The biggest thing you hear in the news today is that individuals are getting lower refunds on their 2018 Returns compared to prior years.
When the new tax law, Tax Cuts and Jobs Act, was passed it lowered federal income tax rates and adjusted the tax tables. It suspended Personal Exemptions, which were replaced with higher Child Tax Credit. The Tax Act, also, raised the standard deduction, so less taxpayers will be itemizing. The above items are some of the factors that could result in lowering individual federal income taxes that would be owed to the IRS.
Then why are refunds lower?
On February 1, 2018, the IRS changed the Withholding Tables to reflect the tax reduction. These tables gave Taxpayers more money to spend throughout the year and also gave the government less interest free loans. This resulted in lowering their normal tax refund, which is great news for taxpayers during 2018 but may result in some surprises when filing their 2018 tax returns.
I If you would like to speak to one of our tax specialists for more information, please call: 1 (866) 760-0940 or send a note to Miranda.Hawk@brixeyandmeyer.com to setup a time to speak.