Jackson Hewitt Warns Taxpayers They Might Experience Refund Shock for 2022 Tax Returns
Tax preparation company urges taxpayers to do mid-year tax checkup to avoid surprises during tax filing, shares biggest changes this year so far
JERSEY CITY, N.J., July 12, 2022 /PRNewswire/ — The past few years have been considerably favorable for millions of taxpayers who received a large tax refund, but this tax season will be much different. Jackson Hewitt Tax Services® is warning taxpayers that they could risk refund shock and receive a smaller refund this year. Or worse, they might owe the IRS. The tax preparation company is encouraging taxpayers to do a mid-year tax checkup appointment to understand their situation and make possible changes that could benefit them, to avoid experiencing refund shock during filing season early next year.
“While most people don’t think about their taxes until the end of the year, July is the perfect time to make a mid-year tax-planning appointment, especially this year, when many taxpayers are at risk of experiencing refund shock,” says Mark Steber, Chief Tax Information Officer at Jackson Hewitt. “My advice: Plan now, keep on top of changes that will impact you and your family, and work with an experienced Tax Pro who has your best interests in mind.”
To do a mid-year tax checkup, Steber says that taxpayers need to review a few items to better understand their 2022 situation, including last year’s tax return, a summary of 2022’s current income amount, and an awareness of notable personal changes from the year–like a change in dependents, change of employment or self-employment pay, getting married or divorced–that may impact their tax situation. With this information, taxpayers can calculate their mid-year tax estimate for the first half of the year, and compare it to the tax amount they’ve paid.
“Once someone has their expected results, they should meet with a Tax Pro to understand how to act accordingly,” Steber adds. “If taxpayers are seeing they might have a smaller refund than they expect or even a balance due, there is still time to take action. That could mean anything from increasing tax withholdings for the balance of the year, to increasing contributions to qualified retirement plans, to many other strategies. See your local Tax Pro for answers to tax specific questions on your unique circumstances.”
In addition to doing a mid-year tax checkup, the Tax Pros at Jackson Hewitt are offering taxpayers insight into the top four things they should know to also help avoid refund shock this tax year:
- Unlike 2020 and 2021, 2022 will likely not have additional stimulus checks, also known as Economic Impact Payments or the Recovery Rebate Credit. These checks were part of COVID relief packages, and the IRS issued more than 470 million payments in the past two tax seasons. No new stimulus checks are being discussed in legislation; therefore, taxpayers shouldn’t expect an additional $1,200, $600, or $1,400 per person in their tax refund.
- Several tax credits are reverting to pre-COVID levels, which are comparatively smaller or limited to last year. This year, taxpayers will experience the Child Tax Credit (CTC) being worth $2,000 per dependent (down from $3,600 in 2021)–as well as no advance CTC monthly payments this year. The Earned Income Tax Credit for eligible taxpayers with no children will go back to $500 from about $1,500; and the Dependent Care Credit will go to a max of $2,100 from $8,000. These credits will also return to other age and income limits, which also means fewer taxpayers will be eligible for these credits.
- There won’t be an above-the-line deduction for charitable donations for those who take the standard deduction. This deduction will revert to pre-COVID rules and only be available to those who itemize. For the past two years, taxpayers could deduct up to $600 on their tax returns.
- Every year, there are tax law changes that bring new challenges and differences. New to this year will be the impact on those who use third-party payment apps, like Venmo, Zelle, PayPal, Apple Pay, and others. These apps are now required to report users to the IRS who accept more than $600 for the year in total, and will send users a 1099-K form. This income will need to be reported on all tax returns to the IRS, and many taxpayers will need to pay tax on it.
Taxpayers can learn more about avoiding refund shock, as well as get other planning tips for a smoother 2022 tax filing season by viewing Jackson Hewitt’s “Tax Talk Live” Facebook Live event series. The first series is taking place the week of July 18, 2022, and will be broadcast each week day from 12:00 to 12:15 p.m. EST: facebook.com/jacksonhewitt.
Visit jacksonhewitt.com for more information and to locate an office to schedule a mid-year checkup appointment.
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 5,500 franchise and company-owned locations nationwide, including nearly 3,000 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.
SOURCE Jackson Hewitt Tax Service Inc.