Attention, procrastinators: Monday marks deadline to file taxes
Monday marks the deadline to file taxes with the IRS for those who haven't sought an extension. And filers expecting big refunds may be in for a surprise.
The government's early filing data shows the IRS has paid out $6 billion less in refunds this tax season. Data shows the average refund paid out through the end of march was about $2,800, roughly $20 less than 2018.
Financial experts say the new tax law that adjusted IRS withholding tables in early 2018 could bring changes to the size of refund checks. The law saw Uncle Sam taking a little less out of some people's paychecks during most of last year.
The Brookings Institute estimates 80% of Americans paid an average of $2,100 less in taxes in 2018. The reduction was applied to paychecks throughout the year, versus a large single lump-sum refund check -- meaning taxpayers expecting a big check may feel a bigger pinch this refund season.
"Obviously it doesn't feel the same, but it works the same, ultimately. It's the same dollar amount you would have gotten back, you just got it in smaller pieces, so it's maybe not as noticeable for a lot of people," says Tim Steffen, director of advanced planning at Baird.
Getting to keep more of your income throughout the year is a good thing -- but financial experts expect plenty of disappointment for people who look at refunds as a sort of forced savings plan, using the extra money to pay for mortgages, big purchases or maybe a family getaway.
The size of your refund may also depend on the political dynamics of your state. The new tax law causes people in states with high tax rates to receive lower refunds.