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IRS tax refunds are down and Americans are upset, blame Trump and GOP



Many Americans are especially frustrated this tax season, the first under President Donald Trump’s new tax law.

According to IRS data, the average federal tax refund amount is down 8.7% — to $1,949 — for the second week of the 2019 filing season compared to the same window last year. The total number of refunds issued dropped by about 15%.

Taxpayers who e-file and request direct deposit should see their refund hit their bank account within 21 days of submitting their return. Many aren’t happy with the size of their refund this year, and some even owe money to the IRS.

A lot of the anger about smaller tax refunds is directed at Trump and the GOP:

While many Americans rely on the windfall from a tax refund, financial experts say a larger or smaller refund is not indicative of whether a person paid more or less in taxes, but rather of the amount withheld from their paycheck.

“Some individuals like receiving a larger refund because they use it as a savings account,” Mark Jaeger, the director of tax development at TaxAct, told Business Insider. “It’s a way for them to save a significant chunk of money throughout the year. For some, that’s a perfectly fine strategy, as long as you can cover all of your other expenses throughout the year.”

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Big tax refunds generally mean you paid too much in taxes — you had too much income tax taken out of each paycheck, and now the IRS is returning what is rightfully yours. Instead of keeping your money in a savings or retirement account where it could earn interest all year, you essentially gave an interest-free loan to the government, Business Insider previously reported.

Further, receiving a smaller refund, or owing money to the IRS, doesn’t necessarily mean you had a higher tax bill this year than before the new tax law was enacted, Business Insider’s Bob Bryan explained. In fact, middle-class Americans, on average, saw their taxes go down for the 2018 tax year.

Read more: Democrats claim the decline in Americans’ tax refunds is proof the GOP tax law screwed over the middle class — but the truth is more complex

The tax law instituted new guidelines for how much employers should withhold from employees’ paychecks for taxes, resulting in an increase in take-home pay for about 90% of Americans beginning in February 2018.

Employees who didn’t adjust their withholdings after the new guidelines were released could be receiving a smaller refund than they expected this year, Jaeger said.

“Just because you receive a small refund doesn’t mean you didn’t get everything back you were owed or that you’re worse off financially — it most likely means you paid the right amount of federal taxes you owed during the year and didn’t overpay,” Jaeger said.

Read more: You don’t have to file your taxes to find out whether you’ll get a smaller refund this year

According to a January article in The New York Times, a Treasury Department analysis provided to the Government Accountability Office estimated that compared with last year, about 4 million fewer filers would receive refunds this year, while about 4 million more filers would have a balance to pay on their taxes because of the new withholding system.

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