Introduction
What a wonderful time of the year! Or maybe not; as Millions of Americans could be stunned as their tax refunds shrink. Why is that? Well, this new Tax Cuts and Job Act (TCJA) signed by the president on December 22, 2017, have left many Americans baffled. As it may lower their taxes in 2018, many are experiencing a lesser refund than in earlier years. Some are even worried that they may owe the government. The president claims this will help boost the economy. It may have helped large corporation and the wealthy people, but the middle and lower class family are the most affected by this.
Summary
Americans started filing their tax returns, many have found that they will either owe the government or will be receiving less than what they normally received in the past. The new tax law was to cut individual income tax rates giving the Americans a tax relief instead it cost them their refund. The standard deduction has double for everyone. For example, a single person deduction was $6350 in 2017 now has grown to $12,000 in 2018. Married couples filing jointly increase from $12,700 to $24,000. Americans will no longer be able to claim the same exemptions as before because the new law eliminated personal exemptions and most of the itemized deductions. Prior to the new tax law, you could claim an unlimited amount of personal exemptions. Now you have limited itemized deductions for state and local taxes being capped at $10,000.
Descriptive Statistics
The IRS use data from millions of tax returns to statistically create an analysis. In the article, the IRS reported that the filing season statistics are low due to several factors compared to last year filing. The Measure of Frequency, use to measure performance on tax filing and calculating the overall totals in each categories and reporting the percentage of each one showing the downward outcome of the 2019 filing season as of February 1st.
Real World Applications
This massive tax bill changes involve so many parts of the tax code that many Americans will feel the impact of last year’s tax reform for the first time. The fact that TCJA has altered the federal income tax brackets, doubled the standard deduction, and changed many other tax credits and deductions have triggered shock and anger among the taxpayers.
“The Government Accountability Office warned last summer that the number of tax filers who receive refunds was likely to drop for the 2018 tax year, while the number of filers who owe money would rise” (1). These changes, which were mandated by the new tax legislation for individual filers are scheduled to expire in 2025.
Analysis
The author is providing a true sense about what the new tax law means and how it will affect your refund. It will affect each family differently depending on their personal situation.
Conclusion
As the president claims this is a good strategy to boost the economy but overall it has affected the low- and middle-class family who are already struggling to make ends meet.
Many American relied on the Refund to pay down bills or make a major purchase. Now receiving little to nothing causing many American frustrated which added another expense on their plate to handle. “The average tax refund check is down 8 percent ($170) this year compared to last, the IRS reported Friday, and the number of people receiving a refund so far has dropped by almost a quarter” (1). If you are unhappy with the outcome, this would be a great time to look over your withholding now for 2019 to avoid the same situation next year.
