Finally, several weeks later and after two different articles written by me on this blog, the Wall Street Journal and CNBC are catching up to the fact that many people are either not getting a tax refund at all this year or a smaller one based on changes stemming from Trump’s tax cuts.
First the WSJ article.
FYI, I found that saving said articles from WSJ as PDF files is important because after their first day on the web, they are embargoed behind a pay firewall. As usual, I quote extensively to prove my comments and analysis art in context, something the Main Stream Media will not do.
WASHINGTON—The first tax-filing season under the new tax law got off to a slower start than last year and filers so far are seeing smaller average refunds, according to early Internal Revenue Service data released Friday.
With about 10% of households filing their returns, the percentage of households getting tax refunds is similar to last year, but average refund size is down 8%, to $1,865. The number of returns filed so far—16 million—is down 12% from the similar point a year ago.
The article points out that early filers are typically the ones expecting a refund and those numbers are down. Yep, no kidding.
Please note the next section carefully, overall you may have gotten a tax cut but that is not the same as a large refund because you had less withheld over the year and thus had more spendable money through-out the year.
About two-thirds of households are getting tax cuts for 2018 under the law, and just 6% are paying more, according to the Tax Policy Center. But the size of those tax cuts may not be reflected in refunds, which are just the end-of-year reconciliation of what a taxpayer owes and what was withheld or paid during the year.
Many taxpayers received much of the benefit through reduced paycheck-withholding throughout 2018. On average, refunds should be larger than usual according to estimates from Evercore ISI and Morgan Stanley .
Still, tax experts and preparers expect many households to be surprised by the size of their refunds—in both directions—and, on balance, millions of people may shift from getting refunds to owing taxes.
CNBC also has a similar article up today.
Though the 2018 filing season only started on Jan. 28, some early filers are discovering that they either owe the IRS or they’ll be getting a smaller-than-expected refund from the taxman.
About 30 million people, or 21 percent of U.S. taxpayers, are expected to owe money to the IRS this tax season, according to a report from the Government Accountability Office, a legislative agency that provides data to Congress.
“The people who are most likely to be surprised this year are the ones who lost some deductions they had last year and who didn’t make changes to their withholding,” said Nathan Rigney, lead tax research analyst at the Tax Institute at H&R Block.
If you owe this season, consider it a lesson learned and do what you can to head off the same troubles in 2019.
It’s generally a good practice to review your withholding, especially if you’ve been through major life changes, including getting married or having children.
If you do owe Federal taxes, TurboTax will let you eFile now and schedule payment anytime until April 15th.
Occasionally here, our posts do beat the Drudge Report, Wall Street Journal, local television stations and others by hours or even days. For a guy that runs this blog in my spare time, I think that’s kinda cool. Oh, and in fairness I do have a little help.