The 10 percent of American households that have already filed their tax returns are so far seeing smaller than average refunds, NBC News reported.
In October 2017, while pushing for an overhaul of the U.S. tax code, President Donald Trump’s spokeswoman, Sarah Huckabee Sanders said on Twitter that the average American family “would get a $4,000 raise under the President’s tax cut plan,” which increased the standard deduction, lowered rates, and capped some deductions.
“How could any member of Congress be against it?” she added.
But according to early Internal Revenue Service data released Friday, the average tax refund is down 8.4 percent in the first filing week, dipping from $2,035 to $1,865 when compared to the same period last year.
“We have said people will be surprised, but how that comes out in the aggregate is to be seen,” Kathy Pickering, executive director of H&R Block’s Tax Institute told USA Today. “Don’t put too much into these initial numbers from the IRS, because the volume is down and it may be hard to parse out the tax reform impact from the shutdown impact.”
Tax professionals say it all boils down to people not adjusting their paycheck withholdings after changes were made to the tax code.
A withholding allowance is basically an exemption from paying a certain amount of income tax. The more allowances you claim on your W-4 tax form, the less income tax will be withheld from each paycheck.
But if your check from Uncle Sam was smaller than expected, that does not necessarily mean you are paying more in taxes. About two-thirds of households will see tax cuts for 2018 while about 6 percent will see a tax increase averaging $2,760, according to the Tax Policy Center.
“Americans are obsessed with their refunds. What really matters is whether your taxes went up or down, not whether your refund went down,” Howard Gleckman, senior fellow at the Urban Brookings Tax Policy Center told NBC News. “It’s really important that people don’t confuse their refund with the taxes they pay,” he said.
Gleckman did, however, acknowledge that many households rely on their annual tax refunds.
“The people who file early are the people who generally count on these refunds. They may have an expectation of higher refunds,” he said.
Jason Marques said his “jaw hit the floor” when he found out his refund would be under $500. He said he expected to get a refund of roughly $6,000, which he got last year, since his income did not change.
“I just started paying back my student loans. If I’d gotten the $6,000, I’d have paid off all my credit cards,” Marques told NBC News. “I could’ve really used that money to eliminate it all.”
Others have taken to social media to echo the sentiment.
“That campaign promise [$4,000 raise] was one of the only two reasons I voted for you [President Donald Trump],” wrote Twitter user Dee Nelson. “Rethinking that decision now.”
Click here to read the story from NBC News.
