An Easy Method to Figure Out Your Federal Tax

February 16, 2010 in Questions | Comments (0)

It can be useful to calculate your income tax return quickly without doing a full tax return. You may want to determine what your tax return is going to be so you know when to file your tax return. If you are going to get a big tax return, you probably want to do your taxes as soon as possible. If you are going to owe the IRS money, you probably want to wait until the last minute or even request an extension. If you are trying to figure out how to calculate income tax easily read on. When the time comes to do your tax return, there are lots of great income tax return software programs available that are way cheaper than hiring a tax professional.

Start you tax estimate by figuring how much money you paid in taxes and how much money you made overall during the last year. This information can be found on your pay stub or your W2. If you are looking at your pay stub you need to use the net amount because you don’t have to pay taxes on certain things. Write these 2 numbers down as we will need them later.

Next, you need to figure out all your deductions. This includes charitable contributions, (like to your church), mortgage interest, your deductions per person in your household, and anything else that is tax deductible. Just add all these numbers up. This doesn’t have to be exact because we are just figuring out an estimated tax return.

With your income, deductions, and taxes paid, you are ready to estimate your income tax. This is really simple – you just subtract your total deductions form your taxible income to determine your taxable income then look up your tax. To find your tax, just go to the IRS website and find the tax table or check out my 2009 Tax Estimator page. On the table, you will see how much tax you owe based on your filing status and income. If this tax is less than the amount you paid in during the year, you will get a refund. If it is more than you paid in, you will have to pay some..

In addition to this simple calculation, you may need to consider tax credits or penalties. One example of credits is the child tax credit of around $1000 per child that reduces the amount of tax you have to pay. One example of a penalty is a penalty for early withdrawal from a retirement account.