There is still time in 2024 for hardworking Americans to make financial changes that can positively impact the results of next season’s tax returns. The experts at Jackson Hewitt Tax Services® are encouraging all Americans to do a mid-year tax checkup and create a personal financial plan for the remainder of the year.
In fact, according to a recent survey by Jackson Hewitt, 43 per cent of people are planning to do a mid-year checkup, which implies that 57 per cent of taxpayers are mistakenly not planning to take any action to review the current status of this year’s taxes.
It’s vital for taxpayers to do a mid-year tax checkup and plan for the rest of the year, especially if they experience life changes or have a change to their finances. It’s also the best time to make strategic adjustments, especially for those unhappy with last year’s tax refund size or an IRS balance due at tax time. - Mark Steber, Chief Tax Information Officer, Jackson Hewitt Tax Services.
According to our recent survey, most people are experiencing financial changes that can impact their taxes at tax filing time. Take the proper measures now so there are no surprises at tax time, such as owing the IRS and stating a more significant balance or receiving a smaller tax refund overall.
According to Jackson Hewitt’s survey, the following relates to people’s finances thus far in 2024:
30 per cent have had a change in their base income/salary
29 per cent have donated to charitable organizations
27 per cent have had to find new sources of income
23 per cent have invested in traditional stocks or cryptocurrencies
9 per cent have won money via gambling, sports betting, or the lottery
3 per cent have collected unemployment income
Taxpayers can flex more control over their finances by adjusting their withholdings on their W-4 on file with their employer throughout the year. Nearly 30 per cent of recent survey respondents need to know if they are withholding the right amount on their W-4, and 30 per cent of people need to realize that they can adjust their tax withholdings at any time. In reality, you can work with your employer and adjust your withholdings as often as you want to ensure that your take-home pay best suits your financial situation. -- Mark Steber, Chief Tax Information Officer, Jackson Hewitt Tax Services.
The same advice goes for the self-employed. Either full-time or with part-time employment, it’s equally important to look at your tax situation to make sure you are adequately paid to date, said Steber. This is important for two reasons. First, the rule is that if you are earning money from self-employment activity, you must pay federal income, state income, Social Security and Medicare taxes quarterly if you owe, not just at tax filing time. Do not monitor your other self-employment income, corresponding taxes, and liabilities. In that case, it can have an unexpected and sizable impact on your regular income and tax outcome at tax time.
How to do a tax checkup?
First, taxpayers should review the prior 2023 tax return with a tax accountant
Taxpayers should review current income and expenses, compare current-year life facts with the 2023 return, and discuss what can impact the remainder of 2024
Taxpayers should evaluate sources of earned income (for example, traditional W-2 employment, side gigs, investments, etc.) and understand how much total money was made in the first half of the year and what’s taxable
Taxpayers should consider notable personal changes from this year that have or will happen by December 31, 2024, including a change in dependents, employment status, new or different earnings and income, and marital status
Taxpayers can calculate a mid-year tax estimate for the year’s first half, then double or annualize an estimate for the entire year’s income, taxes due, and taxes paid so far. Then, a projection can be made for what the end of the year will look like for income, taxes, and a tax refund or balance of taxes due to the IRS
Finally, start now and organize all financial records, which will help during tax filing time
If taxpayers aren’t happy with the estimated tax refund or projected balance due, it’s the ideal time to take action. Your accountant can assist you with proposed adjustments and strategize for the best-case scenario and results.
Doing a mid-year tax checkup and creating a plan for the remainder of the year, such as identifying tax breaks you can benefit from or how to make adjustments to qualify for a tax credit or deduction, can be helpful and is essential for starting and maintaining financial health, said Steber. This proactive approach does not have to be complex or time-consuming and helps prepare taxpayers now rather than being surprised and stressed at tax time.
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Douglas Pilarski is an award-winning writer & journalist based on the West Coast. He writes about luxury goods, exotic cars, horology, tech, food, lifestyle, equestrian and rodeo, and millionaire travel.
You’re welcome to share your thoughts or tell me your story. Please email me here. dp1@sawyertms.com.
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