dropped to a 21% rate, down from 35%. Many taxpayers saw an increase in their paychecks throughout the year, even though they did not change their W4. That is due to the new IRS income tax withholding tables.
“Most people are seeing the benefits of the tax cut in larger paychecks throughout the year, instead of tax refunds that are the result of people overpaying the government,” a Treasury spokesperson said in a statement. Smaller refunds mean that the tables have been adjusted to properly withhold the correct amount based on individual’s expected tax liability.
Senior Treasury officials said early data from the first couple weeks of tax season shows a “solid start” with over 30 million returns already processed, even with the impact of the partial government shutdown on IRS operations.
To find out the true impact of the TCJA, take a look at a 2-year comparison report of your 2018 tax return versus your 2017 tax return and see how your tax has been affected.
The TCJA will affect everyone differently. Want to know how it will affect your return? Download CPA Nerds’ free TCJA Calculator!