- Tax Day 2019 is Monday, April 15.
- Tax refunds may be delayed if the partial government shutdown continues, according to The Wall Street Journal.
- A delay in tax refunds may affect the taxpayers who need it the most: people in lower-income households, who typically file taxes sooner than wealthier filers because they need the money more.
- It would come in a year when many American taxpayers should be expecting bigger refunds than normal.
If the shutdown continues, it could mean a delay in “billions of dollars in income-tax refunds,” The Journal’s Richard Rubin reported.
During the shutdown, the IRS has lost funding and is operating with about 12% of its employees, according to Rubin. While it can process some tax returns, keep systems running, and conduct criminal investigations, it can’t run audits, answer off-season taxpayer questions, or allocate refunds, he reported.
The IRS typically begins accepting tax returns at the end of January, and early filers can see refunds hit their account as early as February.
If the shutdown is resolved in a few weeks, it may not affect taxpayers, but the current situation increases the likelihood of a delay in refunds – which could put pressure on lawmakers to reach a deal to fund the government, Rubin wrote.
But if a deal isn’t reached anytime soon, those who need the refund the most are the most likely to be affected.
“For many Americans, the tax refund is the single largest financial event of the year, and the people who tend to file early in the season are taxpayers who count on large refunds to pay down debt, catch up on bills or make major purchases,” Rubin wrote. “Those are disproportionately low-income households that benefit from the earned-income tax credit and other provisions that give them no income-tax liability or a net benefit from the income-tax system.”
Floyd Williams, a former IRS director of legislative affairs, told Rubin that wealthier taxpayers typically file later and shouldn’t be affected to such an extent.
A delay would come in a year when many taxpayers should be expecting bigger refunds than normal under the new GOP tax law, which went into effect in 2018.
An analysis by UBS estimated an overall increase of $US42 billion to $US66 billion in tax refunds this year over 2017, Business Insider previously reported.
The bank found that most married filers with two children would see the biggest boost in their refunds compared with 2017, particularly those making $US125,000 to $US400,000 and those making under $US40,000 a year.
However, single filers and residents of higher-tax locales like New York and California may see smaller refunds under the new tax law.
- Read more:
- Here’s when you can expect your employer to send the form you need to file your taxes for 2018
- Tax Day is April 15. Here’s what you can expect when filing under the new tax law.
- Everything you should be doing to prepare for tax season
- You may be able to cut down your tax bill with a little-known credit if you saved for retirement this year
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