Thinking about tax returns never stops, even as we go through the last quarter of the year when it seems like the topic should not be that timely. The IRS is always releasing something, though, and some numbers that have come out recently give a look at how the Tax Cuts and Jobs Act affected the landscape.
As we have seen earlier following the April deadline for returns, the changes were not that wild. Sure, we saw some people whose individual situations were drastically different, but when you spread it out over the millions of tax returns received by the IRS, the numbers largely evened out with previous years. (And if you personally saw a drastic change and have yet to do anything about changing it for next year, time is running short on being able to do that … see last week’s blog.)
And although things do tend to even out when we are talking about tens of millions of instances, the IRS recently released numbers that showed over 2.5 million less tax refunds were sent for the 2018 tax season over 2017. This sounds bad when you think of it from the mindset of “I’d like a tax return,” but that doesn’t necessarily mean it is. After all, a refund is really only giving you money back that you already paid to the government and it was later determined that your obligation was lower. Some changes in how you pay taxes or have them withheld from your paycheck can simply mean that you get that money in smaller chunks throughout the year, giving you quicker access to it.
Where this goes in the future is going to be a little difficult to determine. For one thing, more and more people are making money outside of their standard I-receive-a-paycheck-and-a-W2 job which is lowering the number and amount of refunds. Also, some who was surprised by their tax bill last year would have made changes to avoid that next time. In that situation you tend to just want the final number to come out to zero instead of making sure you get a refund back. Those who get a refund tend to just be happy with it and see it as an unexpected (or hoped for) surprise. Again, never minding the fact that better planning could get that money to you quicker.
The IRS unsurprisingly expects the number of returns it receives to keep growing, though, so who knows where the number of refunds will go. The bigger key is to be sure that you are taking care of your own personal situation and planning within the rules that now exist. This doesn’t mean that figuring out where you stand when it comes to taxes is ever easy or an exact science, but it does mean that you can obtain the power to set up things to work to your best advantage. So if you want to be ahead of things and not just follow national trends, give us a call.
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