Smaller income tax refunds leave some taxpayers miffed
CPAs say they are due to the new tax code
NEW ORLEANS (WVUE) - Some taxpayers who have already filed their 2018 federal tax returns are shocked by the amount of their tax refund.
"Last year I got almost $3,600 back. This year, I got less than $1,200 back, and I have four dependents,” said James Sacks as he sat outside a New Orleans coffee shop.
Locally and around the country, many taxpayers are surprised to receive smaller-than-normal income tax refunds, or to be told they owe money to the Internal Revenue Service.
Certified public accountants say the smaller refunds were expected due to the changes Congress made to the federal tax code in December of 2017.
"The refund that you get at the end of the year may be a smaller refund, however, during the year your paycheck was a little bit higher, your take home was a little bit higher. Now, some people didn’t happen to see it because their insurance also went up, or some other deduction they had also went up on their check,” said Richard Tullier, a certified public accountant with Wegmann Dazet & Company who is also a member of UNO’s Department of Accounting Advisory Council.
Kem Washington, a CPA, who owns her own firm, said itemized deductions are impacted by the new tax law.
"For itemized deductions there are some limitations…You’re no longer able to take a personal exemption for each person within your household,” said Washington.
She said the changes also include items some workers previously were able to deduct on their tax returns.
“Before you were able to take a deduction for, like, cell phone expenses, maybe uniforms, those types of expenses if you were an employee and you were not reimbursed. Now, this year in order to qualify for that, you have to be a certain type of employee, such as armed forces,” said Washington.
The IRS said the average refund is down about 8 percent for the first full year of the new tax code.
Washington said the majority of her clients are businesses, and they too are affected by the new tax law.
"What it does, it allows for business owners to take 20 percent of their income, and it definitely reduces their tax liability,” Washington stated.
Tullier encourages taxpayers who fear they may be getting a bad deal to pay close attention to the amount of taxes they paid during the year.
"The taxes themselves are what’s important. The line that says tax on the return, comparing that to a prior year is a great analysis,” said Tullier.
Taxpayers can also adjust their withholdings if they are concerned about owing the government, or about the size of their tax refund.
"They definitely want to review their withholdings. There's a great withholding calculator on the Internal Revenue Service site, and so you can go there and put in your information and determine whether or not you are withholding enough,” said Washington.
"If you want to be precise, go to the IRS website,” Tullier said.
He added that for the majority of taxpayers, taxes decreased.
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