Tax Items To Check as the Year Winds Up

Tax Items To Check as the Year Winds Up

It’s been a very busy year at the IRS, with many special tax changes. Below is a review of some of the top issues you will want to discuss with your tax preparer as the year draws to a close and again when you meet to prepare your returns.

  • Coronavirus tax relief. You may be eligible for special tax help after this troublesome year. Advance Child Tax Credit payments, for example, have been expanded due to the American Rescue Plan Act for tax year 2021 only. If you receive more tax credit than you can properly claim, you may need to repay the IRS some or all of the excess amount. This may reduce your tax refund or increase your total tax due for 2021.
  • Natural disasters. There may be special tax law provisions to help an individual or a business recover financially from a disaster, especially if you live in a county or city that the federal government has declared a major disaster area.
  • Job loss. Be aware that severance pay and unemployment compensation are taxable, as are payments for any accumulated vacation or sick time. Withdrawals from your pension plan may be taxable. You need to make sure that enough taxes are withheld from these payments or make estimated payments. Job-hunting and moving expenses are no longer deductible.
  • Gig economy. Those who joined the gig economy due to the pandemic will need to consider making estimated tax payments on gig income. Avoid a balance or penalties. Any income from part-time, temporary or side work that was paid in cash, property, goods or virtual currency will have to be reported and likely will be taxed.
  • Life changes. A birth or a marriage can affect your refund or how much you owe. Give your employers a new Form W-4, Employee’s Withholding Allowance, promptly. You may move into a higher tax bracket or be affected by Additional Medicare Tax. Keep in mind that if you’re married as of December 31, you must file as a married person for the entire fiscal year.


Most Americans pay taxes throughout the year from salary withholding, quarterly estimated tax payments or a combination of both. The IRS says about 70% of taxpayers over-withhold, resulting in a refund. For those people, the average refund was more than $2,700 in 2020.

The bottom line? Take a look at your tax status, and work closely with tax professionals for a smooth end of year and a tax prep that won’t lead to unpleasant surprises!

Most cyberattacks are aimed at small businesses with fewer than 100 employees. Here are some details from this segment:

  • Learn about best security practices for small businesses.
  • IRS continues protective masking of sensitive information on business transcripts.
  • A Business Identity Theft Affidavit – Form 14039-B – is available for all businesses to report theft to the IRS.
  • Beware of various scams, especially the W-2 scam that attempts to steal employee income information.


Check out the “Business” section on IRS’s Identity Theft Central at IRS.gov/identify theft.

Original content by irs.gov.  This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.

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