Mid-Year Tax Check-up 2024

Key takeaways

• A mid-year tax checkup can help you avoid stress and make necessary adjustments to help you increase your refund or lower your tax bill.
• Reviewing your income and expenses gives you a clear picture of where you stand with taxes, so you’re prepared.
• Reviewing your withholding on your W-4 midyear can alert you to any necessary adjustments you need to make to lower the amount of taxes you owe when you file.
• Considering estimated tax payments mid-year can help you stay ahead of your tax obligations, avoid penalties, and manage your cash flow.
• Reviewing your retirement contributions mid-year can help you take advantage of valuable tax breaks while helping you save for your future.
• Maintaining accurate records throughout the year can help you reduce stress and set yourself up for success when you file.
• Consulting with a Tax Pro mid-year can help you stay informed about any changes that may affect your tax situation and adjust your strategy as needed.

Importance of a mid-year tax check-up

Think of mid-year tax check-ups as a chance to get ahead of the game, like checking the air pressure in your tires and the oil in your car before a long journey. Your car may not need maintenance, but checking in ahead of time can help you avoid some nasty surprises on your trip.

The benefits of a mid-year tax check-up

• Tax laws can and do change more often than many people realize. Not only that, but life changes, like getting married or divorced, having a baby, buying a home, or caring for elderly parents, can have a big impact on your taxes. By doing a mid-year check-up, you can catch up with any changes that might affect your tax situation and adjust accordingly.
• Ever received a shocking tax bill? A mid-year check-up can help prevent that. By reviewing your income, deductions, and credits halfway through the year, you can spot any potential issues. You can then adjust how much your company is withholding from your paycheck on your W-4 to cover taxes before it's too late. Doing a mid-year tax check-up will help you to be in the know about what you're getting into when you file.
• Tax check-ups aren’t just about knowing what you owe. They’re also about maximizing what you can save or potentially what you get back. By doing a mid-year review, you might uncover opportunities to reduce your taxable income and the amount you owe, like increasing contributions to retirement or health savings accounts.

You don’t have to wait until April to start thinking about your taxes. A mid-year check-up can save you time, money, and stress down the road. It's like giving yourself a head start in the race toward tax season success.

Review your income and expenses

A big part of doing a mid-year tax check-up involves doing a review of your income and what you spend it on.

Here’s why it matters

• Take a good look at all the ways you earn money, including your main job, any side hustles, investments, or rent you collect. Understanding how much you've made, and whether that income is taxable or not, helps you plan for taxes better. This is a good place to start determining how much you may owe when tax time comes around.
• In addition to looking at how much you earn, it's also crucial to see where your money goes. Look for things you can deduct from your taxes, like gig-related expenses, medical bills, or donations. Make sure to keep your receipts organized in one place, so they’re easy to find when you file next year.
• Mid-year is a great time to spot deductions that are easy to miss. Have any big medical bills? Make energy-efficient upgrades to your home? These may all help lower how much you owe in taxes or potentially even increase your refund. Keep track of possible deductions and organize any supporting documentation you may need when you file.
• Do you have any major life changes for the year? Most life changes, such as marriage, having children, children in college, supporting your parents, or even a divorce, can dramatically change your tax situation. Look at your W-4 after a major life change and adjust your withholding as needed.

Review tax withholding amounts from your paychecks

When you get paid, a portion of your earnings goes toward taxes. This is called tax withholding and reviewing it mid-year can prevent any nasty surprises from popping up when you file.

Here’s why it matters

• Your withholding status determines how much tax is taken out of each paycheck to cover your taxes. It's usually based on factors like your filing status, number of dependents, and any additional income. Reviewing your withholding status mid-year helps to ensure it still reflects your current situation. Keep in mind that you can ask whoever handles human resources or payroll at your job to review and update your withholding status on your W-4 any time.
• If you don’t have enough tax withheld from your paychecks, you could face a bigger tax bill or even underpayment penalties when you file. By reviewing your withholding mid-year, you can catch any potential shortfalls and adjust accordingly to avoid penalties.
• On the other hand, having too much tax withheld means you’re giving the government an interest-free loan. It also often means that you’ll get a bigger refund. By reviewing your withholding mid-year and adjusting it as necessary, you can maximize your take-home pay throughout the year.
• Major life events, like getting married, having a baby, or buying a house, can impact your tax situation and may require adjustments to your withholding. Reviewing your withholding mid-year ensures it stays in line with any changes in your life.

By reviewing your tax withholding from your paychecks mid-year, you can ensure it accurately reflects your current situation, helping you avoid penalties and a surprising tax bill when you file next year.

Consider making estimated tax payments

When it comes to taxes, staying proactive and estimating your tax payments mid-year can save you headaches down the road.

Here’s why it matters

• If you're self-employed or earn income that isn't subject to withholding, like freelance work, driving for a rideshare, selling items online, or have investment income, you may need to make estimated tax payments throughout the year. These payments cover your tax responsibilities and allow you to pay in smaller easy-to-manage payments instead of being shocked by a big tax bill when you file.
• Making estimated tax payments allows you to spread out your tax payments throughout the year, which can help you manage your cash flow effectively. Instead of facing a large tax bill all at once, you can pay smaller amounts quarterly.
• If you owe more than $1,000 in taxes after accounting for withholding and credits, you may face underpayment penalties unless you make estimated tax payments. By making these payments, you can avoid penalties and stay in the IRS’s good graces.
• Calculating your estimated tax payments can be tricky, but it's essential to avoid surprises come tax time. Consider working with a Tax Pro or using the IRS's estimated tax worksheet to determine how much you should pay each quarter.

By considering estimated tax payments mid-year, you can stay ahead of your tax obligations, avoid penalties, and manage your cash flow more effectively.

Explore the tax advantages of your retirement contributions

Planning for retirement isn’t just about saving for the future. Reviewing your retirement contributions mid-year can also lead to significant tax benefits.

Here’s why it matters

• Contributions to some retirement accounts, like traditional 401(k)s or IRAs, are made with pretax dollars, which means you don’t pay taxes on that money until you withdraw it in retirement. This tax-deferred growth allows your money to grow faster since you're not paying taxes on those earnings each year. Plus, these contributions can lower your taxable income today. This means you may pay less in taxes now while still saving for your future. Then, when you take money out once you retire, you probably will be in a lower tax bracket.
• Some retirement contributions, such as contributions to a traditional IRA or certain employer-sponsored retirement plans, may qualify you for tax credits, like the Saver’s Credit. This credit can further reduce your tax bill, making it even more beneficial to contribute to your retirement accounts.
• If you’re age 50 or older, you may be eligible to make catch-up contributions to certain retirement accounts, allowing you to contribute more and potentially lower your taxable income even further.

By exploring the tax advantages of your retirement contributions mid-year, you can take advantage of valuable tax breaks while building a solid foundation for your future financial security.

Maintain accurate records including tax documents and receipts

Keeping organized records of your tax documents and receipts throughout the year might not sound glamorous, but it’s a crucial aspect of managing your taxes effectively.

Here’s why it matters

• Whether you’re claiming deductions for medical costs, or charitable donations, having accurate records is essential. Mid-year is an excellent time to ensure you have all the necessary documentation to support your claims when you file.
• While nobody likes to think about it, audits can happen. If you’re facing an audit, having meticulous records can make the audit process smoother and less stressful. By maintaining accurate records of your income and expenses, you can provide the necessary documentation to support your tax return.
• Come tax season, having all your documents and receipts organized can save you time and hassle. Instead of scrambling to find everything at the last minute, you can breeze through the tax preparation process with confidence.
• Consider using digital tools, like spreadsheets or dedicated apps, to keep track of your tax documents and receipts. These tools can streamline the record-keeping process and make it easier to access your records whenever you need them.

By maintaining accurate records of your tax documents and receipts mid-year, you set yourself up for success and peace of mind when tax season rolls around.

Consult with a Jackson Hewitt Tax Pro to avoid surprises

Navigating the complexities of taxes can be daunting, but you don't have to do it alone. Consulting with a Jackson Hewitt Tax Pro mid-year can provide valuable insights and guidance to help you avoid surprises and be prepared come tax season.

By consulting with our Tax Pros mid-year, you can get personalized advice tailored to your specific financial situation. Whether you have questions about deductions, credits, or tax-planning strategies, your Tax pro can provide clarity and peace of mind.

Meeting with a Tax Pro mid-year gives you the tools you need for proactive tax planning. Your Tax Pro can review your income, expenses, and other information to identify potential tax-saving opportunities and strategies. By addressing any issues or concerns early on, you can minimize how much you owe when you file and potentially increase your refund. 

Tax laws and regulations are constantly evolving, and it can be challenging to keep up with all the changes. Our Tax Pros stay in the know about the latest developments in tax law, ensuring that you receive accurate and up-to-date advice. By consulting with a Tax Pro mid-year, you can stay informed about any changes that may affect your tax situation and adjust your strategy accordingly.

Perhaps most importantly, consulting with a Jackson Hewitt Tax Pro provides peace of mind. Taxes can be stressful and overwhelming, but having a knowledgeable ally in your corner can alleviate anxiety and uncertainty. Knowing that you have a trusted advisor to turn to for guidance and support can make the entire tax process feel more manageable and less intimidating.

Taking control of your taxes doesn’t have to be a daunting task. By conducting a mid-year tax check-up and implementing proactive strategies, you can navigate the tax landscape with confidence and ease.

Don’t wait until tax season rolls around to think about your taxes. Take charge of your financial future today by conducting a mid-year tax check-up and consulting with a Jackson Hewitt Tax Pro. With the right tools, knowledge, and support, you can navigate the tax landscape with confidence and achieve your financial goals.

About the Author

Mark Steber is Senior Vice President and Chief Tax Information Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

More about Mark Steber Our Editorial Policy