Tax day has been and gone. If you were disappointed in your refund amount, you’re not alone.
This spring marked the first time taxpayers and their accountants submitted tax returns under the Tax Cuts and Jobs Act. Here’s why you may have seen less in your return and how it could actually benefit you moving forward.
If your paycheck was bigger starting last year, it wasn’t all due to the tax cut. Part of that bigger check was the result of adjusted withholding, where ‘Uncle Sam’ took out less. (In 2018, the Treasury Department and the IRS updated the withholding tables to reflect the new Tax Cuts and Jobs Act). This can actually be a good thing: NPR reported that the reduced withholdings actually leads to bigger paychecks throughout the year.
A spokesperson for the Treasury Department said the lower tax refunds explains why:
“Most people are seeing the benefits of the tax cut in larger paychecks throughout the year, instead of tax refunds that are the result of people overpaying the government. Smaller refunds mean that people are withholding appropriately based on their tax liability, which is positive news for taxpayers.”
Adjusting Your Paycheck Withholdings
Tax professionals have been warning that refunds could be smaller than expected if people didn’t adjust their paycheck withholdings after the new tax law changes listed above.
The amount withheld from your paycheck is determined by how many allowances you claim on your W-4 tax form. The more allowances you claim, the less money is withheld from your paycheck. Talk to your employer’s HR or accounting department for instructions on how to do that.
Most taxpayers owe less in total income taxes
- Larger standard deductions. The standard deduction is almost double for every filing status starting in 2018.
- Expanded Child Tax Credit. The Child Tax Credit is now $2,000 per child, up from $1,000 in 2017. That makes up for the loss of the dependency exemptions for most taxpayers.
- Credit for other dependents. A new tax credit of up to $500 for each of your older children and other dependents may also lower your bill.
If you depend on a refund for springtime spending, or to pay off credit card debt, you may want to increase your withholding going forward. Remember, the goal is to not have a huge tax refund; it’s to have as close to the right amount withheld from your paycheck as possible. That way you don’t have a big bill at tax time. Plus you can put as much of your own money to good for the rest of the year.
Applying for a Loan with TLC Loans
If you’re unhappy with your tax refund and were relying on that cash to pay important bills, Total Loan Company could help.
We are a highly rated lender (in the states of Illinois, Utah, Missouri and South Carolina) and the TLC team has a long history of working in the consumer finance industry. Most of all we understand the challenges facing our customers and their families.
We know there are times where you may need an installment loan to get you through a tough financial time, like receiving a smaller tax refund than expected. At Total Loan Company, LLC the loans we make are as individual as the people who apply for them! We make borrowing easy, convenient, and affordable with fast loan solutions.
If you need a personal loan, we can help! Apply here today and get your money tomorrow.