Tax season has just begun and some Americans have already filed their taxes for 2018. And while many people generally expect a hefty refund, several have found themselves with a surprise tax bill from the IRS.
“I literally screamed when I saw my refund,” says Elissa Crooks. The 41-year-old from Orlando says that her refund was slashed by roughly $1,400 when she filed her 2018 taxes a few days ago.
She says that she relies on her refund to cover the property taxes on the house she bought four years ago. A Democrat whose voting history has included candidates from both parties, she says that she was “very upset” about her lower refund.
“I waited over the weekend to hit the send button because I thought something had to be missing,” she says. “I went over it with a fine-toothed comb. I didn’t know why it was so different.”
Crooks isn’t alone. On Twitter, the hashtags #TrumpTaxScam and #GOPTaxScam are full of angry tweeters, complaining that their refunds were either greatly reduced, or that they now owe the IRS, thanks to the Tax Cuts and Jobs Act (TCJA) passed in December 2017. Many say they feel betrayed by President Trump, who they voted for in 2016. While some appeared to be fake accounts, or ‘bots,’ there are many who have been negatively impacted by TCJA.
She lives in Rialto, Calif., with her wife and says that she voted for President Trump in 2016. She normally receives a $2,500 refund, but this year, she had to pay $1,900. (The average refund between 2014 and 2018 was around $2,700.)
There’s “definitely an impact” she says, from the tax bill. “Our oldest is graduating; both are adults and are in college (one Bachelors, one Masters degree).”
Kelli says that her family will be “ok” — “until it’s time to do this again next year”, she says.
While many might have seen a change in their refunds, Mark Mazur, director of the Tax Policy Center, points out that for most people who have seen a negative change didn’t notice that the withholding on their paychecks changed, affecting their income liability. Put simply, some people have been getting bigger paychecks thanks to TCJA, which could affect their refund status. (Whether you get a refund or end up owing money to the Treasury depends partly on how much tax is withheld from your paycheck by your employer.)
“I do taxes all the time and if you were to ask me my tax liability last year, I’d have to look,” says Mazur. “The refund sticks with them [taxpayers]. The tax liability is another line on the form that they don’t pay attention to, despite the best efforts to get them to do otherwise.”
Crooks admits that she saw an increase in her paychecks (roughly $75 a month), but didn’t think much of it. Despite watching the news about TCJA, she says she was unaware that tax cuts would impact her paycheck, not her refund, like she was expecting.
“I never heard that. I didn’t know this would happen. I almost wish I had,” she says.
Mazur isn’t surprised, especially considering tax cuts passed in the two previous administrations.
“In the [George W.] Bush administration, there was a tax cut and they sent people a check,” he says. “And people remembered that they got that check. In the Obama administration, there was a tax credit that was delivered in the form of a reduced withholding — and people didn’t notice it.”
“When they did polling on the Obama tax cut, people didn’t think they got it. Those lessons apply here,” says Mazur. He says that even at the Tax Policy Center, staffers were “surprised” to see that many of them got tax cuts, compared to previous years.
“But unless people do that comparison, they don’t know,” Mazur says. “They focus on the dollars in and dollars out when they file their returns.”
Mazur points out that while there are many sounding off on Twitter and elsewhere about surprise bills and disappointing refunds, this problem might not be as widespread as it seems.
“The analysis that we’ve done is that two-thirds will get a tax cut, and a small percent — 8 or 10 — will get a tax increase,” he said. “But that’s in the aggregate. Even 10% of the country is a lot of people getting an increase.”
The IRS released its first filing statistics showing the impact of the government shutdown and the TCJA on the current tax season.
According to the figures, the IRS received 12.4% fewer individual tax returns than last year at this time. Returns processed also sharply declined by 25.8% from the year prior, likely in large part to lingering effects from the 35 day long government shutdown.
Tax refunds also took a hit. Those who filed their returns have seen their refund amounts an average 8.4% lower than last year. The average tax refund so far is $1,865, down from $2,035 in 2018.
Despite these numbers, the Treasury Department tweeted Monday: “News reports on reduction in IRS filings & refunds are misleading,” blaming the statistics on a “small” sample size. (The IRS used information from over 16 million returns filed and 13 million processed to compile its data.)
But that tweet doesn’t jive with the reality for people like Crooks and Kelli. And for some angry voters, TCJA will impact how they vote in 2020.
“I knew the middle class was going to get screwed,” Crooks says. “I had a glimmer of hope that maybe I would be equal to what I was before. But now I see it hurt me. I voted Democrat down the line in November and I’m definitely going to do that in 2020.”
Even after being hit with a tax bill, Kelli continues to support the president.
“I like what he is trying to do,” she said. “I don’t agree with the Democratic solution of socialism.”