Yesterday Hot Air posted an article about this year’s tax refunds. The article was in response to a Washington Post article claiming that people were getting lower tax refunds this year than last year.
The article at Hot Air pointed out a number of things that might result in getting a smaller tax refund:
But since we have to play this game, let’s figure out why your refund is smaller. Did you get a raise or a significant bonus last year? Did you perhaps start a new job that pays more? Were there any other major changes in your financial situation? Tax filing company Intuit has a list of possible explanations you could look for. They include things such as your filing status changing, the selling of assets or the possibility that you were hit with a penalty.
There will be a small number of people who lost out on part of their SALT (state and local tax) deductions, but that should really only have a significant impact on people in high-tax states like New York who are earning well into six figures. As for everyone else, if your income went up, did you adjust your withholdings accordingly? If not, perhaps you need to have a chat with an accountant.
The article also reminds us that a tax refund is a refund of the money that you gave to the government during the year. You allowed them to have that money interest free until you filed your tax return and they were obligated to give the money back to you. Ideally, your tax refund should be small–that means that you correctly calculated the amount of money you actually owed the government. The question is not how big your tax refund is–the question is how much money you actually paid in taxes. The size of your tax refund is simply a reflection of how much money the government took from you during the year.