Your Tax Refund May Be Lower Than Usual This Year. Here’s Why..

Your Tax Refund May Be Lower Than Usual This Year. Here’s Why..

By Derek Hatfield

photo credit: Derek Hatfield // Shutterstock

This year, your tax refund may be a little lower than usual, or you may be asked to actually pay something back. This is all due to Trump’s Tax Cut & Jobs Act. The act was supposed to work in favor of  middle class America, but instead seems to be working against us. According to the IRS, the avg tax refund this year fell down by 8%, to around $1,865. The total number of tax refunds has fallen 24% from last year.

Tax refunds come when employers withhold money from workers’ paychecks that goes to cover their taxes. When workers file their taxes at the end of the year, they either a) receive a refund if the amount withheld was higher than the amount owed or b) pay a tax bill if the amount withheld was less than their tax obligation.

Some will see less money in their refund due to loss of certain deductions. Others will see less due to employers withholding less money in their paychecks — meaning throughout the 2018 year, your paychecks should have had a little increase. The I.R.S., in trying to more closely match the amount held out of paychecks with the amount that taxpayers will owe, changed its withholding tables.

“Just because you receive a small refund doesn’t mean you didn’t get everything back you were owed or that you’re worse off financially — it most likely means you paid the right amount of federal taxes you owed during the year and didn’t overpay,” Mark Jaeger, the director of tax development at TaxAct, told Business Insider.

According to a Treasury Department report, a projected 4 million fewer taxpayers will receive a refund this year while the number of people owing a tax bill will increase by roughly the same number.

Recently announced 2020 Democratic Nominee Sen. Kamala Harris tweeted out on Monday, “Let’s call the President’s tax cut what it is: a middle-class tax hike to line the pockets of already wealthy corporations and the 1%.”

House Speaker Nancy Pelosi has also spoken out against the law, “Once again, American families are feeling the reality behind the empty promises of the GOP Tax Scam.”

Written by Clarke Jones

Source: New York Times