If You Got A Lower Tax Refund This Year, It's Not Just You
While biting winters and blistery summers aren't fun, there's another season that most of us would skip if given the chance: tax season. The only light at the end of the tunnel of filling out forms and grimacing at your finances is that coveted tax refund. But this year you might have looked at your refund and thought wait, are tax refunds lower in 2019? Well, if so, you're apparently not the only one whose refund came up short.
If your financial situation hasn't changed since you filed last year, but your refund has, you might be wracking your brain trying to figure out what happened to a chunk of your check. The answer is, that it probably has nothing to do with you, really. New data from the Internal Revenue Service (IRS) shows that as of Feb. 1 the average tax refund was down 8.4 percent from last year. To put it in dollars, the IRS dished out $12.560 billion in refunds last year, but only $8.713 billion this year. To put that in dollars that us normal folks can actually imagine, the average refund last year was $2,053 and so far this year it's $1,865, according to the IRS. The U.S. Treasury noted in a Feb. 11 . tweet, however, that this was pretty par for the course for this point in tax season and didn't necessarily indicate a larger trend. Elite Daily reached out to the IRS for further comment on the drop in tax refunds, but did not immediately hear back.
Some are already speculating that the most recent tax cuts are to blame. At the end of 2017 Republicans passed a huge tax overhaul that cut individual income and corporate tax rates. But according to The New York Times, the effects of the new tax bill started to really become clear when people noticed smaller refunds in 2019. While the Tax Cuts and Jobs Act signed by President Donald Trump did lower tax rates, it capped deductions for state and local taxes at $10,000, according to The New York Times. It also eliminated deductions for moving expenses and personal losses unless it was a result of a natural disaster that was declared by the president, according to CNBC.
If you're thinking, "But I didn't deduct any of those things either year but my refund is still smaller," there could be another reason. The New York Times reports that the reason your check might be lower than last year could be due to the fact that your company withheld fewer taxes from your paycheck after the changes.
With the first fiscal year since the Republican tax bill passed, the IRS anticipated what people might owe in taxes and changed their withholding tables for 2018, per the Times. Tax refunds are basically an interest-free loan you pay to the government, as a lot of people choose to overpay, and then have the excess returned in the form of a refund at the end of the year, according to Investopedia. So basically if less was withheld from your paycheck throughout the course of the year, that means you paid less throughout the course of the year so there's less to give back to you at the end.
Elite Daily reached out to the Treasury Department for comment on the smaller tax refunds and whether they were a result of the GOP's tax act, but did not immediately hear back.
However, in light of the IRS reports on smaller refunds, on Feb. 11 the Treasury Department sent out a tweet saying that the recent reports of lower refunds were "misleading" because they only have a "few days of data." Filing season began Jan. 28 and the deadline is April 15. They wrote,
News reports on reduction in IRS filings & refunds are misleading. Refunds are consistent with 2017 levels and down slightly from 2018 based on a small initial sample from only a few days of data.
But if you're one of those whose refund is lower this year, that might be small comfort. Just remember that you are not alone, and misery loves company.
