How to Calculate Your Tax Return
No matter what you do for a living or how much money you make, filing taxes is a fact of life. Whether you are expecting a big refund or anticipating writing a big check to the IRS, you need to make sure your taxes are filed accurately and on time. Calculating your taxes properly is the best way to get the refund you have coming while avoiding trouble with the IRS.
Other People Are Reading
Instructions
-
-
1
Gather all of your tax documents before you begin. It is important to have as much information at your fingertips as possible when filing your taxes. Separate your tax documents according to type, such as W-2 forms, 1099 forms, etc.
-
2
Review the different tax forms on the IRS website to determine which type of form you need to file. For instance, if your income consists of only wages and a small amount of interest, you might be able to use the simple one-page 1040-EZ form.
-
-
3
Download the form you need from the IRS website at IRS.gov or pick one up at the local library or your legislative office. Review the form and the instructions carefully.
-
4
Enter the wages from your W-2 forms on the first income line of the tax form. If you held more than one job during the prior year, add the amounts from each of the W-2 forms you received and enter that total.
-
5
Add up the amount of interest you received from all sources, including your checking account, savings account and certificates of deposit. These amounts should be reported on the 1099-INT documents you received. Enter the total on the appropriate line on the tax return. The exact line number might be different depending on whether you are using the 1040EZ, 1040A or 1040 form, but the line will state interest income.
-
6
Calculate the amount of dividends, business income and capital gains you received, then enter those items on the appropriate lines. Be sure to double-check your math before entering each figure.
-
7
Find the amount of your standard deduction and exemptions, then enter those figures on the appropriate lines. Subtract your exemptions and deductions from your gross income to find your taxable income.
-
8
Use the tax table included in the instructions for your tax form to determine your tax. The tax table is also available at the IRS website. Compare the total tax to the taxes you have already paid through withholding or direct payments. The difference between these two numbers is the amount of your refund, or the amount you still owe the IRS.
-
1
References
Resources
- Photo Credit tax forms image by Chad McDermott from Fotolia.com
