It’s Not Stupid to Want a Big Tax Refund
Overwithholding can be a smart financial survival strategy. If the Trump administration has made it harder, it deserves all the political blowback it gets.
Raise your hand if you like more money.
Photographer: Joe Raedle/Getty Images
Lots of people have been finding out that their tax refunds from the Internal Revenue Service are lower than they expected, or nonexistent. The average refund for the first two weeks of tax-filing season this year was down 8.7 percent from a year ago, the IRS reported Thursday, and the number of refunds was down 15.8 percent. Part of the latter drop is due to the government shutdown that ended just as filing season was starting, but given that (1) employment and wages were up in 2018 and (2) most Americans are supposed to be getting a tax cut from the Tax Cuts and Jobs Act enacted in December 2017, these declines are pretty strange.
The Government Accountability Office did predict last July that something like this might happen. The combination of the new tax law and subsequent tax-withholding decisions by the Treasury Department (of which the IRS is part), the GAO said, would cause the percentage of taxpayers due refunds to drop to 73 percent from 76 percent and the percentage who would owe money at tax time to rise to 21 percent from 18 percent. That’s not a huge shift, but combined with lots of people getting reduced refunds, it does seem like a recipe for pretty widespread disappointment.