Why is my tax refund smaller in 2019?
Posted Feb 25, 2019
Before you plan that big spring break vacation or huge deposit into your retirement account (wishful thinking on my part?), consider that your tax refund may be significantly different than it was last year. So what gives? Wasn’t the point of the new tax plan to put more money in people’s pockets?
While every person’s tax situation is different, if your income was subject to withholding, you may have benefited from the new payroll withholding tables that went into effect February 2018. If so, less of your income was withheld and you had the benefit of more money throughout the year. However, this may lead to a smaller refund on your 2018 taxes. You may even owe the IRS when you file. As many as 21 percent of taxpayers are not withholding enough money to cover the taxes due. That’s up from 18 percent before the tax law change.
And while the standard deduction and child tax credit increased, certain itemized deductions were capped, such as state and local taxes. See my last post Tax Changes You Need to Know for 2018 for more changes that could impact your tax return and subsequently, your refund. Many people will benefit from the new changes, but some will feel the squeeze on their wallet this tax season.
Luckily the government shutdown earlier this year did not stop or slow down the refund process for most people. If you e-file and request direct deposit, you could get your refund in as little as 9 days. Most taxpayers receive their refund within 21 days of e-file acceptance. You can check the status of your refund online at the IRS’s website.
If you like getting a big tax refund, or you find that you owe tax under the new tax plan and you would rather pay more throughout the year, have your withholdings adjusted for 2019 or ask your tax professional about making quarterly estimated tax payments.