Heads up! Your 2019 Tax Refund Might Be Higher, Lower or Later Than Usual
Millions of Americans have come to count on tax refunds to fuel their spending in the waning days of winter. But as income tax filing season opens on Monday, a sweeping tax code overhaul and the lingering effects of a government shutdown could squeeze taxpayers’ refund checks and delay them, too.
The month-long government shutdown coincided with one of the Internal Revenue Service’s busiest times, and while 46,000 employees were called back to work without pay, many did not show up. Many taxpayers calling with questions faced delays of over an hour. While furloughed federal workers will return to their jobs on Monday, it will take time to get parts of the I.R.S. running smoothly again. And the workers’ time on the job could be brief, with a temporary measure funding the government expiring in three weeks.
Even before the shutdown, big questions loomed about this year’s tax season. The $1.5 trillion tax overhaul that took effect at the beginning of 2018 lowered individual income tax rates, doubled the standard deduction and eliminated or capped many personal exemptions and tax breaks, such as the state and local tax deduction. All told, the overhaul threw a cloud of confusion over the correct amount to withhold in advance from workers’ paychecks.
The Treasury Department was given discretion to set new withholding levels, which I.R.S. officials finished early last year to help taxpayers ensure they would not have too much — or too little — held back from their paychecks.
But the actual impact of those changes will only be known for sure once the returns are processed. The lack of clarity over what has been an annual injection of cash into the consumer economy is adding a layer of uncertainty just when the United States is already contending with slowing global growth, trade tensions and recent jitters in financial markets. Whether the new law will lead to a surge in refunds, a modest bump or even a decline could also have political implications.
A Treasury Department analysis provided to the Government Accountability Office, the investigative arm of Congress, projects that about four million more filers will have a balance to pay on their taxes this year, and four million fewer will receive refunds, compared what would have been the case under the old withholding system. The Congressional Budget Office said in a budget review last year that it “now expects tax withholding to be lower during fiscal year 2018; that effect will be offset by higher tax payments (or smaller refunds) when taxpayers file their tax returns next spring.”
(Source: The New York Times)