Tax season to include refund delays, variant refunds reflecting individual situations

Cropped Photo: Ken Teegardin / CC BY-SA 2.0
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Sponsored - As tax season approaches, Americans are readying for their first refund under new tax reform, which is expected to have wide-reaching implications — especially for families and homeowners.

Tax season 2019 will include early refund delays due to anti-fraud measures required by the PATH Act, and taxpayers may encounter large swings in the size of their refunds. It’s going to take some time for people to truly untangle their tax situation, which may make this season a good one to ask for help.

The tax professionals at H&R Block have been preparing for tax season 2019 since the moment reform passed, and they’re prepared to unpack and untangle individual tax situations.

Andrew Wagner is an H&R Block Senior Tax Advisor who has been preparing individual and small business tax returns since 2008. He said millions of taxpayers may face refund delays this season.

“The IRS is required to hold refunds for returns claiming the earned income tax credit (EITC) and additional child tax credit (ACTC) until mid-February,” Wagner said. “Approximately 30 million taxpayers claim the EITC or ACTC, with half filing early, which means as many as 15 million taxpayers could have their refunds delayed until mid-February.”

Despite the early refund delays, some taxpayers may see their tax refund situation improve, as there are certain groups that may see a larger refund than expected.

“Families with children under 17, especially those who claim the standard deduction, are most likely to get a refund bigger than anticipated, unless they had updated their withholding with their employer at the beginning of the year,” Wagner said.

And though a larger refund sounds pretty sweet to most of us, a larger refund could point to an underlying issue — that taxpayers who aren’t up-to-date on the impacts of reform had less money to spend throughout the year.

“Getting a refund bigger than expected may sound like a nice problem to have, but it means families weren’t able to use their money during the year,” Wagner said. “It’s OK to want and plan for a big refund, but it’s always better to know it’s coming.”

In the same line of thinking, not understanding the changes to the tax code could also mean some taxpayers will have a balance due.

“Those who did not update their W-4 are most at risk of significant changes to their refund or balance due,” Wagner said. “While most people will come out ahead overall, it won’t feel that way for the people who will get a smaller tax refund, or will end up owing, because they got their tax reform benefit through bigger paychecks.”

It’s important to understand the changes, and how taxpayers can affect their own situation, as the impacts of tax reform continue to become clear. Those at risk of owing a balance can make changes to alter their outcome next year.

“The potential for surprises comes from updated IRS tables employers use to calculate tax withheld from an employee’s paycheck. These changes generally resulted in bigger paychecks and less tax withheld starting in February or March, even if you took no action,” Wagner said.

Changes in the tax code could result in myriad unique situations for taxpayers. While some may owe a balance due, others are going to see a larger refund than they expected. But what about those whose refund is delayed, and who count on that refund for financial security?

“For taxpayers who want access to money faster than the IRS can provide a tax refund, H&R Block is offering the Refund Advance, where you could get an advance on your refund of up to $3,000 after filing your taxes,” Wagner said. “It’s a no-interest loan from Axos Bank, and the loan is repaid from your tax refund once received. Applications are available at participating H&R Block offices from Jan. 4 to Feb. 28.”

Tax filers looking for more information on changes to the tax code, their unique tax situation or options for receiving a Refund Advance can head to hrblock.com/refundadvance or call 1-800-HRBLOCK.