Whether or not you have been keeping up with the day-to-day politics of the tax debate, you are most certainly aware of the results. The Internal Revenue Service has recently informed the general public that as many as 100 million people will be late getting their tax refund checks. This applies even to people who take care of their tax obligations through an electronic program.
The “fiscal cliff” debates in Congress and other, smaller tax battles have finally taken their toll on the average citizen. Although many tax breaks for the middle class have been extended for the time being, they will be effectively wiped out because of the time delay of actually receiving the money.
For the average citizen, this means that the yearly tax refund should not be counted on as a definite piece of the family budget this year. Although the amount of the tax refund will not be affected, the timing of the tax refund this year will be uncertain.
The IRS has yet to implement the full regimen of changes that the new tax legislation requires. Because the tax deal was made in Congress directly before and during the Christmas holidays, it was almost impossible to implement the changes after they were made.
Many financial experts are advising that individuals and families that count on tax refund to work around the changes for 2013. Money that usually went into expendable purchases will now have to be saved because it is uncertain when the windfall of the tax refund will occur. However, this type of saving tends to create a surplus later in the year which can be used for investment purposes after the tax refund comes in. Many advisors are telling their clients to be sure not to spend this money, because it can actually serve as an emergency fund or as money for investments that can increase personal wealth.
Financial advisers are also informing their clients that this type of uncertainty in the timing of tax refunds may become somewhat of a norm in the coming years. Because of many unresolved issues in the federal financial structure, many political battles will be fought in the near future that may affect the greater population of taxpayers.