Erica Clark – Assistant News Editor
As Americans start to file taxes, they may consider: How will the government shutdown affect tax returns and refunds?
For starters, President Trump is refusing to sign a spending deal that doesn’t agree to include five billion dollars for a wall at the US-Mexico border. This resulted in the month-long government shutdown. The IRS (Internal Revenue Service) planned to keep 12.5 percent of its employers, which is lower than 10,000 workers. While 46,000 employees were being called back to work without pay, many did not show up. The tens of thousands of additional IRS employees were disallowed, so they were no longer getting paid or obligated to show up to work for the time being. Many taxpayers calling with concerns faced delays of over an hour.
While many employees returned to their jobs this past Monday morning, it will take time to get parts of the IRS running smoothly again. Many workers’ time on the clock could be brief, with this shutdown being a temporary measure funding the government expires in just two weeks.
If Republicans and Democrats are unable to reach an agreement by Feb. 15, President Trump indicated that he, without doubt, would shutdown the government once again, or declare a national emergency, which the White House argues is necessary for the security of America.
A lot of big questions emerged about the 2019 tax season. The $1.5 trillion tax overhaul that took part in 2018 lowered individual income tax rates and capped many tax breaks, such as both the state and a local tax deduction.
Overall, this overhaul causes a vast amount of confusion over the exact amount to withhold in advance from workers’ paychecks.
The actual impact of those changes will only be confirmed once the returns are processed. The bank’s economists expect an approximate $62 billion in additional tax refunds attributable to change from the tax overhaul. This, in total, would be a 26 percent increase over the last year.
Usually, three-quarters of tax filers receive refunds. Last year, more than 102 million tax filers got money back.
The refunds totaled roughly $285 billion, with an average refund being $2,800. This is the money most citizens use to get through the last cold months of winter.
If you are to receive a lower refund, with the new tax code, companies and taxpayers made better assumptions on how much they owe the government. Though, some Republicans in Washington are concerned taxpayers might not see it from that perspective, and that smaller refunds will cause many Americans to think they were scolded, not assisted, by the new tax code. Opinion polls show the law has struggled to attract support from a majority of voters.
High-income taxpayers in states including New York, New Jersey and California could be at high risk for unexpected tax liability. This is because those taxpayers are more likely to have claimed a larger amount of deductions on their federal returns. President Trump’s law capped that deduction, known as S.A.L.T. (State and Local Tax), at $10,000 per household each year.
You should also be expecting a large tax cut if you’re among the country’s highest earners, carrying 37% kick in at $500,001 for single people and $600,001 for married couples, according to smartasset.com.
The government shutdown is also expected to sap economic growth in the first quarter since workers and contractors were left without pay and vast amounts of government work went undone.
The government’s unfulfilled duty of paying their workers had a large scale impact on significant consumers pending in the economy. Contractors and business owners that cater to government employees have suffered a large loss. Many economists analysts agree that first-quarter growth will be several tenths of a percentage point lower than they had predicted.
The government shutdown made a lot of Americans confused about possible setbacks in paying deserved refunds.
The new Trump tax brackets didn’t apply until the 2018 tax year, which you will file by April 2019. The brackets will stay the same, but the income thresholds will change slightly to keep up with inflation.
If you’re wondering how the tax changes affect your specific tax situation, there are various sources to estimate what you can expect to pay under the new plan.
There are various resources online that can assist you to navigate your taxes this year, such as TurboTax’s tax reform calculator. If online tools aren’t enough, there is always the option to speak with an accountant to make sure you know what to expect and how to prepare for this tax season.