5 Warning Signs of the First Year of Tax Reform – The Motley Fool



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Millions of Americans are eagerly awaiting tax savings through the reform efforts that came into effect in early 2018. This tax season is the first opportunity to witness the impact of the news. Tax bills laws, and many have hoped that they see larger repayments and tax preparation easier as a result.

It is still early in the season, but until now, these hopes have not materialized yet. Instead, many figures released by the Internal Revenue Service indicate that tax reform has not yet delivered on its promises. Let's go into the details to see if taxpayers should worry.

Intertwined metal gears, with the words tax reform engraved in the side of one.

Source of the image: Getty Images.

1. Fewer people have filed returns

Many fewer taxpayers have sent their returns to the IRS during the 2019 tax season compared to the previous year. This year, at the beginning of February, the IRS had received about 28.8 million returns, down 7% from last year. Most of these claims – 27.6 million – were filed electronically.

Those who use tax professionals to assist in their preparation were particularly likely to have delayed their returns this year compared to previous years. Only 11 million returns were filed electronically through tax professionals, down more than 1.5 million from the 2018 tax season. About half a million people less have produced their own self-prepared declaration for production electronically, accounting for 16.6 million people. This suggests that the simplest returns continue to arrive without too much delay, but those who need help find it harder to get them.

2. Return processing is slower

The IRS has reported an even greater drop in the number of returns processed so far this fiscal season. The service received less than 27 million returns processed in early February. This compares to more than 30 million returns processed during the 2018 tax season.

The government shutdown occurred at a particularly difficult time for the IRS employees, which could have contributed to the slow start of the tax season. Nevertheless, the tax agency workers will face a difficult battle by mid-April due to the situation, which will only add to what is already a considerable level of stress within the region. IRS.

3. Fewer people are looking for help

The IRS maintains an extremely useful website that offers many resources to taxpayers. The IRS.gov website offers a multitude of applications, ranging from simple applications, to telling you if you even need to produce a return to detailed tools and instructions for every detail of tax laws. Traditionally, users have widely used the website to make sure they are doing well. advantage of all means, they can reduce their tax bills.

The use of the IRS.gov website up to now in 2019 is down about 7% from 2018 levels. The 106.4 million hits still represent a significant figure, but nearly 8 million fewer visits mean users are using the site less for help and information.

4. Fewer people had refunds

The most attention of the IRS has been paid off. There have not been as many refunds issued this year as last year. By 2018, approximately 13.5 million refunds had been issued in early February. This year, this number is less than 11.4 million.

Similar decreases appear for repayments directly deposited in bank accounts. With repayments down from 15% to 16%, many taxpayers will have to wait longer or not be reimbursed at all.

5. Typical tax refunds are smaller

In addition to fewer refunds up to now, those who make have money in return have seen their repayment amounts decrease. The average reimbursement is down almost 9% to $ 1,949, nearly $ 200 less per return.

The net impact was a 23% reduction in repayments paid to $ 22.18 billion. That is $ 6.7 billion less than what was paid last year at the same time, and some economists predict that sales of very expensive consumer goods could suffer because of lower refunds.

Watch the tax season

These numbers may improve as the tax season progresses. However, given the particularly complex nature of tax reform, taxpayers must expect some particular barriers to which they are not accustomed. This justifies starting to pay your taxes as soon as you can, rather than waiting until the last minute.

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