Millions in U.S. didn't get tax refund this year -- and may not next year, either - Kogonuso

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Apr 15, 2019

Millions in U.S. didn't get tax refund this year -- and may not next year, either

A NerdWallet survey found 20 percent of Americans who've filed their 2018 federal tax return ended up owing money. Of those taxpayers, 32 percent received a refund last year. That amounts to 7.9 million new Americans owing money this year, the survey said.

So, why the big difference?

"The new tax rules will affect people's final tax bill, whether they owe or get a refund, so they have changed everyone's tax situation," NerdWallett tax specialist Andrea Coombes told the New York Daily News. "That means you should go in and make sure your withholding is appropriate."
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President Donald Trump drastically changed the tax brackets and doubled the standard deduction when he passed the Tax Cuts and Jobs Act into law in December 2017. Americans who earn $150,000 or less and have dependents benefited the most, with $2,000 in child tax credits.

The standard deduction -- $12,000 for individuals and $24,000 for married couples filing this year -- will continue to increase every year through 2025. Filing next year, it rises by $200 for individuals and $400 for couples. By contrast, the standard deduction for single filers last year was just $6,350.

Other reasons for the cut in refunds is the new tax code also eliminated personal exemptions and slashed the mortgage tax deduction. Also, experts say too many Americans didn't change their withholding -- the amount of tax deducted from each paycheck -- and didn't compensate for the changes. The NerdWallet survey found just 17 percent of taxpayers did so after the new law went into effect.

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"They didn't heed the warnings from the IRS about checking their withholding," said Cindy Hockenberry, director of tax research and government relations.

More changes might also be in store when you file next year, too. The IRS is planning a revised W-4 form that aims to get Americans' withholding amount closer to what they truly owe at the end of the year, meaning the difference at tax time would be less -- hence, smaller or no refunds. While the move could entirely eliminate refunds, it should also reduce the number of people who owe each year, too.

Filling out the revised W-4 might be far more complicated.

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"It'll be a much bigger pain," Pete Isberg, head of government affairs at payroll company ADP, told USA Today. "The accuracy will be 100 percent but the ease-of-use will be zero."

The IRS hasn't issued the new W-4 yet, but sent a draft version to experts last year for feedback.

"It looked a lot more like the 1040 than a W-4," Isberg said.

Filling out a more complex W-4, though, should make it easier to file your tax return every year.

The IRS wanted to implement the new form for 2019, but it's possible the agency might not do so until 2020.

Hockenberry said hiring a tax professional is one surefire way to get your taxes right. Fees to hire one range

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