Remember the outcry about smaller tax refunds during the first few weeks of the tax season? Numerous reports detailed how so many taxpayers were shocked and upset about the size of their refunds. Even worse, some taxpayers were getting an additional tax bill. The complaints against President Trump’s tax plan were coming in from all directions. Forecasters were predicting doom and gloom for most taxpayers.
Well, hold everything. It seems that maybe those early predictions were a little off the mark. It turns out we just needed to give it some more time. Now that the tax season is about two months old, things have taken a big turn. With a little over a week remaining before the April 15 tax return deadline, the numbers have taken a stark turn.
Average Refund Amount Slightly Up
While the number of tax returns that have been filed continues to lag behind last year’s pace, the average refund amount has gone up. That’s good news for taxpayers, because after the first few weeks in February, things didn’t look so good. The average refund was way down compared to last year and many taxpayers said they never saw it coming.
However, the lower refunds were mostly likely due to poor planning. Millions of taxpayers failed to adjust their W4 withholdings status. That means they were receiving more money in each paycheck, which means they’re was less to getback in their tax refund. Essentially, they paid less so there’s less for the IRS to give back.
But, despite the poor early numbers, things have evened out. According to the IRS, for the week ending February 22, the average refund for taxpayers had actually gone up when compared to last year. The increase isn’t huge, only 1.3 percent. But compared to the first few weeks of the tax season–that saw a 16 percent decrease in the average refund amount–those numbers are very encouraging. The average refund this year through February 22 was $3,143, compared to $3,103 last year.
The numbers have digressed slightly since late February. According to the IRS, for the week ending March 8, refunds were up 0.1 percent from last year. The average refund through March 8, 2018 was $3,004 and the average refund through the same time period this year is $3,008.
Fewer Returns Processed
Things could still go either way, with about a month to go before the tax deadline. Additionally, the IRS has not yet received, or processed, as many returns this year as they had at this point last year in the tax season. As of March 8, the agency had received 67.7 million returns and processed 65.3 million of those returns. That’s 2.8 percent fewer returns processed compared to last year. Overall, the IRS says it expects to process about 150 million total returns in 2019.
Still Need to File?
In any case, if you still haven’t field your taxes this year, then don’t put them off any longer. You’re much better off getting your taxes done early, no matter how big or small your refund might be. Contact GROCO if you need help with your taxes.
The post Finally Some Good News Regarding Taxpayers’ Refunds first appeared on Advisors to the Ultra-Affluent – Groco.