Gokula Autar is pessimistic about his tax return this year.
“I had a better return last year, this I don’t think I’ll have a good one,” he said.
That sentiment is echoed by millions of others who also report that they’ve received a smaller tax refund this year.
As of Feb. 1, the IRS reported that the average refund is down about 8 percent from the same time compared to last year. It’s not what most people expected after President Donald Trump promised his tax plan would help the middle class.
“We will cut taxes for middle class families. This is a major, major tax cut, the biggest since Ronald Reagan,” Trump said in a September 2017 rally.
But, accountant Mahendra Ramnauth says his clients are finding the exact opposite. He now has become the barer of bad news. Ramnauth says 50 percent of his clients are seeing a 15 to 20 percent reduction in their refund.
“People are caught off guard when we present the numbers, or the refund amount, to them. People question the fact of the credibility of the work that we’ve done. As the reality set in this year, they are realizing more so that they should be aware of the withholdings,” said Ramnauth, owner of MPR Tax and Accounting Services.
It’s withholdings that Nicole Kaeding, director of federal projects at the Tax Foundation, says are the reason for your smaller refund. Kaeding says the average person saw an additional $20 to $40 in every paycheck.
“What the Treasury Department did is they adjusted the amount of taxes that were withheld from your paycheck every time you got paid, say every two or three weeks. And so you actually saw a little bit more in every paycheck in terms of less taxes withheld, but that means your refund at the end of the year might be a bit smaller than you actually expected,” Kaeding said.
Ramnauth says client appointments are down 15 percent and he believes that’s because word on the street is that refunds are a lot less.
“People are not rushing as much to get it done, because they’re aware that refunds are smaller so they’re not as aggressive to come out, or they’re not as willing to come out and get it done,” Ramnauth said. “We would be fully booked more so than ever at this time of the year, as tax season barely has eight more weeks to go.”
While there’s not much you can do now about your refund, both Ramnauth and Kaeding advise that if you’re disappointed with your tax refund this year, to make sure you contact your employer to adjust your W-4 withholding forms for next year.