Are Tax Refunds Too High?
Each year, countless South Floridians receive a gift from Uncle Sam. Although it is popular for most people to complain about paying taxes, the truth is the government has been overpaying those who have received refunds for the past 10 years. While tax planning is a year-round process, many people throughout Miami-Dade and Broward Counties wait until the minute to file their taxes. More people are discovering a nice chunk of change.
Why More South Floridians Are Getting Higher Tax Refunds
Tax law can often get complicated. Even the most knowledgeable Fort Lauderdale tax attorney must constantly stay on top of any changes to the tax codes. When it comes to tax planning, the majority of people in South Florida like to keep it simple. Rather than go through a year’s worth of tax planning headaches, more people choose to set their W-4s and not make any changes throughout the year. As a result, nearly 80 percent of Americans end up receiving a federal tax refund.
How Are Tax Refunds Determined?
There are several different factors that will determine a person’s tax refund. In addition to your income, there are also your deductions and credits. According to statistics provided by the Internal Revenue Service, the average tax refund has stayed consistently high over the last decade.
- 2008: $2,728
- 2009: $3,036
- 2010: $3,003
- 2011: $2,913
- 2012: $2,803
- 2013: $2,651
- 2014: $2,952
- 2015: $2,793
- 2016: $2,857
- 2017: $2,782
Keep in mind the tax extension data for 2017 was not included. Many economists are hoping President Trump’s tax reform proposal will bring even better results. The President has already promised the largest tax break for the middle. But whether it gets passed through Congress is another story. High tax refunds are always good news for the American consumer. Many are putting their extra cash to good use. According to GoBankingRates, approximately 4 out of 5 Americans said they used their tax refund to reduce their debt or deposit in their savings account.
But critics say high tax refunds do not always tell the whole story. It is often an indication an individual did not effectively manage their money the previous year. One of the big issues with tax refunds is they earn no interest. Anytime there is inflation, it reduces the purchasing power of your tax refund. Although it requires more work, it is better to do some serious tax planning over the course of the year. Then you can invest your money and let it grow in interest. Although a tax refund may look good next April, you could have earned even more money with effective year-round tax planning.
Do You Have Unresolved Issues With The IRS? Fort Lauderdale Tax Attorney Ira Zuckerman Can Help
Some problems never seem to go away. Among the most troubling are unresolved tax problems, such as back taxes, bank levies, tax liens and wage garnishments. Over the years, Fort Lauderdale tax attorney Ira Zuckerman has utilized a personable and comprehensive approach to help clients resolve their issues with the IRS. To learn more, contact the legal team at Zuckerman Law, LLC and schedule a consultation to discuss your case.