Sticker shock in the retail industry is not uncommon. But many taxpayers, this year, have been getting somewhat of a sticker shock when it comes to their tax refunds. That’s because so far this tax season, refunds have been down. Way down.
The Tax Cut and Jobs Act came with promises of a nice tax break for the middle class. So why have so many refunds been reduced? The reason is the new laws changed withholding amounts. That means taxpayers have been getting more income with each paycheck. Because less money was being withheld all year, people are getting less back in their tax refunds.
The problem is most taxpayers haven’t seen a huge difference from paycheck to paycheck. So they haven’t noticed the cumulative affect. The IRS warned taxpayers all year to check their W-4s to ensure the proper amount was being withheld. However, in many cases, taxpayers didn’t heed the warnings.
Now that tax season is here, most taxpayers are expecting their usual refunds. But that’s just not happening, which is leaving numerous taxpayers upset. However, the truth is, you don’t want to have a large refund because that money belongs to you all year. The new tax laws make it so you get it up front, instead of waiting until the following tax season.
But it might take some time for taxpayers to get used to the changes.