The New Year brings 2018’s tax refunds, but what most Americans are concerned about is the decrease in tax returns this year that have dropped as much as 8 to 10 percent. The contesting results of both the government shutdown, new tax laws and people sending in refunds later in the year has caused a stir in what you will receive back. Some are even quoting it as the perfect tax storm.
The Internal Revenue Service (IRS) data has reported this decrease, showing the average tax refund in the first two weeks of filing season this year as $1,865, compared to last year’s average of $2,035. This report also shows the decrease of tax returns and the number of those processed are down compared to last year, presenting at this point in 2018 an average of about 18.3 million returns and 17.93 million processed. In comparison to this year – the IRS has received 16.03 million and only processed 13.3 million so far – it is a far cry from what many tax consultants and payers were expecting.
In line with the Tax Cuts and Jobs Act, the Treasury and IRS adjusted the tax withholding tables through individual tax rates, increased standard deductions and the elimination of some popular deductions. If you face high state and local taxes (SALT), many tax professionals expect you to be hit hard with these changes. Many weren’t expecting these modifications due to the fact these rules were altered in the last year and may have not impacted your 2017 tax returns but is now in effect with your 2018 tax returns.