How to Know if You Will Have to Pay on Tax Returns
The most accurate way to know if you will owe taxes is to sit down and do your taxes. However, this can be very time consuming. Using Form 1040 without filling it out in depth can help you get a rough estimate of whether or not you will need to pay taxes, and about how much you will need to pay. This number can vary once you fill out your tax return in detail for the year.
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Instructions
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Go through lines 7 through 22 on Form 1040. This set of lines are income lines. If you have any possible income from these lines, write the income down. For example, a person has his paycheck for the week. His paycheck's gross amount is $1,000 a week and he works 50 weeks a year. He would mark down $50,000. He also has $20 of interest from a savings account and $5 in dividends from his stock investments. His total income then is $50,025.
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Go through lines 23 through 37 on Form 1040. These are known as above-the-line deductions. If any apply to you, mark them down as an expense. In our example, the person paid $2,025 in student loan interest.
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Subtract the expenses from the income to arrive at adjusted gross income. In our example, $52,025 minus $2,025 equals $50,000. Then subtract out the applicable standard deduction from Form 1040. In our example, $50,000 minus $5,700 equals $44,300.
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Determine the number of exemptions the taxpayer has and multiply the amount by $3,650. An exemption is for yourself, spouse if filing together, any dependents, and if you are blind or older than 65. Subtract this amount from the amount in Step 3. In our example, our taxpayer only has one exemption. Therefore, $44,300 minus $3,650 equals $40,650. This amount is taxable income.
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Find the taxable income on the tax tables. In our example, $40,650 pays tax of $6,356. This is a rough estimate of how much money the taxpayer will owe for the year. This does not take into account any amounts withheld by the employer. The taxpayer can subtract the total amount withheld for federal taxes from this amount to determine the remaining tax due.
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References
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