INDIANAPOLIS, Ind. — Tax season is now in full swing, and millions of people, including Hoosiers, are anxiously waiting for a refund. But many Americans are now finding that their refund is smaller than expected.
According to the most recent report from the IRS, the average tax refund is down 8.4 percent so far in 2019. That amount translates into roughly $170.
Tax analysts say the disparity can be attributed to the new tax code established by the 2017 Tax Cuts and Jobs Act, which changed withholding tax amounts as well as credits and deductions.
“The Child Tax Credit went up, standard deduction went up, but things like employee business expenses for employees, went away for almost every person,” senior H&R Block tax analyst John Helpling said.
For many people the amount of taxes coming out of their paychecks decreased in 2018. That extra money resulted in small increases in their regular paychecks, but a decrease in their refund.
“So the amount that they’re seeing less this year was because they got it throughout the year,” Helpling said.
In certain cases, the new tax code led to higher refunds for Americans.
Ultimately, Helping says people are in control of how much of a refund they get, adding it all comes down to selection made on employee W-4s at the beginning of the year. W-4s dictate how much money is withheld from your check and can be altered based on the type of paycheck, or refund a person would like to see.
“If you don’t take care of it now, people are going to see the same results next year,” Helpling said.
Because the new tax code can be confusing, Helpling adds it’s always best to consult with a professional about what type of refund and what type of paycheck you would like to see.