Early Tax Returns Suggest Americans Receiving Smaller Refunds, But It May Not Be What It Seems
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PHILADELPHIA (CBS) – Tax season is upon us, and many who got an early jump on filing this year may have been a little shocked at the amount of their refunds.
Receiving a smaller refund does not mean that a person paid more in taxes, according to the Tax Policy Center. Most Americans actually did get a cut because of the 2017 reform, but a big refund check does feel good.
Caught in the woes of winter, a sizable tax refund can really warm the spirit.
"I'm still paying off those student loans, so it's nice to have a little bit of that extra cash," one woman said.
"I usually spend it on motorcycle parts because I have three Harleys," one man said.
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But three weeks into tax season, tax refunds are on the decline.
IRS data shows that through Feb. 15, the average refund was 16 percent smaller than last year.
The IRS also expects more people to owe because of the Trump Administration's revisions to the tax law.
"I didn't owe, but I didn't get back as much as I did in previous years," said Tisha Williams.
Williams, a tax specialist with Liberty Tax on Broad Street, says it's been hard having to explain to customers that due to the revamped tax code, their tax cut was likely seen in their paychecks and therefore, a large refund may not be heading their way.
"Before Thanksgiving, Christmas, that money is already spent so they are looking to get that money back to take care of bills," said Williams.
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If a person prefers a large annual refund over a larger paycheck or just wants to try warding off owing the federal government, Williams suggests contacting your employer and claiming fewer allowances on the 2019 W-4 form.
"Claim zero, so that they are taking out in much in taxes as possible that way at the end of the year, you can see something and then just invest," said Williams.
In 2017, Delaware residents ranked first in highest tax refunds. New Jersey came in second and there are a lot of factors that go into that.
It's unclear if that will hold true this tax season.
