For most Americans preparing taxes is a chore. Working through 12 months of finances, deductions, credits and income can be laborious even if the burden is eased using software. Software is a good investment because it can save wading through the more than 100 pages of instructions that come with Form 1040, the most basic of all Internal Revenue Service tax forms.
But usually there’s a pot of gold, actually more like a cup of gold, at the end...historically about 3 out of every 4 taxpayers receive a refund and over the past decade, the average refund has been around $3,000. As a result, most people have become accustomed to receiving a sizable refund each year... until this year when average refunds have dropped.
Needless to say, I have heard several people who have, either without thinking or out of ignorance, blamed President Trump because of his hallmark legislation, the Tax Cuts and Jobs Act. Claiming that their tax refund is down because of President Trump is simply false.
The obvious explanation is that if the tax rate was cut 3 percent it meant a smaller tax bite out of each paycheck and more take home pay. And, if a smaller amount is withheld for taxes, it means a smaller refund...simple math. But, here’s the funny thing...President Trump is still a villain.
If people want more money at the end of the year the solution is a simple one: don’t blow the take home pay increase, save it.