What Your Tax Refund Will Look Like This Year
Since tax season has officially begun, you may be daydreaming about what you are going to do with your refund : pay off some of the debt, hide some for a rainy day, plan a vacation – most Americans could spend a little more money for any amount. reasons.
And since this is the first year that the new tax law generally takes effect, you can expect a higher refund than usual. But this is not necessarily the case.
As Richard Rubin of The Wall Street Journal explains, “The amount of your refund and the amount of your tax cut are not the same thing.” Rubin writes that while the refunds will be greater than last year’s average, the amount is “unusually uncertain” due to changes in tax laws.
As always, it depends on your personal situation. And in particular, how much of your tax cut have you already received in 2018 in the form of slightly higher salaries. Ruby uses this example:
Consider two people who each received a total tax cut of $ 500 – due to a law passed by Congress in late 2017 – and who typically receive a $ 2,000 refund.
- Person A had $ 25 less federal taxes deducted from her last 20 salaries for the year due to IRS change on withholding tables. As such, she received a $ 500 tax cut in 2018 and should receive the same $ 2,000 refund she received last year.
- Person B is self-employed and therefore did not have any change in salary withholding. He also did not change his quarterly estimated tax payments. His refund should be $ 2,500 over the previous year.
Last February, the IRS changed the calculation of the withholding, and some people adjusted the amount of the withholding themselves . So while your return may not be different from 2017, your returns will be the same. “Taxpayers can only see these changes if they compare their 2017 earnings with their 2018 earnings — if their income, family size and basic expenses have not changed,” Rubin writes.
It is also possible that you may have owed money and fines, although you usually did not, especially if you listed deductions under articles in the past, but no longer do so. The IRS is easing some of the penalties associated with partial retention this year.
However, more households are expected to receive higher compensation this year – spend (or save!) Wisely.