With filing season officially under way, a growing number of taxpayers are realizing that the Tax Cuts and Jobs Act might be a double-edged sword.
The White House said in October 2017 that the average family “would get a $4,000 raise” when it was pushing for passage of the law. Now that the new filing season has begun, some taxpayers are finding out that the tax man giveth — but also taketh away, especially as it pertains to their annual refund.
“Americans are obsessed with their refunds. What really matters is whether your taxes went up or down, not whether your refund went down,” said Howard Gleckman, senior fellow at the Urban Brookings Tax Policy Center. “It’s really important that people don’t confuse their refund with the taxes they pay,” he said.
But even as Gleckman pointed out that some people’s overall tax burdens might be smaller this year, he acknowledged that many people come to expect and even rely on that refund.
“The people who file early are the people who generally count on these refunds. They may have an expectation of higher refunds,” he said. These taxpayers, especially those who hold down multiple jobs, could be in for a rude awakening.
This was what happened to Jason Marques, a postal worker, pizza delivery driver and student in Massachusetts who said that, since his income didn’t change, he was expecting a similar refund to the roughly $6,000 he got last year — money he said would go towards his student loans or paying off credit card debt.
Marques said he was hurt by the cap on student loan interest deduction and the elimination of non-reimbursed business expenses, which he used to deduct the out-of-pocket costs he incurred as a delivery driver. “My jaw hit the floor,” he said, when he learned his 2018 refund would be under $500.
“I just started paying back my student loans. If I’d gotten the $6,000, I’d have paid off all my credit cards,” he said. “I could’ve really used that money to eliminate it all.”
Marques is not alone in his frustration. Early filers have been taking to social media to express their ire at finding that their refunds were a fraction of what they anticipated or — worse yet — that they would owe an unexpected bill to the IRS.