Have you seen people talking about their tax refunds being surprisingly low? There's a reason for that. This is the first year taxpayers are submitting returns under the Tax Cuts and Jobs Act that President Trump signed into law in December 2017.
“It’s my 17th busy season of doing tax returns and it’s probably the biggest change I’ve seen” Turner said.
If your tax refund is less this year, that’s only because you haven't been paying as much to the government throughout the entire year.
A Certified Public Accountant in Little Rock explained. all these changes.
“You’re overall liability may be less, but your withholding is less as well,” said Cale Turner, CPA Tax Partner with Hogan Taylor.
According to the IRS, early filings show the average refund is down 8.4 percent compared to last year. That means if you got the average refund of $2,035 last year, you will see a check for $1,865 this year.
“Maybe you’re getting $1,000 less, but in theory you’ve gotten $40 or $50 more per paycheck,” Turner said.
That has to do with the changes the IRS made to the withholding tables. You’ve likely noticed a slight increase in your paychecks all year, which is why the IRS won’t owe you as much now. According to the Tax Policy Center every tax bracket should have seen an increase in after-tax income.
“If you’re getting a $2,000 refund, that’s $2,000 you weren’t able to use over the course of the year because the government was holding onto it,” Turner said.
Thats not the only change thanks to the Tax Cuts and Jobs Act. here are new tax brackets, changes to itemized deductions, plus a new section that impacts business owners.
Turner’s biggest advice is to be aware of what’s being withheld from your paychecks.