A tax refund can be a nice windfall — last year, the average individual refund amount was $2,707. Americans can utilize this money to pay down debt, add to their savings, invest in the market — or, yes, to splurge on something fun. Whatever you plan to do with the money, you likely are hoping for as high of a refund as possible. And even though Donald Trump is no longer president, his tax policies may still be affecting the tax refund you receive.
Read: Everything You Need To Know About Taxes This Year
Here’s a look at how the former president’s tax policies can impact your refund this year — for better or for worse.
How the Tax Cuts and Jobs Act Impacts Your Refund
“Effective beginning with 2018 tax returns, the Tax Cuts and Jobs Act, as indicated in its name, included numerous provisions to cut taxes and increase refunds,” said Jennifer Marshall, director of tax services at The Bryn Mawr Trust Company.
Find Out: IRS Delayed Refunds Last Year for Millions of Taxpayers — Here’s How To Get Yours Faster
Under this act, income tax rates were cut and the standard deduction was increased to $12,000 for single filers and $24,000 for married filing jointly. In addition, a new 20% deduction on qualified business income was added, which could potentially increase refunds.
“It’s interesting to note that these changes caused a decline in refunds for taxpayers in 2018 as the withholding tables were adjusted and many individuals did not have enough withheld to cover their tax liability,” Marshall said. “While the standard deduction was increased, there were several itemized deductions that were limited or eliminated, including a $10,000 cap on the deduction of state/local income taxes and real estate taxes, and the complete elimination of miscellaneous itemized deductions.”
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How the Setting Every Community Up for Retirement Enhancement (SECURE) Act Impacts Your Refund
“Effective beginning in 2020, this tax act made changes to retirement plans, including a change to age 72 from 70 ½ for when distributions are required to be made from IRA accounts,” Marshall said. “This would have had a refund impact on a limited number of individuals; however, an additional provision enacted later would go on to eliminate the requirement to take a distribution for 2020.”
Recent Changes: Tax Year Deadline Dates You Need To Know
How the Coronavirus Aid, Relief and Economic Security (CARES) Act Impacts Your Refund
“Enacted in response to the economic impact of COVID-19, this tax act is the one that eliminated the mandatory distribution requirement for many retired Americans with IRA accounts,” Marshall said. “Careful review was required for these situations since tax withholding is often elected with these distributions, so the suspension of the distribution could also have an impact on the amount of tax that people had paid in.”
Find Out: Here’s the No. 1 Thing Americans Do With Their Tax Refund
How the Economic Security Act Impacts Your Refund
This act provided economic impact payments to individuals of $1,200 with an additional $500 for qualifying children under the age of 17. These payments are not taxable and therefore would not have an impact on 2020 refunds, Marshall noted.
How the Taxpayer Certainty and Disaster Tax Relief Act of 2020 Impacts Your Refund
“This tax act provided an extension or made permanent several provisions or deductions that would have otherwise expired, including the lower 7.5% AGI limitation on medical expenses and the exclusion for the discharge of indebtedness on a qualified principal residence,” Marshall said. “That exclusion will prove extremely important to Americans going through mortgage issues as a result of COVID-related reduction in income.”
Be Aware: The Major Tax Changes for 2021 You Need To Know About
What These Policies Collectively Mean for Your 2020 Tax Year Refund
“How all these provisions have impacted 2020 refunds is all over the board,” Marshall said. “Many taxpayers have taken a hit to taxable income resulting from complications of the COVID-19 virus. How that impacts the refunds that will be issued will be dependent on how your tax payments are normally made. Those with changes to income covered by tax withholding should feel the least amount of impact. However, for those individuals making tax payments outside of withholding, there was a necessity to review those quarterly payments very carefully this year.”
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Last updated: March 22, 2021
This article originally appeared on GOBankingRates.com: How Trump’s Tax Policies Are Still Impacting Your Refund
FAQs
You may be in line for a smaller tax refund this year if your income rose in 2023. Earning a lot of interest in a bank account could also lead to a smaller refund. A smaller refund isn't necessarily terrible, since it means you got paid sooner rather than loaning the IRS money for no good reason.
Why is everyone owing taxes this year in 2024? ›
Under-withholding from Your Paycheck
Under-withholding is the #1 reason individuals owe taxes. This occurs when not enough tax is taken out of your paychecks throughout the year. If you haven't updated your W-4 form after a major life change, income adjustment, or second job, you might find yourself in this situation.
Are people getting bigger tax refunds? ›
As of April 19, 2024, the IRS processed about 136 million returns and refunded roughly $245 billion to U.S. taxpayers. That's 3.6% more than was refunded last year. The average individual refund is also larger — and by an even wider margin.
Will tax returns be bigger in 2024? ›
Because of that, workers whose pay didn't keep up with last year's high inflation are on track to get bigger tax refunds, with some likely to receive up to 10% more in 2024, Jackson Hewitt chief tax information officer Mark Steber told CBS MoneyWatch earlier this year.
Will my 2024 tax refund be lower? ›
After a slow start to the 2024 tax season, the average tax refund this year is now up to $3,070, a 6% increase from this time in 2023. While a $3,000 check in April is a welcome cash infusion, wouldn't it be even better to get $6,000 back? How about $10,000?
What is the average refund for 2024? ›
Since the start of the January tax season, the IRS has delivered more than $200 billion in refunds through early April. The average refund was $3,011, a 4.6% increase from last April's average of $2,878. Here are major filing season numbers in 10 key areas.
Why do I always owe taxes when I claim 0? ›
If you claimed 0 and still owe taxes, chances are you added “married” to your W4 form. When you claim 0 in allowances, it seems as if you are the only one who earns and that your spouse does not. Then, when both of you earn, and the amount reaches the 25% tax bracket, the amount of tax sent is not enough.
What tax changes are coming in 2024? ›
For tax year 2024, the standard deduction for married couples filing jointly rises to $29,200, an increase of $1,500 from 2023. For single taxpayers, the standard deduction rose to $14,600, a $750 increase from the previous year.
Is it better to owe taxes or get a refund? ›
“The best strategy is breaking even, owing the IRS an amount you can easily pay, or getting a small refund,” Clare J. Fazackerley, CPA, CFP, told Finance Buzz. “You don't want to owe more than $1,000 because you'll have an underpayment penalty of 5% interest, which is more than you can make investing the money.
How are people getting 30k back on taxes? ›
The Department of Community Services and Development encourages Californians earning under $30,000 a year to file their taxes to claim the California Earned Income Tax Credit (CalEITC), a cash-back tax credit, and receive a larger tax refund.
If you make $60,000 a year living in the region of California, USA, you will be taxed $13,653. That means that your net pay will be $46,347 per year, or $3,862 per month.
What is the average tax refund for $75000? ›
Which income bracket got the biggest refund?
| Income level | Average refund | % of income |
|---|
| $25,000 to $49,999 | $2,845.81 | 5.7% to 11.4% |
| $50,000 to $74,999 | $2,830.10 | 3.8% to 5.7% |
| $75,000 to $99,999 | $3,347.69 | 3.3% to 4.5% |
| $100,000 to $199,999 | $4,436.36 | 2.2% to 4.4% |
3 more rowsApr 14, 2024
Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.
Is it better to claim 1 or 0 on your taxes? ›
Claiming 1 on your tax return reduces withholdings with each paycheck, which means you make more money on a week-to-week basis. When you claim 0 allowances, the IRS withholds more money each paycheck but you get a larger tax return.
What is the average tax return for a single person making $40,000? ›
If you make $40,000 a year living in the region of California, USA, you will be taxed $7,507. That means that your net pay will be $32,493 per year, or $2,708 per month.
What are the changes in income tax in 2024? ›
The Tax Cuts and Jobs Act (TCJA) increased the standard deduction (set at $14,600 for single filers and $29,200 for joint filers in 2024) while suspending the personal exemption by reducing it to $0 through 2025.
What is the new Child Tax Credit for 2024? ›
The proposed payment amount for the Child Tax Credit expansion in 2024 (to be filed in 2025) and 2023 (to be filed in 2024) is $2,000 per qualifying child under the age of 17 as of December 31st, 2023. If the Child Tax Credit expansion does not pass, the maximum credit will remain at $2,000, with no monthly payments.
Will Child Tax Credit delay refund 2024? ›
This story is part of Taxes 2024, CNET's coverage of the best tax software, tax tips and everything else you need to file your return and track your refund. Note that your refund could be delayed because you claimed the child tax credit or the earned income tax credit, which takes a bit longer to process.
