How to Calculate My Income Tax Return
Although filing a tax return can seem like the equivalent of brain surgery for many taxpayers, it really isn't as difficult as it seems, at least in some cases. But no matter how complex your return is, it ultimately boils down to a few elemental stages of informational processing.
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Instructions
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Determine your filing status and the number of dependents that you can claim. If you are single with dependents, then you will probably file as Head of Household. If you are married, you will probably file jointly unless specific circumstances dictate the wisdom of filing separately. If you lost your spouse recently, then you may be able to file as a Qualifying Widower.
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2
Enter the names, Social Security numbers and dates of birth of any dependents that you are claiming, either on paper or using a computer program. Check your filing status in the appropriate box and then gather all of your income forms from all sources.
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3
Enter all of your income on the appropriate line on the 1040. Be sure to include all earned income, such as W-2 income, self-employment income, rental and royalty income and investment income, including interest, dividends and capital gains.
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Subtract all of your above-the-line deductions, such as moving expenses, student loan interest, business losses, HSA and IRA deductions, self-employed health insurance deductions and unreimbursed educational expenses for teachers. The resulting number equals your Adjusted Gross Income (AGI).
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Subtract either your standard or itemized deductions from your AGI, as well as your personal and dependency exemptions. To determine whether or not you can itemize deductions, complete Schedule A and enter the total if it exceeds the amount of your allowable standard deduction. The resulting number equals your taxable income.
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Look in the tax tables on the IRS website to see the amount of tax you owe. Enter that amount on the form or in the program and then enter in the amount of tax you had withheld from all sources of your income, if any. Enter any tax credits that you are entitled to, such as the Earned Income Credit and the Child Tax Credit. Subtract both these numbers from your total tax. The difference is your balance due or refund.
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Tips & Warnings
This article merely attempts to highlight the concept of doing a tax return and is purely educational in nature. It should not be construed as tax advice. For more information, visit the IRS website or consult your tax advisor.
