Average tax refund down 8% so far this season

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(CNN and WHNT) — Tax season is off to a slower start this year, with early filers seeing smaller average refunds.

The average refund is down about 8% under the first full year of the overhauled tax code, according to data released by the IRS on Friday. Refunds averaged $1,865 compared to $2,035 for tax year 2017.

The total number of returns received also dipped during the first week of the season ending February 1, down from about 18 million to some 16 million so far in 2019.

This season will be watched closely to gauge the real impact of the tax overhaul in 2017 that ushered in the most sweeping changes to the tax code in 30 years.

The new rules lowered most individual rates and nearly doubled the standard deduction. The legislation also included sweeping tax cuts for companies, lowering the corporate rate to 21% from 35%.

Some workers saw a bump in their take-home pay after employers started using the new IRS income tax withholding tables.

But experts have said people could see smaller refunds than expected if they didn’t adjust their paycheck withholdings after the changes took effect. Others could see their tax burden increase because the revised code eliminated some popular deductions.

Local tax preparer, Robert Seaman of Seaman, Shinklunas & Lindgren, said your best bet is to check with this IRS calculator to make sure you have noted the correct withholding information for your household.

“If you wind up having a tax bill this year that you were not expecting, the first thing you need to do is go to your employer and complete a new W4,” he said. “Your employer by law cannot help you fill that out. The IRS put the calculator out to try to help people.”

Seaman said he has noticed more anxiety among taxpayers this tax season.

“People are anxious to get their returns done,” he said. “I think it’s the unknown that people are nervous about. They have heard there was a tax rate reduction, but there also were some things that went away. Like personal exemptions are gone. And so they’re sort of antsy about well, what is the liability? And the sooner they know it the better because they have to have the tax paid by April 15. That, you cannot extend.”

The average American taxpayer got a refund of about $2,700 last year, according to IRS statistics.

Filing season opened just days after the end of the longest partial government shutdown in US history. “We thank the Treasury and IRS employees who have been working diligently to ensure the system is processing these returns efficiently,” Treasury Secretary Steven Mnuchin said in a statement Friday.

For anyone who hasn’t filed a tax return yet, Seaman said the sooner the better.

“Get it done and give your tax preparer some time. There are a lot of people already putting stuff in. The longer you wait, the more you are going to have to get in the queue and wait to get your information. The closer to the deadline it’s going to be that you’re going to have to write a check, so the sooner you can find that out the better.”

“Now, if you get a situation where you can’t afford to pay your taxes, don’t think by not filing your taxes that you’re doing a good thing. The real penalties for not paying your taxes, filing and paying, begin after April 15. That’s when they start really adding up,” Seaman advised.

He added, “As long as you pay all your taxes by April 15, the penalty and interest is not going to be that bad. If you wait until after or worse yet do not extend and wait until you have the money to file, you’re going to be paying a lot more penalty and interest.”

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