Just when Texas residents thought they had a handle on IRS tax laws, the 2018 overhaul of the code took place and threw everyone off their stride. In addition to the Tax Cuts and Jobs Act, the IRS and the Department of Treasury also changed withholding tables to reflect the new law. As the IRS reveals its stats from 2018, it seems as if the average tax refund is not so different from last year. It is only down 2% from a year ago.
Standard deductions have nearly doubled to $12,000 for a single filer and many important itemized deductions have been reduced. Personal exemptions have been eliminated as well. Individual income tax credits have decreased. At the same time, the child tax credit has been doubled to $2,000 per child under the age of 17.
Filers saw less withheld taxes as well, which meant their paycheck was higher than it would have been previously. However, this also means their refunds would be lesser. Withholding taxes is tricky. If too much is withheld, a refund is likely, but withholding too little means a person is likely to owe taxes.
The 2018 results probably left a lot of Texas residents unhappy with their taxes. They can take a couple of steps to prepare themselves for the next tax cycle, such as educating themselves about tax law changes and assessing their withholding tax. It might also be beneficial to ensure one’s taxes are accurately prepared to get the most benefit of the deductions and credits.