Surprised by this year’s return? What to do now for next year
No one likes surprises when it comes to taxes. If you owed taxes unexpectedly this year or your refund was smaller than anticipated, you know.
But do you also know the time to get ahead of next year’s taxes is now? Read on to find out why your refund may have been lower and why mid-year is prime time for a tax check and how we can help.
Lower refunds, taxes owed: Factors influencing your figures
If your refund was lower this tax year, you were not alone. In fact, IRS stats show refunds were down over 7% over the previous year.* There can be lots of reasons why. For starters, some refunds were lower due to the expiration of pandemic-era tax relief. But other reasons may point to changes in your tax situation that affect your bottom line.
Here are a few factors that can influence your refund:
- Changes in life may alter your eligibility for certain credits and deductions. For example, a child turning 17 may mean you can no longer claim the Child Tax Credit (but could claim the less valuable Credit for Other Dependents).
- Picking up side income. If you have self-employment income, you may not know you need to pay quarterly taxes throughout the year. Missing these payments could mean more taxes when you file.
- Job changes affecting your paycheck withholding. If you or your spouse added a job or started a new job, it could affect your overall withholding.
Why your withholding is so key. With every paycheck, you’re paying taxes as you earn. How much is determined by W-4 withholding. Those life changes and side jobs? Form W-4 factors it all in.
*Source: IRS statistics for the week ending May 12, 2023.
Check your withholding now. Thank yourself later
Why check your W-4 withholding now? Well, now time is on your side. Let’s say you want to end the year with a refund. If you don’t have enough taxes coming out of each paycheck each period, you may find you owe at tax time.
Wait too long to update your W-4 and you might not have enough pay periods to catch-up. If you’re not sure where to start, don’t sweat it. That’s what we’re here for.
Use our W-4 withholding calculator to adjust your withholding, account for any side income, and create a ready-to-sign updated W-4 form.
How an H&R Block tax pro can help
Have questions? Talk to a tax pro for help with your withholding.
Saving for unexpected (tax) bills: How Spruce can help
Car repairs. Doctor’s bills. Or even taxes. Whatever your unexpected bill is, the Spruce Mobile banking app can help you save for them.
With Spending and Savings accounts and loads of other features supported by the app, Spruce is worth checking out.
Spruce fintech platform is built by H&R Block, which is not a bank. Spruce℠ Spending and Savings Accounts established at, and debit card issued by, Pathward®, N.A., Member FDIC, pursuant to license by Mastercard®. Mastercard and the circles design are registered trademarks of Mastercard International Incorporated.