[ad_1]
\n<\/p>\n
For some Americans, this tax season has come with an unwelcome surprise:\u00a0either a smaller-than-expected refund or, even worse, a jarring bill from\u00a0Uncle Sam.<\/p>\n
Most got their tax savings in their paychecks during the year, but the loss of a sizable refund is hitting their finances now. Some are getting refunds that are half their normal size, while others are\u00a0thousands of dollars\u00a0in the hole for the first time.\u00a0<\/p>\n
To manage, they\u00a0are readjusting their spending plans to align with a smaller refund. People who owe are pulling from savings, taking out\u00a0a loan or signing up to pay off the IRS in installments. They plan to consult with tax pros\u00a0so they can avoid another\u00a0money disaster next year.<\/p>\n
Start the day smarter: <\/strong>Get USA TODAY’s Daily Briefing in your inbox<\/a><\/p>\n “We\u2019re finding out that those with the biggest refund change are those that didn\u2019t do tax planning last year,\u201d\u00a0said Lynn Ebel, director of The Tax Institute at H&R Block.\u00a0<\/p>\n So far, according to IRS statistics, the average\u00a0refund\u00a0is\u00a0down\u00a08.7\u00a0percent from this\u00a0time last year after the biggest tax law changes in decades.\u00a0The share of returns getting a refund is also slightly lower than a year ago. The IRS doesn’t offer figures about what people owe.<\/p>\n Can a watch save your life?: <\/strong>‘It saved my life’: Apple Watch, Fitbit are notifying users of medical emergencies<\/a><\/p>\n Who wants a foldable phone?: <\/strong>Forget 5G and foldable. We just want it to last all day: What you want from new smartphone<\/a><\/p>\n Americans love their tax refunds \u2013 even if\u00a0they\u00a0give the federal government\u00a0interest-free loans for the year by having too much withheld in each of their paychecks. Many prefer\u00a0the\u00a0money\u00a0returned to them as a big check in the spring.\u00a0The forced savings helps them preserve a predictable windfall, one they can\u2019t dip into during the year.<\/p>\n Past taxpayer surveys show they use that money to reduce debt, pad savings or\u00a0pay for a vacation or other large purchases.\u00a0Overall, about three-fourths\u00a0of taxpayers get a refund, which last year\u00a0averaged\u00a0just under $3,000.<\/p>\n Jennifer and Daniel Yuen planned to use their refund\u00a0to support their oldest daughter, who moved to Washington, D.C., to train with the Washington Ballet. The couple pay\u00a0for her tuition and rent.<\/p>\n Last year, they got almost $800 back. This year, they owe more than $5,000 \u2013 a major burden for the Chicago couple.\u00a0\u00a0\u00a0\u00a0 \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/p>\n \u201cWe\u2019re strapped,\u201d said Jennifer, a special-education teacher. “That’s three to four months of my daughter\u2019s rent or half of her tuition.\u201d<\/p>\n Instead,\u00a0they are considering a payment plan with the IRS\u00a0because\u00a0they can’t afford to write such a big check. Those extra monthly payments will dent other plans they had for this year, too.<\/p>\n \u201cThis will put off the car that was supposed to replace our 11-year-old one,” Jennifer said.\u00a0<\/p>\n Jennifer says the elimination of the unreimbursed employee expenses deduction hit their taxes hard.\u00a0Both she and her husband, who is a stagehand, often spend their own money on job supplies \u2013\u00a0all of which used to be tax-deductible.<\/p>\n \u201cThat’s what really killed us,” she said.<\/p>\n The Yuens fit the profile of those taxpayers most at risk for smaller refunds or owing the government, Ebel said.<\/p>\n Homeowners in high tax states, employees with a lot of unreimbursed expenses and people who itemize\u00a0with no dependents all could experience an unpleasant tax season.<\/p>\n Kathleen Trisdale expected to owe something this year. \u201cMaybe\u00a0a few hundred dollars,\u201d said the resident of California, a state with high taxes.<\/p>\n Instead, she owes more than $2,000, a hardship for the disabled veteran, who depends on her military pension and Social Security for income.<\/p>\n \u201cI actually had to take out a signature loan from my credit union to pay my taxes and had to increase my monthly deductions by $300 to make sure I’m not hit hard next year,\u201d Trisdale said. \u201cSo not only am I hit with this tax hike, I am now more in debt and I have less income at my disposal each month.\u201d<\/p>\n She\u2019s not entirely sure why her taxes ended up this way. She noticed that she couldn\u2019t deduct her college tuition and other school expenses. She\u2019s pursuing a four-year degree in environmental science and management.\u00a0<\/p>\n Trisdale, 54, also couldn\u2019t write off the interest she paid on her mortgage because she took the standard deduction.<\/p>\n She plans to see a tax professional for help, \u201cwhich will cost me even more,\u201d she said. “I\u2019m a low-income person so I didn\u2019t think I would be affected this much.\u201d<\/p>\n In large part,\u00a0those who owe money to the federal government aren’t necessarily paying\u00a0more in taxes after the major\u00a0changes to the tax law. In fact, four in five taxpayers are estimated to get a tax cut, according to the Tax Policy Center.<\/p>\n But if you didn\u2019t change your paycheck withholdings \u2013\u00a0which most taxpayers didn’t do\u00a0\u2013\u00a0your tax savings were doled out during the year in each paycheck, reducing or eliminating your refund.<\/p>\n \u201cWhen we compared withholdings of people on file, September 2017 versus September 2018, it was largely unchanged,\u201d said Pete Isberg, head of government affairs at ADP, a payroll and HR services provider. \u201cGenerally, few employees changed their withholdings.\u201d<\/p>\n Workers may have not noticed any changes to their paychecks either, Isberg said, because their 2018 paychecks not only included the tax law changes, but also any changes to their other benefits, such as healthcare premiums.<\/p>\n \u201cSo, net-net they may not have seen an increase,\u201d he said.<\/p>\n Diana Hansen didn’t want to take any chances on her refund that she planned to use\u00a0for a trip to Bermuda this year\u00a0to celebrate her 25th anniversary with her husband.\u00a0Aside from her typical withholdings, Hansen \u2013\u00a0an executive administrative assistant \u2013\u00a0had $100 more taken out of each paycheck.<\/p>\n It still wasn’t enough. The couple \u2013\u00a0who normally gets $1,000 to $3,000 back \u2013\u00a0owes $4,200 in federal taxes.<\/p>\n Diana thinks the $10,000 cap on the\u00a0state and local tax deduction is largely to blame. Fortunately, the couple has enough in savings to pay in one lump sum.<\/p>\n \u201cBut it kills me,” she said.\u00a0“You get your savings to a certain level that you have a buffer, and then this happens.”<\/p>\n She and her husband will still go to Bermuda and, in the meantime, are adjusting\u00a0their withholdings for next year. So far, she’s taking out an additional\u00a0$150 from her paycheck, but could do more if needed.<\/p>\n \u201cOur taxes are sitting right here,\u201d she said. \u201cI haven\u2019t signed them and won\u2019t until the very end.\u201d<\/p>\n In some ways, Stephanie Harris is one of the luckier ones. The 53-year-old actuary in Pittsburgh is still getting a refund, but it\u2019s about half of what it usually is.\u00a0Even so, she is one of the five percent of filers that the Tax Policy Center estimated would end up paying more in federal taxes following the changes to the tax law.<\/p>\n \u201cIn the past five years, my effective tax rate has been as low as 6.13 percent and as a high as 8.43 percent,\u201d she said. \u201cThis year, my effective tax rate was 9.38 percent, the highest it\u2019s ever been.\u201d<\/p>\n Tax tools:\u00a0<\/strong>These online tools can help you navigate your federal returns<\/a><\/p>\n Watch for tax errors:<\/strong>10 common filing mistakes to avoid this year<\/a><\/p>\n Harris ended up taking the standard deduction of $24,000\u00a0for married couples filing jointly. But the elimination of the dependent exemption \u2013 she has two children she can claim \u2013 and the $10,000 cap on the state and local tax deduction didn’t help her refund.<\/p>\n “This means we have to take more out of savings toward paying the rest of this year\u2019s tuition (for her child),” she said. “More than we counted on.”<\/p>\n Follow USA TODAY reporter Janna Herron on Twitter @JannaHerron or email her at JHerron@usatoday.com.<\/em><\/p>\n This article originally appeared on USA TODAY: Some Americans face a costly surprise this tax season: tiny refunds or bigger bills<\/a><\/em><\/p>\n<\/div>\n<\/div>\nThat’s my refund?<\/h2>\n
Who\u00a0owes taxes?<\/h2>\n
Withholding\u00a0math<\/h2>\n
Adjusted withholdings, but not enough<\/h2>\n
Actually paying more in taxes<\/h2>\n