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by beth bellor
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we’re three weeks into tax filing season, the data from the irs remains mostly glum, and tax professionals are facing clients angry and confused by their smaller-than-expected refunds.
more on busy season: irs in crisis: tax professionals bear the brunt | tax pro efiling drops 12.5% after shutdown | taxpayer advocate slams congress over funding | busy season: accountants worry for u.s. economy | tax shops bulk up for big busy season | busy season: the busiest ever? | survey: tax season launches with a whimper | 16 big questions for tax season | survey: tax accountants alarmed by tcja & shutdown
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for the week ending feb. 15, the most recent statistics available, the only figure on the plus side is the one accountants least want to see – individual income tax returns filed by self-preparers. boo! let’s tell ourselves they would have been the least profitable clients.
the internal revenue service reported receiving 39.8 million individual returns as of feb. 15, down 4.8 percent from the same period one year ago. it had processed 37.8 million of those returns, down 6.6 percent. the agency’s current processing rate is 95 percent.
e-filings
of total returns, 96.5 percent are e-filed. the total so far is 38.4 million, down 3.8 percent. of those, tax professionals have handled 16.6 million, down 8.5 percent, with self-preparers turning in 21.8 million, up 0.1 percent.
tax pros have processed 43.2 percent of this year’s e-filings.
website visits
visits to irs.gov, pretty much the only way to get anything out of the agency anymore, stood at 161.7 million, down 3.3 percent.
refunds
refunds totaled 23.5 million, down 26.5 percent, in the amount of $62 billion, which is down $38.8 billion. blame some of that on the average refund falling 16.7 percent to $2,640.
direct deposit plays a huge role: 94.3 percent of total refunds and 96.5 percent of the total amount. direct deposit refunds have totaled 22.1 million, down 26.3 percent. the total amount refunded electronically was $59.9 billion, down 38.8 percent, with the average refund down 17 percent at $2,703.
7 responses to “tax refund fury roils busy season”
roger lubiens
my clients are realizing they should have closer examined their pay-stubs and made changes to their form w-4 mid season. my clients too are averaging $2600 refunds.
bob heisler, ea
i agree that looking at the refund amount alone does not identify the situation. what taxpayers should do is compare their taxable income in 2017 to that of 2018, then compare the total tax due for both years. naturally, if withholdings or estimated tax payments are changed, refunds or balances due will follow suit.
sam sahib
the problem is not withholding. problem is that trump tax plan has almost eliminated personal exemtion which was $4,050 per person. go figure if you had a family of more than 3 and itemized deduction of already over $20k. this is a big hit to tax payers pockets.
marc vigil
it is simple – the federal government should have never decreased tax withholding’s for all taxpayers in february 2018 with guidance to double check with holdings since the with holdings may not be accurate by taxpayer. unless the taxpayer has a tax professional who teaches them how to withhold properly the majority of taxpayers don’t know how to withhold their own income taxes.
the majority of our clients under withheld federal income taxes in 2018 because of this & weren’t aware they were supposed to double check their with holdings. when you compare 2017 to 2018 you can see the lower tax withholdings as well as the lower federal tax liability since all tax brackets below $400,000 taxable income were dropped 3% or 4% from 2017 federal tax rates except the lowest income bracket that remained 10% & the two highest brackets that remained 35% or the 39.6% tax bracket was dropped 2.6% to 37%.
tax professionals need to do a better job showing this to taxpayers as well as the media perhaps showing this example since if the taxpayer has children or other tax credits we have seen multiple clients with lower federal tax with holdings with higher income & bigger tax refunds because the tax credits increased for child tax credit, child & dependent care credit, earned income tax credit, etc., etc.
people that used un-reimbursed employee expenses have no relief and according to the irs most taxpayers were not following tax code or misstating their un-reimbursed employee expenses since their employee either increased their salary to compensate for the un-reimbursed employee expenses, reimbursed them during the year and they were double dipping or people just misapplying tax code by claiming business mileage to & from their starbucks job as a barista at 20,000 miles annually when there is no deduction for mileage to & from your main job or they try to write off work clothes when the tax code clearly states uniforms & protective clothing.
the irs guidance for these folks is to have your employer reimburse you for the work expense since it isn’t the irs’s job to reimburse since they eliminated this from federal yet it still applies to our state of california for taxpayers.
morale – withhold correctly or make tax voucher payments if you are self employed at the right amounts and your federal income tax rate is lower by 3% to 4% for all tax brackets except the lowest tax bracket & the two highest tax brackets (over $400,000).
don’t blame the irs for your refund being smaller this year or owing since if you withheld correctly you would get a bigger tax refund since your federal income tax rate dropped 3%-4% if you are middle class & if you have children under 17 years of age you may get a bigger refund with tax credits.
lee nash
i have spent more time than normal doing a tax comparison to 2017 and explaining it to clients. i am more than willing to do that because i think the new tax plan is a good thing.
i have all of the 1040 work i can possibly handle so more people doing their own return is good too!
john l roberts
your clients must be making substantially more money than mine because they are not benefiting to the tune of the $4000.00 refund promised by trump.
terri ryan
agreed! i now include the 2017-to-2018 year-over-year comparison in packet (front and center) showing effective tax rate reduction even though many have been hit with the salt $10k limit. the problem is, clients are only looking at the refund – its reduction or disappearance due to the 2018 w-4 table debacle. it’s truly a hard and time-consuming sell and we’re the messenger! the media hype on reduced refunds has at least gotten the 4/15 stragglers in the door sooner!