Washington: The average tax refund was down 8 percent from last year after the first week of filing, according to the IRS, under the first full year of the overhauled tax code.
On Friday, the IRS reported refunds averaged $1,865 compared with $2,035 for tax year 2017.
Also, the number of returns received, 18,302,000, declined 12.4 percent from 16,035,000 for five days through Feb. 1.
The Republican-led tax overhaul was the most sweeping changes to the tax code in 30 years.
For tax year 2018, people will no longer use Form 1040A or Form 1040EZ but instead will use the redesigned Form 1040, according to the IRS. “Many people will only need to file Form 1040 and no schedules,” the IRS said on its website.
CNN reported people might see smaller refunds than expected if they didn’t adjust their paycheck withholdings after the changes took effect.
In addition, their tax burden might increase because the revised code eliminated some popular deductions, including moving expenses for self-employment, personal exemptions, limited state and local taxes, and miscellaneous ones subject to a 2 percent floor, according to TaxAct Blog.
The tax season opened on Jan. 28. The 35-day partial government shutdown, the longest in U.S. history, which affected the Treasury Department, ended three days earlier.
“Filing season has successfully launched with millions of tax returns having been filed,” Treasury Secretary Steven Mnuchin said in a statement. “We thank the Treasury and IRS employees who have been working diligently to ensure the system is processing these returns efficiently.”
The total number of returns processed, 17,518,000, was down 13.1 percent from last year.
For every 10 self-prepared returns, six were handled by tax professionals.
Visits to IRS.gov totaled more than 74 million from 66 million last year — a 10.9 percent decline.
Roughly 30 percent of taxpayers itemized in the past, according to Intuit TurboTax, but the numbers are expected to decline because of a higher standard deductions and fewer deductions.
The new rules nearly doubled the standard deduction to $12,000 for single taxpayers and $24,000 for married couples. Also rates were lowered and threshold changed. For example, it declined from 15 percent $18,651 to $75,900 to 12 percent from incomes from $19,051 to $77,400. In the top bracket, it went from 39.6 percent for income more than $470,000 to 37 percent above $600,000.
The legislation also lowered the corporate rate to 21 percent from 35 percent.
Image: The 1040 is the standard IRS tax form, which around 30 percent have utilized in past years, according to Intuit TurboTax. For Tax Year 2018, you will no longer use Form 1040A or Form 1040EZ. Photo courtesy IRS