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TAX TIME

As of this week, the IRS is now accepting your 2018 taxes!

While most Americans got a refund last year, averaging about $3,000, the same may not be true this year.

But it’s not all bad news.

here's why

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What’s New This Year?

  • The 2017 tax code overhaul was biggest change since 1986.
  • Many benefited from tax reform (ex: lower rates), but deductions changed, causing confusion.
  • If you didn’t update your paycheck withholdings, you may have higher take-home pay, but now owe Uncle Sam.
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aWe worry very much that there will be a perception that aMy refund went down, Iam in a worse economic position.’ When, in fact, the reality could be the opposite.a

Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. Although refunds *may* be lower for some, the tax cuts might've provided benefits throughout the year. If you feel discouraged by your tax refund, remember you may have benefited in other ways.
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On The Flip Side:

aFor your average taxpayer itas going to be a record high tax refund season. Much higher than they expected.a

Ellen Zentner, chief United States economist Morgan Stanley. Bottom Line: There's some uncertainty over refunds for 2018 filings. Some Americans will receive a higher refund vs. 2017 taxes due to new tax code; some less.
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Tax Prep Tips

  • Its hard to do…but try to do your taxes earlier than later, to eliminate any surprises.
  • Check with your tax preparer about whether or not your withholdings need updating.
  • Folks who took a lot of itemized deductions or have a two-income household are “more likely than others” to see changes in their refunds” (WSJ).

 

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Why It Matters:

  • 154 million expected to file taxes (60% of U.S. adult population).
  • Consumer spending is a major impact on the overall economy.
  • Verdict is out on whether tax refund *itself* is an economic stimulus.
  • Remember: you only get a refund if you OVERPAY your taxes. Ultimately the goal would be to get zero refund!
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Despite the recent shutdown that impacted 7 out 8 IRS employees, refunds are expected to be "on time" (approx. 3 weeks from filing). If there's another shutdown, we'll be in uncharted territory again.

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