The IRS reports the average federal tax refund so far is down eight percent from 2018, as filers are nabbing about 170 dollars less. The lower refund is the result of the GOP tax reform legislation that went into effect last year. But Frank Holzenthal, with the Louisiana CPA Society, says the lower refund is offset in most cases by higher take home pay during the year.
“The statistics have indicated that 80 percent of those who have filed are actually receiving a tax cut, but the problem is that people are equating a lower refund with paying more taxes.”
The phenomenon has led many to believe that their total amount of taxes paid has gone up this year. Holzenthal says it’s likely because most of those people have seen small increases to their take home pay, and he advocates comparing this year’s tax liability line with last year’s for a better picture.
“What has probably happened is that their tax cut was spread out throughout the year in the form of lower withholding on their paychecks, so their paychecks probably went up a little bit.”
Several polls run in the first half of last year from Politico and CNBC indicated that a slim majority of Americans did not notice larger paychecks as a result of the Tax Cut and Jobs Act.
That being said, Holzenthal cautions that even if you compare your total liability with last years, most people won’t notice a substantial difference as a result of the tax reform.
“I don’t think anyone is going to make out like a bandit, but everyone should, in general, be paying a little bit less the way the new law is structured.”
