With the new tax season approaching, many will soon be in the midst of organizing their tax documents to begin tax preparation and filing. Unlike the prior years which included many pandemic tax benefits, taxpayers need to brace for a tax year with smaller refunds. Pandemic tax benefits like the expanded child tax credit, expansions to the child and dependent credit pandemic stimulus payments ended at the end of 2021 without any further extensions or revivals.
Many taxpayers who work as employees and receive a w-2 at the start of the tax season may notice that their withholdings are not enough and will owe. This will especially be the case if they adjusted their withholdings to account for stimulus payments or credits during the pandemic period. Since withholdings ultimately count to pay for taxes owed during the year, if there was a decrease in withholdings, then the take-home pay per pay period will have increased but the amount ultimately applied toward a balance due on taxes will decrease.
The IRS is still telling taxpayers to file electronically and request direct deposit, assuming a refund is owed, for those taxpayers that want their returns processed more quickly. Of course, as in the past, IRS delays are still expected.
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