How to Round Out Amounts on U.S. Federal Tax Returns
Tax return calculations can be challenging enough without having to calculate decimal amounts. To make calculations easier, the Internal Revenue Service allows, but does not require, taxpayers to round amounts to the nearest dollar. However, you can only round numbers you are entering on your tax return, not the numbers that you are using in your calculations. In addition, you must either round all of your amounts or none of your amounts; you cannot pick and choose.
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Instructions
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Calculate the amount that you are supposed to enter on a particular line without rounding. For example, if you are entering income from taxable interest and you earned $120.30 from Bank A and $234.40 from Bank B, you would calculate the amount to be entered to be $354.70, rather than rounding $120.30 to $120 and $234.40 to $234 so that the total would be $354.
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Round the calculated amount down to the nearest dollar if the number of cents is below 50. For example, if the amount you are supposed to enter equals $164.29, the IRS allows you to enter $164 to make your calculations easier.
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Round the calculate amount up to the nearest dollar of the number of cents is equal to 50 or more. For example, if you were supposed to enter $354.70, you could enter $355 to make the calculations easier.
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Repeat the process each time you are entering amounts onto your tax return. If you round once, you must round every time.
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References
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
