Recent news accounts have claimed that federal taxpayers are receiving smaller tax refunds for the 2018 filing season, implying that their taxes are higher as a result of the 2017 Tax Cuts and Jobs Act. According to research by the Wall Street Journal, however, although refund amounts are indeed lower this year for many individuals, it is not necessarily a result of higher taxes.
WSJ writer, Laura Sanders, explains:
The overhaul cut individual income taxes for 65% of filers, raised them for 6%, and left them unchanged for the rest, according to the Tax Policy Center.
But in a key move, Treasury officials also cut withholding for employees and pension recipients in early 2018, which boosted take-home pay for up to 90% of workers. Knowing that this automatic change was imprecise, they also urged taxpayers to check their withholding and use an IRS calculator to fine-tune their own results. Few did.
As a result, many filers are receiving smaller refunds this year than in the past, and some who usually get refunds will have a balance due. Although they received a tax cut, it was reflected in paychecks through the year.
If you have questions regarding your federal tax obligations, a current tax controversy, or tax collection matter, contact one of our attorneys today.