We are barely into tax season and are already seeing some people experience surprises when they start to see what their tax return is going to look like. As always, we don’t want to say, “I told you so,” but it is not as if any of these surprises had to be surprises.
One of the biggest of those surprises is going to continue to be the advance payments of the Child Tax Credit that people received in 2021. Many just took the money not realizing how it could affect the final number on their tax return. For many, this does not even mean that they are receiving less back as a tax refund, it is just some that some of it was received earlier.
This is also the time of year when everyone is looking at their W2, though, and only now taking stock of what taxes were withheld from their pay last year. Granted, I don’t know if this was ever something that people tracked on a week-to-week basis, but it is even easier to not think about now when so many now get paid digitally and may not even look at a paystub during the year.
Of course, this is also a time when many people are making money outside of their main job, too, which can only further complicate tax matters. To return to the original point, though, none of this has to be a surprise.
Many people may not have filled out a W-4 in years, but the form was revamped a couple years ago to account for many different situations. It is no longer just a few spaces that largely only record if you are married or not and have dependents. Instead, now you can indicate if you have another job, how much money you expect to make outside of W2 jobs, how much you expect to be able to take in deductions, and any additional money you would like withheld from your paycheck.
As with most things tax-related, doing this can feel daunting and difficult. The IRS has a pretty powerful tool in its tax withholding estimator, though, which can help you make sure you are withholding the amount you wish from your paycheck. This tool can be reached via a website (https://www.irs.gov/individuals/tax-withholding-estimator) although it is currently down until sometime early this month. If it is something that will benefit you, though, tuck the information away for a little bit and don’t be afraid to use it. After all, it will keep the surprises at bay.
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