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This group of Americans will most likely get the biggest tax refunds

Crystal Sing | Twenty20

A handful of early tax filers are seeing unexpectedly low refunds, or worse, owing money to the IRS. But not everyone is in for an unpleasant surprise.

Many people are watching this tax season more closely than usual because it's the first time the Tax Cuts and Jobs Act is in effect for a full tax year. The new law, passed in December 2017, enacted a number of broad changes. It introduced new tax brackets, included an expanded child care credit and changed the way itemized deductions are factored in, for example.

Unfortunately, 28 percent of Americans don't understand exactly what's different, and almost half have no idea how the changes affect their tax bracket. Adding to that confusion, refunds dropped 8.7 percent over the first two weeks of filing season, according to the Internal Revenue Service (IRS). Plus, the IRS is processing returns at a slower pace than usual, in large part due to the 35-day partial government shutdown.

"The law is so different, we may have a different pattern than in the past," Howard Gleckman, a senior fellow in the Urban-Brookings Tax Policy Center, tells CNBC Make It. "This is not a normal year."

But while some Americans may see lower refunds, most tax experts expect the refund rate to stabilize. And for some, their tax refunds will be higher this year.

Families with kids will likely see the biggest refund

Those with children still living at home may see a bigger refund this year, Lynn Ebel, director at The Tax Institute at H&R Block, tells CNBC Make It. Especially if they live in low-tax states such as Texas, Washington and Wyoming.

"Families with children under 17, especially those who claim the standard deduction in 2017 and will claim it in 2018, are most likely to get a refund bigger than anticipated," Ebel says.

The child tax credit is a great boost for young families with children.
Harlene Stevens
CPA with accounting firm Nisivoccia LLP

Under the new law, families can deduct up to $2,000 per qualifying child, up from $1,000 previously. These are credits, so if you tax bill is $10,000 and you qualify for the maximum credit, your bill goes down to $8,000. Plus, up to $1,400 of the child tax credit is refundable this year. So even if you don't owe any money to the IRS, you can get that money back as a refund.

"The child tax credit is a great boost for young families with children," Harlene Stevens, a CPA with accounting firm Nisivoccia LLP, tells CNBC Make It.

There's also a new, non-refundable $500 credit for other qualifying dependents who may not otherwise meet the requirements for the larger child tax credit. For example, if you have college-age children under 23 who are still living at home, or if you are supporting grandchildren, you can claim the credit.

However, Ebel notes if you don't have children or dependents and you itemized your deductions in 2017, and plan to do the same in 2018, you will likely see a smaller refund. This set of Americans "are one of the groups most at risk of owing instead of getting a refund," she says.

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Look beyond just your refund

Lisa Greene-Lewis, a TurboTax expert and CPA, tells CNBC Make It that it's important to look at your total tax picture, and not just the refund.

Many people are expecting to see more money in their pocket because five of seven tax rates have been lowered. But Green-Lewis says whether you see a bigger refund depends on your personal tax situation and if you appropriately adjusted your W-4 withholdings in 2018.

An estimated 20 percent of taxpayers did not withhold enough throughout the year, Barry Kleiman, a CPA and principal at the tax firm Untracht Early, tells CNBC Make It.

"The majority of taxpayers who usually take the standard deduction may see more money in their pocket, but this does not necessarily mean it will show up in their refund; it could have shown up in their paycheck last year, their tax refund, or as a lower tax balance due," Greene-Lewis says.

A single person making $50,000 per year, for example, would see a tax savings of $2,640 under the new standard deduction amount, as opposed to the $1,587.50 in savings under the old system. But more of the savings is likely in the taxpayer's paycheck last year, instead of coming back to them at tax time.

The majority of taxpayers who usually take the standard deduction may see more money in their pocket, but this does not necessarily mean it will show up in their refund.
Lisa Greene-Lewis
TurboTax expert

If you did end up owing the IRS money this year, there's a fairly easy fix for next year: "Employees can adjust their withholdings to make up for the amount due based on the 2018 tax filing," Ryan DiPeri, a senior tax associate at Bederson LLP, tells CNBC Make It.

"Tax law is constantly changing," he adds. Some of the changes are permanent, while other changes will only last through December 2025. After that, the tax laws will revert back to what they were in 2017 unless Congress passes new legislation.

"While the first year is an adjustment for most people filing a return, once you have an idea of what your return looks like, you can plan accordingly for future tax years," DiPeri says.

Don't miss: Here's who is more likely to get a lower refund this tax season, according to experts

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Crystal Sing | Twenty20
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