Tax refunds down 8% so far, residents urged to plan ahead

Tax season is here and many early filers are seeing smaller than average refunds.

“I thought we were going to receive money back, but we didn’t this year. We’re owing a lot more than I expected,” said Alex Santana, a local resident who filed his taxes Monday afternoon.

Santana said he usually gets anywhere between $2,000 and $3,000 back in tax refunds but this year, he says he owes $1,500. He says he blames the GOP-led Tax Cuts and Jobs Act passed in 2017. This is the first tax season to see the impacts of the overhaul and the first major change in a tax season in 30 years.

“The tax laws have changed. We got more in our paychecks but we did not have correspondingly more withheld, so higher taxable income, lower withheld, lower refund,” said Susy McMillen, a tax return preparer at Champion Income Tax.

McMillen has been in the business for more than 25 years and says she’s never seen such a drastic dip on tax refunds.

“We kind of were taken by surprise. We anticipated there wouldn’t be much change for middle America, but it turns out, they’re really the ones paying this year,” McMillen said.

She is warning those who haven’t filed yet to plan ahead.

“Do not depend on your refund to pay your mortgage or your rent,” McMillen said.

She had one tip to share to help people get ahead of next year’s tax season.

“Claim single and 0 on your W4. That means more will be taken out but it’s stretched over the whole year and you generally learn to live a little bit below your means and you probably won’t have to pay taxes at the end of the year,” McMillen said.

The average American taxpayer got a refund of about $2,700 last year, according to IRS statistics.

Filing season opened just days after the end of the longest partial government shutdown in US history. “We thank the Treasury and IRS employees who have been working diligently to ensure the system is processing these returns efficiently,” Treasury Secretary Steven Mnuchin said in a statement Friday.