IRS data shows tax refunds issued so far are smaller than last year
WASHINGTON D.C. — With tax season in full swing, many Americans who filed early are receiving slightly smaller refunds than in previous years.
According to the Internal Revenue Service statistics released for the week of February 1, tax refunds from the first filing week of 2019 are down an average of 8.4% from the same period in 2018. This is an average decrease from $2,035 to $1,865.
Some experts say this is an early indicator of what the coming weeks may look like.
The IRS also received fewer returns in the first week of February 2019 than in the same period last year and has processed fewer returns as well.
The White House said in October 2017, when they were pushing for the passage of the bill, that the average American family “would get a $4,000 raise.”
The bill put more money in citizens’ pockets up front. The average middle-class Americans saw a post-tax income increase between 1.2% and 1.9%, CBS reports.
The lowest 20% of earners saw an income increase of about 0.4% and the wealthiest 20% saw about a 3% increase in their paychecks.
With these tax cuts, the IRS also adjusted withholdings to better reflect the lowered tax burden.
The standard deduction for single people nearly doubled under the bill, rising from $6,350 to $12,000 and the standard deduction for married couples rose from $12,700 to $24,000. The Tax Cuts and Jobs Act also capped the state and local tax deduction at $10,000 and eliminated other itemized deductions.
However, tax professionals have warned since the new code went into effect that refunds could be smaller than expected if people didn’t adjust their paycheck withholdings after the new tax law changes, according to USA Today.
The more allowances you claim, the less money is withheld and the more money you see every week.
So, essentially, getting a smaller refund doesn’t necessarily mean you’re paying more in taxes. In many cases, much of the earner’s tax savings showed up in their paychecks, which could result in a smaller refund.