The 2019 tax season is upon you, and if you’ve been listening you’ve probably heard a number of people complain about the changes. This is because while tax adjustments occur every year, and 2019 brings with it more than usual. For some, it’s confusing as they are required to change how they file. However, a smaller return does not mean you did not keep as much money. In fact, there’s a better chance you received more money throughout the course of the year than you have at any other time. Here is a bit more on how tax refunds were calculated, and what you can do in the future to make sure you receive the most money throughout the year.
What the Government Recommends Doing
If you want to keep the most money throughout the year and boost the size of your checks the federal government recommends adjusting how you claim taxes. It says if you are a single individual without dependents and one job to claim two different allowances. This will push you as close to covering your full tax liability as possible. While this will mean an even smaller tax return, it ensures you have the most money coming in week in and week out. Chances are, you’d rather have the money spread throughout the course of the year, so you can put it aside in your savings account, than waiting for the government to mail you a check.
How Average Workers Faired ($20K-$40K)
The average fast-food cook made just over $21,600 annually. The federal government withheld $744 dollars over the course of the year, giving the average working just over $950 in its refund. For the average server who brings in just over $25,000, the federal income tax due is around $1,100 while the tax refund is nearly $1,000. The tax income is slightly here versus the refund here (as compared to a fast-food cook) because tips are calculated differently from wages. Depending on the restaurant the wages may be tipped like that of an independent contractor. Plus, the lowest income bracket does receive the highest percentage of a refund.
For the average barber, they brought home around $30,500, with a federal income tax of $1,600 and nearly $1,000 in tax returns. If you were a travel agent or someone bringing in around $40,000, the federal income tax was around $2,800, while the refund was just under $1,000.
How Workers Making Over $50,000 Faired
The average firefighter pulled in around $52,000 annually. A firefighter (and others making around this amount) paid just under $4,000 in federal taxes, while their tax return hit just over $1,400. For an average insurance agent bringing in $67,000, their federal income taxes would have been around $6,500, while they would have received just over $1,800 in their refund. Also, a computer programmer making around $87,000 would have had federal taxes of around $10,600, with just over $1,800 in their refund.
As you can see, the tax returns are designed to specifically help individuals who make less, as they are required to contribute less while receiving a higher percentage back.
In 2019 the federal government withheld fewer taxes from your paycheck. For some, this meant a smaller return than normal. However, many of these individuals who are receiving smaller refunds filed their taxes without taking advantage of these different big refund opportunities. So while the up front refunds might seem smaller, you’re likely keeping more money in your pocket book, which means you’re making money off the interest in your bank account and not the federal government (it also means you can pay off more debt throughout the year).
Hopefully this information has helped clear up some of the question marks you have regarding the 2019 tax filing season.