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Tax season is upon us, the first one since the major tax overhaul last year, and many are already starting to feel the impact, while complaining that they are receiving a lower than expected tax refund.
Per IRS data, smaller refunds do appear to be a trend. The average federal tax refund amount was down 8.7%, to $1,949, compared to this same time last year CBS is reporting. The number of refunds has also dropped, down by 15% so far this year.
Here’s just a sampling of what people are saying on Twitter (spoiler: they aren’t happy):
My federal tax refund was HALF of what it was last year, and for the first time in my life I actually owe money to the state. I work 2 jobs and barely afford my bills, but I’m really glad billionaires are getting breaks on their taxes this year. MAGA!
— jess ❄ (@jessbee_) February 15, 2019
Me, policy journalist: tax refunds are a sign of the system not working; people shouldn’t give no-interest loans to the government, they should have their money early!
Me, doing my taxes this year: what do you mean I “owe money” how dare you
— Dylan Matthews (@dylanmatt) February 18, 2019
Tax refund a thousand dollars lower pic.twitter.com/nBsGGvnbkl
— STEPHEN ZERANCE (@stephnz) February 16, 2019
It’s important to note that the size of a person’s tax refund is in no way indicative of how big a tax bill they are paying. When a person receives a big tax refund, for the most part it simply means they paid too much in taxes. Big refunds, tax experts say, aren’t even a good thing, but rather mean filers are doing something wrong. The real goal, they say, should be breaking even.
It’s also important to note that most people will be paying less in taxes this year than last year. The nonpartisan Tax Policy Center projected that people’s income taxes will drop by about $1,260 on average (higher earners are benefiting more, to be sure, from the tax law overhaul).
What does seem to have happened, which explains why people are so upset, is that when the new tax law went into effect people didn’t change their witholdings, so the amount coming out of their paychecks wasn’t enough (thus, the lower refunds).
Experts are saying it’s still too early to say what is going to happen since tax season doesn’t end until April, but watch this space! And don’t forget to file by April 15.
Feature Illustration: Laura Caseley For The Money Manual
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