Guest Article by Matt Herman for Herman & Company CPA’s, P.C.
It’s all over the latest reports.
Tax refunds are down 3-9 percent since last year, according to numbers released a couple of weeks ago. But just last week, the IRS reported that tax refunds are up 1.3% from last year. So which is it? The answer is, both.
Why are the numbers all over the place? It’s because both are true. While some Americans have gotten more back this year, other Americans are getting a much higher bill than expected, while others get smaller refunds.
The changes caused by the tax bill went into place on January 1, 2019. But there are a number of factors in play that could cause your tax refund or bill to be higher or lower than last year.
Some of these include:
Lower Taxes Overall
Lower overall taxes might mean that less is taken out of your paycheck each cycle. That means that overall, you may have had less taken out and so will be getting less overall as part of your return.
If your refund is lower than expected, take a look at your checks in 2018 and see if you got to keep a little more.
Changes in Income Brackets
In the new tax law, the tax brackets and the tax rate you pay will have changed.
To take a look at these changes, check out this resource.
Many Deductions Were Eliminated
A large number of common deductions were eliminated in this tax season. That includes entertainment expenses, which used to be deductible. You’ll have to check into your favorite deductions to determine which ones were eliminated.
Taxes are complicated and the latest tax bill represents the largest tax reformation in 30 years. So it’s no wonder that reports are all over the place. And if you still haven’t filed your taxes for this year consider visiting your local CPA.