Have YOU checked your withholdings to avoid sticker shock this spring?
For 2021 you may be under withheld. If you are not withholding enough, you could be headed for a large sticker shock on your tax bill or significantly reduced refund.
We are, along with the IRS urging all taxpayers to check withholding to head off a higher tax bill or penalty in 2022, reminding taxpayers that reform increased the standard deduction, removed personal exemptions, limited or cut other deductions, and changed rates and brackets.
Here are some of the law changes that could affect you as a taxpayer:
- Changes to tax rates and brackets.
- Expansion of the child tax credit.
- The standard deduction nearly doubled to $24,400 for joint filers and $12,200 for singles.
- A $10,000 cap on deductions for state and local property, sales and income taxes.
- New limits on deductions for some mortgage interest and home equity debt.
- Higher limits on the percent of income you can deduct as charitable contributions.
- No deductions for miscellaneous expenses. In prior tax years, these had to exceed 2 percent of a filer’s income to qualify. These included investment expenses and unreimbursed employee expenses such as travel, meals, entertainment and uniforms.
You also need to determine if you should make adjustments to your state or local withholding. You can contact your state’s department of revenue to learn more.
If you need help or would like us to look at this on your behalf, please let us know.