Mid-year tax planning more important than ever before

“Many Americans experienced smaller tax refunds this past tax season, and in many cases, there was an increase in people owing balances due compared to last year. Next year’s Tax Day might look very similar for many taxpayers if they don’t take immediate action now to make adjustments,” said Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “Taxpayers have more control over their tax return than you might think, but it’s necessary to keep ahead of financial and life changes that can impact you and your family so you avoid refund shock and manage expectations at tax time. That’s why we strongly encourage having a mid-year planning appointment with a Jackson Hewitt Tax Pro.”

To do a mid-year tax planning, taxpayers should first review their 2022 tax return and a summary of their current income amount so far in 2023 and compare the basic facts. Then, taxpayers should think of notable personal changes from this year that have or will happen by December 31, 2023, that will impact their tax return, including a change in dependents, employment status, new or different earnings or gains, as well as getting married or divorced. With this information, taxpayers can calculate a mid-year estimate for the first half of the year, then double or annualize an estimate for the full year and compare it to the tax amount previously paid.

If taxpayers aren’t satisfied with the estimated tax refund, or balance due, it’s an opportunity to take action. A Jackson Hewitt Tax Pro can help taxpayers with what can be changed, including altering tax withholdings, increasing retirement contributions, and other strategies.

“Taxpayers have experienced many changes in the last few tax filing seasons. During the height of the pandemic, many taxpayers benefitted from stimulus payments and increased tax credits, but this past tax season was reflective of what filing was before 2020,” said Steber. “We expect this year’s tax filing to be a similar experience and are recommending to all of our clients to do a mid-year planning session with their Tax Pro to make sure they better understand their situation and to plan for any changes during the remainder of the year.”

While every taxpayer should consider mid-year planning, it’s an important activity for those who are self-employed. “Updated tax law changes are in effect for self-employed taxpayers who use third-party payment apps (Venmo, Zelle, PayPal, and others) for business payments,” said Steber. “Those who use these apps for business purposes and accept $600 or more during 2023 will now receive a 1099-K form from the app. Previously these users didn’t receive a form from the vendor unless they accepted $20,000. These earnings have always been considered taxable income, but the change is receiving a 1099-K form from the third-party vendor.”

For more information, visit jacksonhewitt.com and to locate an office to schedule a mid-year planning appointment.

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About Jackson Hewitt Tax Service Inc.

 Jackson Hewitt Tax Service Inc. is an innovator in the tax industry with a mission to provide its hard-working clients access to simple, low-cost solutions to manage their taxes and tax refunds. Jackson Hewitt is devoted to helping clients get ahead and stands behind its work with its Maximum Refund Guarantee and Lifetime Accuracy Guarantee^® (restrictions apply, see Jackson Hewitt’s website for more details). Jackson Hewitt has more than 5,600 franchise and company-owned locations nationwide, including 2,700 in Walmart stores as well as online tax prep services, making it easy and convenient for clients to file their taxes. For more information about products, services, and offers, or to locate a Jackson Hewitt office, visit www.jacksonhewitt.com or call 1 (800) 234-1040. 

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