Tax refunds and tax prep fees shouldn’t be a surprise
Even though it’s been more than a year since tax reform passed, most people have taken a wait-and-see approach to figuring out what tax reform means for them. Only 19 percent of survey respondents said they updated their paycheck withholding to take tax reform into account. Now that it’s tax season, it’s the moment of truth.
Almost half of survey respondents think tax reform is going to increase their refund. That’s likely to be true for many people, especially those who take the standard deduction and have children under 17. The child tax credit, which is now twice as large at $2,000 and available to more families, is going to show up in a lot of families’ refunds this tax season.
Tax reform changes can show up in refunds or in paychecks
The other tax cuts, like the lowered tax rates and the almost-doubled standard deduction, aren’t going to show up in refunds. Instead, those tax cuts started showing up in paychecks as early as February of 2018. That’s when employers needed to implement the updated withholding tables to calculate how much tax to withhold from their employees’ paychecks. The new withholding tables took into account the lowered tax rates and the increased standard deduction, changes which impact most people in the same way, so everyone has already seen the benefits of those changes in their paychecks.
What does that leave to impact refunds? Aside from the child tax credit, it’s mostly things that are going to increase taxable income. The new withholding tables didn’t automatically account for tax reform changes like the elimination of personal and dependent exemptions, the $10,000 cap on itemizing state and local taxes and the loss of unreimbursed employee business expenses. All these changes will increase taxable income and lower refunds, but they impact everyone differently. IRS withholding tables cannot tell an employer which employees have more than $10,000 in state and local taxes. The employee is the one who has that information, and needs to update their withholding allowances with their employer to account for their specific circumstances.
W-4 planning eliminates tax refund surprises
That’s why anyone who didn’t update their W-4 – that is, most people – could be in for a surprise when they file their taxes. Even a refund that’s larger than expected can be a problem if it meant unnecessarily scrimping during the year. Everyone should get the refund that they want, and with some W-4 planning, they can.
A tax refund is the largest single financial transaction many people will have all year. Even though it’s their money, it can become a source of anxiety or fear when it isn’t clear how it will turn out or why it is the amount it is. H&R Block tax professionals will provide W-4 planning for their clients when they file their 2018 tax returns to help them get the refund they want next tax season and help alleviate anxiety around their tax refunds.
Upfront pricing eliminates surprise around tax preparation prices
H&R Block clients consistently shared that not having upfront pricing for tax prep has added more stress. So this year, H&R Block has introduced upfront pricing. Anyone can know the price before tax preparation begins, with price transparency from start to finish. All it takes is a quick trip to the office, where anyone can add up their personalized H&R Block tax preparation price in three simple steps: federal price, state price and add-on price.
Everyone deserves to know their tax preparation price before they even begin. And everyone should know what is happening with their tax refund, why, and how to make it what they want. It’s another way H&R Block has your back.
Learn how people can meet the July 15 extended tax filing deadline and stay safe with H&R Block.