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PITTSBURGH (KDKA) – Many people who’ve gotten their tax refunds say they’re smaller than last year.
That is because of the tax reform laws.
Some people who got a refund last year actually owe money this year, even if their salary didn’t change.
It’s still early in tax season, but early filers have noticed one thing about their tax refunds.
“About 8 percent smaller,” said Duquesne University professor Dr. Bryan Menk.
“They’re still getting a refund check, but it’s just not as big as what it was.”
Yep, smaller refunds even though President Donald Trump pitched the Republican tax bill as cutting almost everyone’s taxes.
A smaller refund does not mean you are paying more in taxes, says Menk.
“The withholding rates were lowered last year which means fewer dollars taken out of each paycheck.”
“You got a bigger paycheck every two weeks or every paycheck whenever you got paid, but that meant you paid in less to the government throughout the year, so when you get a refund back, there’s less money that you overpaid.
In other words, your refund is smaller because less money was taken out of your pay each week.
In fact, says Menk, that was one of the ideas behind the GOP bill — reduce the refund by reducing the tax withholding each week.
“Under the old system, about 75 percent of the people who filed tax returns received a refund. The goal of this new process was to make it more accurate,” Menk told on Monday.
But lots of people count on big refunds — forced savings — even if the government gets too much of your money and holds it without paying interest until they refund it.
Everybody likes to get a big tax refund, but that’s not really the measure of whether you paid more taxes in 2018 than 2017.
You really have to examine your tax returns carefully.
Look at a particular line, and that’ll tell you whether you’re better off now than you were a year ago.
Take a look at line 44 — taxes due on your old 2017 tax Form 1040 — and compare it to line 15 on the new 2018 tax form.
You should be paying lower federal taxes, says Menk.
“They expected 80 percent of the taxpayers to see a lower total liability this year than they had last year,” notes the professor.