CLEVELAND, OH (WOIO) -The first Americans to file their 2018 taxes are finding their refunds are lower than 2017 if they’re getting a refund at all, now that the President Donald Trump’s Tax Cuts and Jobs Act has taken effect.
Tax experts explain that because of the tax plan more money was left in your check than in the government’s pocket.
“Really a refund, I know people think it’s forced savings, but you’ve just extended an interest free loan to Uncle Sam for the year,” Business Analyst Jill Schlesinger told CBS This Morning. “And I got a feeling you could use that money better than your uncle can.”
After the first week of returns were processed by the IRS, the average refund is down 8.4 percent compared to 2017.
According to accountant Bob Gross, partner at Gross and Company Inc. in Beachwood, there are a number of deductions that people could claim in 2017 that they can’t on their 2018 returns.
“Dependent exemptions are eliminated, unreimbursed business deductions for employees was eliminated,” Gross said. “Limit on state and local taxes for those who itemized their deductions.”
In the past you could deduct everything you had to pay your local municipality and state in taxes.
Now there is a cap of $10,000 on those deductions.
It may not be beneficial to itemize at all.
If you’re going to claim deductions, the new threshold to take advantage of them is $12,000 for single filers and $24,000 for married.
According to Gross most people won’t have that level of deductions.
If you’re someone who ended up owing this year, you may want to contact your employer and ask them to start withholding more from your checks.
There is an obvious downside to that though.
“If they want a refund, or a bigger refund, then they should adjust their withholding,” Gross advised. “But they should know that the net payroll check will go down so there is a trade off.”