How to Find Out How Much You Will Be Getting Back on Taxes
Taxes are withheld from most employees' paychecks throughout the year and, when too much money is withheld, a taxpayer is entitled to a refund. The policy of requiring tax withholding was adopted in 1943. Withholding is handled by your employer based on the number of exemptions you've claimed on your W-4 form. In January of each year, your employer will send you a W-2 showing how much money you earned and how much has been withheld for various taxes during the previous calendar year. You can compare this amount to the total amount you owe in taxes to see how much you will be getting back.
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Instructions
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1
Determine the total amount of money that has been withheld from your pay for different taxes. Each W-2 lists the amount of federal tax withholding in Box 2, state tax withholding in Box 17 and local tax withholding, if applicable, in Box 19. If you had multiple jobs, you'll have to add all the withheld amounts from every W-2 form you receive.
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2
Determine the amount of taxable wages you earned from box 1 on your W-2. If you had multiple jobs, add the income amounts shown on all your W-2 forms.
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3
Subtract any deductions from your income to find your adjusted gross income. These deductions can be either itemized deductions or a standard deduction that you can take without having to itemize. Many states allow deductions that are similar to what the federal government uses, but check to make sure.
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4
Calculate the tax you owe by using the appropriate tax tables. Federal income tax is a "progressive" tax system, meaning that as your income increases, the tax rate increases as well.
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5
Subtract the total of any tax credits you are eligible to take. Tax credits, such as the credit for higher education expenses, decrease your tax bill directly, whereas tax deductions reduce only your taxable income. For example, if you are in the 25 percent tax bracket, a $1,000 tax deduction would decrease your tax bill by $250, but a $1,000 tax credit would decrease your tax liability by $1,000.
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6
Subtract the amount of tax you owe (from Step 5) from the amount of money that was withheld during the year. If the number is positive, you will get a refund. If it is negative, you will owe money. For example, if you owe $8,700 in federal taxes but $9,000 was withheld from your pay, you'll get a $300 refund. If you owe $2,900 in federal taxes but only $2,200 was withheld, you will owe $700.
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