Where's My Tax Refund? Why You Might Get Less or Owe the IRS More in 2019

Many Americans will receive a smaller federal tax refund for 2018 than they usually do, and might even have to pay the IRS, owing to changes in the tax law.

While President Donald Trump's Tax Cuts and Jobs Act of 2017 (TCJA) means that many Americans are paying less in federal income taxes, they are receiving smaller refunds—or may even wind up owing the IRS more than expected because of changes in the amount of witholding tax.

According to IRS figures, released on February 14, as of February 8, the average tax refund was down by 8.7 percent from the previous year—from $2,135 to $1,949.

The IRS data showed that while 13.5 million tax refunds had been issued at this stage last year, the number has dropped to 11.4 million this year—a 16 percent decline.

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Larger Paychecks

The Trump administration said that the lower number of tax refunds were a result of families taking home larger paychecks because of less witholding tax.

"The TCJA cut taxes across the board, particularly for middle-income families," the Treasury Department said in a statement to Reuters in early February. "Smaller refunds mean that people are withholding appropriately based on their tax liability, which is positive news for taxpayers."

Richard Thaler, who received the 2017 Nobel Prize in Economic Studies, told NPR that the Trump administration did not widely publicize its changes to withholding tables, and reductions to taxes taken from paychecks. He said this meant many didn't notice small increases in take-home wages, and did not realize that their tax refund would be lower as a result.

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"People have trouble saving. For many people, the day they get their tax refund is the one day of the year that they're actually financially solvent," Thaler said.

Tax Reductions, and Tax Hikes

According to the Tax Policy Center, and its analysis of the Trump tax plan, "The bill would reduce taxes on average for all income groups in both 2018 and 2025.

"In general, higher-income households receive larger average tax cuts as a percentage of after-tax income, with the largest cuts as a share of income going to taxpayers in the 95th to 99th percentiles of the income distribution.

"On average, in 2027 taxes would change little for lower- and middle-income groups and decrease for higher-income groups. Compared to current [pre-Trump reform] law, 5 percent of taxpayers would pay more tax in 2018, 9 percent in 2025 and 53 percent in 2027," the Tax Policy Center reported.

Tax Refund Anger

While some Americans counting on pocketing a large refund have been disappointed with the diminutive returns, others are facing higher tax bills because of the changes in how local and state deductions were calculated.

For some, the result provoked anger, with Americans tweeting that the Trump administration tax reforms were a scam under the hashtags #GOPTaxScam and #GOPTaxScamStories.

The Tax Policy Center said in its study: "The impact of the proposal on individual taxpayers differs depending on their income sources, demographic and family statuses, and other characteristics that affect eligibility for certain tax benefits.

"In 2018, 80 percent of taxpayers would receive a tax cut from the included provisions—averaging about $2,100—and about 5 percent would face an average tax increase of about $2,800.

In the bottom income quintile, 54 percent would receive a tax cut and 1 percent would face a tax increase. In the middle-income quintile, 91 percent would receive a tax cut and 7 percent would face a tax increase. In the top 1 percent of the income distribution, 91 percent would receive a tax cut and 9 percent would face a tax increase," the Tax Policy Center reported.

Trump Tax Cuts Reversal?

Trump's tax cuts have been criticized by Democrats, who said the cuts favored corporations and the super rich. Some senior Democrats have pledged to reverse the new tax law.

"Who could have predicted that middle-class Americans would be in for a big disappointment when their tax refunds came this year? Who would have thought that the GOP tax cut would only benefit the wealthy and not working families? Everyone. We all saw this coming," tweeted Senator Adam Schiff, a California Democrat.

Senator Kamala Harris, a Democratic presidential candidate, on February 11 called the Republican tax refunds "a middle-class tax hike to line the pockets of already wealthy corporations," prompting Trump's oldest son, Donald Trump Jr., to hit back on Twitter.

"Of course refunds are down," Trump Jr. tweeted on February 12. "People are paying less in taxes and the code is simplified. A refund means you overpaid and got money back. When you pay less the refund will be less. Do you really not understand that? Now do the effect of proposed Dem tax hikes has on income!!!"

To check the status of your tax refund, visit the Internal Revenue Service's "Where's My Refund?" online tool.

Where's My Tax Refund? Why You Might Get Less or Owe the IRS More in 2019 | U.S.