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Factors That Impact Your Tax Refund

Factors That Impact Your Tax Refund

If you aren’t sure why your tax refund is higher or lower this year, there are several possible reasons. This post gives you a quick overview of some of the potential causes, but you should ask a professional tax preparer for a personalized explanation.

New Tax Laws

The Tax Cuts and Job Acts (TCJA) was the biggest tax overhaul our country has seen in decades. The TCJA was designed to cut taxes, but the benefits won’t be evenly shared by every taxpayer.

Some of the major changes in the TCJA that could impact your tax refund include the following:

  • Bigger standard deduction.
  • Elimination of personal exemptions.
  • Lower tax rates.
  • Expanded Child Tax Credit.
  • Corporate tax cut and pass-through business tax deduction.
  • Elimination of miscellaneous itemized deductions.

These changes, along with many others, are likely to impact your tax refund for as long as the TCJA remains in effect. This may mean a higher or lower refund, depending on your situation.

Tax Withholdings

The IRS pay-as-you-go tax system has to accomplish two competing objectives:

  • The IRS wants you to pay taxes as you earn income throughout the year.
  • Your tax liability is based on your annual income and deductions, which won’t be known until the end of the tax year.

Tax withholdings and estimated tax payments are an educated guess as to have much you should be paying. However, you can end up overpaying or underpaying throughout the year, particularly if your income fluctuates significantly from year-to-year.

The TCJA also caused some hiccups with taxpayer withholding. Many taxpayers didn’t know how to adjust their W-4 forms based on the new laws and underpaid, leading to a surprise tax liability when they filed their returns.


Your refund will generally be affected if you take more of the following deductions:

  • Retirement plan contributions
  • Business expense deductions
  • Charitable contributions (if you itemize)
  • Mortgage interest (if you itemize)

You’ll have to decide whether the tax breaks are worth increasing how much you put towards these items.

If you don’t get a big tax refund, that isn’t always a bad thing. It could mean that you’re paying just the right amount in taxes throughout the year and you’re already doing everything you can to save on your taxes.

However, owing a big tax liability at tax time can be a problem. You could face underpayment penalties, and you may need to talk to a tax attorney to figure out how to pay back your tax debt over time.

The Gartzman Law Firm offers tax settlement help for both federal and state tax debt. Use our contact form to request a consultation with an Atlanta tax resolution attorney.