To avoid repayment shock (or lack thereof), do a mid-year tax assessment.
GREENSBORO, NC — COVID has brought with it masks, social distancing, and remote work and school. It also brought stimulus checks, a $3,600 child tax credit and extended earned income tax credits.
Many people have cashed in, this year it’s time back to pre-COVID tax laws.
“All of these things won’t happen in 2022 because tax law is reverting to pre-COVID, so it’s a good time to save yourself from reimbursement shock and a good time to act now to make a difference. during tax season,” Jackson Hewitt’s JW DeGance said.
To avoid this refund shock, you can do a mid-year tax assessment. You can hire a tax preparer to do this, or you can do it yourself.
Check this, Jackson Hewitt has a free tax calculator. Most of us file Form 1040, but there is also help for the self-employed if you have estate tax impacts and more.
Calculators make it easy, you just need to type in numbers.
The hardest part of all of this is simply getting your paperwork together.
“Gather your income documents, your pay stubs, what you’ve earned through June, and what you’ve paid for taxes. If it’s going to be similar for the second half, you can double that to figure out what your refund will be,” DeGance said.
If you have to withhold more tax or if you have to give more in your retirement to reduce your taxable income,
it’s good to know that now instead of just before the end of the year.