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.