How to Calculate My IRS Refund

You can get a refund from IRS depending on your circumstances.

Throughout the year, most people have money withheld during the year to pay their anticipated tax bill. However, this amount is only an approximation of what you are expected to owe, not an exact amount. If you have significant tax deductions or tax credits, you may end up with a refund of some of the money you paid in tax withholding to the IRS. To calculate your refund, you need to known your total taxable income, any deductions that you are eligible for, any credits you are eligible for and how much you have paid in income tax withholding during the year.

Instructions

1. Determine your total taxable income. This includes wages, salaries and taxable interest. Any company that you worked for during the year should send you a W-2 form at the end of the year stating how much taxable income you earned.

2. Determine the deductions that you will take. Everyone is eligible for the standard deduction unless you chose to take itemized deductions. Examples of itemized deductions include mortgage interest, moving expenses and medical expenses. Above-the-line deductions are taken in addition to the standard deduction, and include student loan interest and contributions to traditional IRAs.

3. Determine your total taxable income by subtracting your total deductions from your taxable income.

4. Determine the amount of tax that you owe for the year. You can use an on-line calculator to determine how much you owe.

5. Determine which, if any, tax credits you are eligible for. Tax credits include the energy efficiency credit and the earned income credit. Credits are different from deductions because they directly reduce the amount of tax you owe, while deductions reduce only your taxable income. Subtract the value of your tax credits from the amount of tax you owe from step 4 to arrive at your tax bill.

6. Determine the total federal tax withholding payments that you have made throughout the year by adding the amounts withheld by employers that are listed on your W-2 forms and any estimated tax payments that you have made during the year.

7. Calculate the size of your refund by subtracting the amount of your tax bill found in step 5 from the amount of tax withholding payments made found in step 6. For example, if you owe $4,000 in taxes but have had $5,000 withheld during the year, then your IRS refund would be $1,000.

Tips & Warnings

• Most employers withhold taxes for both state and federal taxes. Include only the federal taxes withheld when calculating your IRS refund.

References

• The Finance Buff: Tax Deductions
• Simple Subjects: How Do I Calculate My Tax Refund?

Resources

• Money Chimp: Tax Brackets and Tax Calculator