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Millions of Americans filling out their 2018 taxes are getting refunds this year that will be less than they expect, or they are discovering that they owe money to the Internal Revenue Service after years of receiving refunds.

The average tax refund check is down 8 percent, or $170, this year versus last year, the IRS reported Friday. The number of people receiving a refund has dropped by almost a quarter.

An IRS spokesman said not to read much into the early report because it only reflects returns processed through Feb. 1, and the partial government shutdown caused some delays in processing filings.

Still, people have taken to social media to vent their anger, and many who do are blaming President Donald Trump and Republicans for their shrunken refund. Trump and congressional Republicans passed a major overhaul of the tax code in December 2017, the biggest legislative achievement of the president's first year.

The Government Accountability Office warned last summer that the number of tax filers who receive refunds was likely to drop for the 2018 tax year and the number of filers who owe money would rise.

The agency pointed to an IRS estimate that about 4.6 million fewer filers would receive refunds this tax filing season. Another 4.6 million filers were likely to owe money after previously receiving refunds.

There is no estimate for how many people will still receive a refund but a smaller one than before. Some refunds have decreased because of the changes in the tax code made by the law, such as a new limit on property and local income tax deductions.

Some refunds have decreased because of how the IRS has altered withholding in paychecks.

A smaller refund, or a notice of taxes due, may seem like a sign that taxes went up, but generally that's not true. According to the nonpartisan Tax Policy Center, 80 percent of filers received a tax cut, compared to about 5 percent who are paying more in federal income taxes. The tax cuts showed up in fatter weekly or biweekly paychecks for most Americans.

"There's a difference between taxes and your refund," said Joseph Rosenberg, a senior research associate at the Urban-Brookings Tax Policy Center at the Urban Institute. "People generally got a piece of their tax cut last year gradually in the form of lower withholding on their paychecks."

Although many families received a tax cut, their refund is smaller this year because the IRS used the new tax law to make changes to the withholding tables -- the amount the federal government recommends taking out of paychecks for federal income taxes.

The IRS was trying to set withholding levels so that more people would pay the correct amount of taxes, meaning they neither owe anything to the IRS at the end of the year nor receive a refund.

"Getting a tax refund means that you gave the government an interest-free loan because you overpaid your taxes," said Nicole Kaeding, director of Federal Projects at the Tax Foundation, a right-leaning think tank.

In recent years, about 75 percent of filers received refunds, even though personal finance experts say it's not a wise idea to boost withholding from paychecks to get one.

"It's a mystery why taxpayers seem to be comfortable -- and even happy -- with getting refund checks," said Rosenberg.


Many Americans prefer getting a one-time refund of $1,000 to $2,000 instead of an additional $20 to $40 in a weekly paycheck. Analysts believe that those Americans consider it a way to force themselves to save to pay off credit card debt, pay down a mortgage or support a large purchase.

Sal Ramirez, 20, earns $45,000 a year as a packaging designer in San Gabriel Valley, Calif. He said he received a refund last year of more than $1,200. He had expected that to increase under the new tax law, but he only got $900 this year.

"I am really frustrated with my refund this year. I was expecting a good chunk of change. I was going to put it toward buying a car," Ramirez said, adding that he'll have to save a few more months for the car.

Ramirez, who didn't vote for Trump, couldn't remember whether his total tax bill went up or down. He was just focused on his refund.

John Prugh of Ewing Township, N.J., was irate when he completed his 2018 tax return this month and discovered his refund would be $3,000 less than what he received last year.

Prugh, 39, considers himself "solidly middle class." He is a manager at a Barnes & Noble bookstore, and his wife works for the New Jersey state government. They have two children.

Prugh's overall tax bill is higher and his withholding looks a little lower. His family was affected by the new law's $10,000 cap on state and local taxes, including property taxes and state and local income taxes. He said that in the past he normally deducted about twice that amount. He was also hit by the elimination of the ability to deduct mileage for work. The higher standard deduction under the new law did not counterbalance losing these other deductions.

But Prugh said he had no reason to think the family's tax situation would change this year. He and his wife have lived in the same house for years, have received about the same pay in their jobs and have two kids.

"It totally feels like a scam," said Prugh, who also didn't vote for Trump. "I did still get a small refund, but compared to what I was expecting from previous years, it was a shock."

A Section on 02/11/2019

Print Headline: So far, average tax refund down 8%


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Archived Comments

  • JIMBOB47
    February 11, 2019 at 6:04 a.m.

    Generally speaking, most people are 'uninformed' (or unwillingly stupid) to look at the tax changes - i.e. withholding. They would rather let the Feds have that interest-free money all year and get the $$ back in the form of the refund.

  • PopMom
    February 11, 2019 at 6:40 a.m.

    Many people also were unaware of the elimination of the state and local tax deduction which caused their taxes to increase rather than decrease. For many, there was no tax cut. The big winners were those who owned businesses which could be classified as pass throughs and saw a reduction in tax rate from 38% to 21%. Accountants and lawyers who were ineligible for this treatment and have a 37% rate with no state and local tax deduction and are having to pay more. The Republicans were able to snooker much of the public with small decreases in their rates, but the huge beneficiaries are the very wealthy owners of businesses who now have the 21% rate on their income. Of course, this huge windfall to these people is hurting the debt. Imagine making millions of dollars and only having to pay 21% on it. Everything will change in two years. I want Trump out, but I don;t want a socialist in there either.

  • LR1955
    February 11, 2019 at 6:54 a.m.

    My income went up, my tax bracket changed, I received a slightly larger refund from both Fed & State taxes.

  • Waitjustaminute
    February 11, 2019 at 7:24 a.m.

    It was way past time to limit the state and local tax deduction. Citizens in high tax states shouldn't get to pay less in federal taxes than everyone else. If their federal tax bills went up, they shouldn't be mad at Congress; they need to talk to their state lawmakers.

  • Waitjustaminute
    February 11, 2019 at 7:31 a.m.

    Also, while it won't help this year, if the 85% of taxpayers who received a tax break really prefer to get a big refund, they can simply fill out a new W-4 and have their extra money withheld from their paychecks. There's a line on there where you can have your employer withhold an extra amount in addition to what the tax tables say.

  • Skeptic1
    February 11, 2019 at 7:36 a.m.

    "Some refunds have decreased because of how the IRS has altered withholding in paychecks." And, "80 percent of filers received a tax cut, compared to about 5 percent who are paying more in federal income taxes. The tax cuts showed up in fatter weekly or biweekly paychecks for most Americans." Another misleading headline from the ADG.

  • RBear
    February 11, 2019 at 8:07 a.m.

    WJAM you get penalized for doing that. Go read the tax code.

  • BoudinMan
    February 11, 2019 at 8:20 a.m.

    I love how the trump ilk is already dreaming up ways to spin this. I remember reading all those comments about how great the tax act was gonna be to our pocketbooks. It was as if everyone would get rich off of their tax refunds. They are so easily led by the nose by the Orange Combover-in-chief.

  • Knuckleball1
    February 11, 2019 at 9:03 a.m.

    Yep, the Temper Tantrum Toddler in the White House promised and said so many times that the tax cuts would put hundreds of dollars in the pockets of all Americans.
    When in reality it was pennies on the dollar.
    Know several Construction workers that have to travel for work, the new tax plan is costing them money, some of the deductions have gone away. Almost cheaper for them to stay home and draw Unemployment than work. These are not dead beats and don't want a handout but you also have to look at the bottom line.

  • RobertBolt
    February 11, 2019 at 9:13 a.m.

    How glorious it will be to pay Federal taxes on the money we use to pay State and local taxes. Heil, Trump!