To avoid refund shock (or the lack of a refund), do a mid-year tax assessment.
GREENSBORO, N.C. — COVID brought with it masks, social distancing, and remote work and school. It also brought stimulus checks, a $3,600 Child Tax Credit, and the Extended Earned Income Tax Credits.
A lot of folks cashed in. This year, time rolls back to pre-COVID tax laws.
“All those things are not going to happen in 2022 because the tax law reverts back to pre-COVID, so it’s a good time to prevent yourself from refund shock and a good time to take action now to make a difference come tax season,” said JW DeGance of Jackson Hewitt.
To avoid that refund shock, you can do a mid-year tax assessment. You can go to a tax preparer to do this, or you can do it yourself.
Check this out, Jackson Hewitt has a free tax calculator. Most of us file 1040, but there is also help for self-employed folks if you have estate tax impacts and more.
The calculators make it easy, you’re just plugging in numbers.
The hardest part of all this is just getting your paperwork together.
“Gather your income documents, pay stubs, what you’ve earned through June, and also what you’ve paid in for tax. If it’s going to be similar for the second half of the year, you can double that to figure out what your refund is going to be,” said DeGance.
If you need to withhold more taxes or if you need to give more to your retirement so your taxable income is lowered, it’s good to know that now instead of right before the end of the year.
TL;DR
Tax refunds for 2023 may be smaller due to the reversion of tax laws to pre-COVID regulations, eliminating previous benefits like stimulus checks and enhanced tax credits.
- Many taxpayers received significant benefits during COVID, including stimulus checks and increased tax credits. These benefits are no longer available for the 2023 tax year. Conducting a mid-year tax assessment can help individuals prepare for potential changes in their tax refunds.
- To avoid refund shock (or the lack of a refund), do a mid-year tax assessment.
- GREENSBORO, N.C.
Your tax refund may be smaller in 2023 because many of the benefits introduced during COVID, such as stimulus checks and the increased Child Tax Credit, are no longer available, reverting tax laws back to pre-COVID standards.
To avoid refund shock, consider conducting a mid-year tax assessment to evaluate your income and tax situation. This can help you make necessary adjustments in withholding or retirement contributions before the end of the year.
You can perform a mid-year tax assessment by gathering your income documents and tax payments, then using a tax calculator, like the one offered by Jackson Hewitt, to estimate your potential refund or tax owed.
You should gather income documents, such as pay stubs and any earnings through June, along with records of what you have already paid in taxes to accurately assess your situation.
Yes, there is help available for self-employed individuals, including resources that address estate tax impacts and specific calculators designed for their unique tax situations.