How Much Do I Owe in Taxes? Income Tax Calculation
IRS Tax Tables 2022: https://www.irs.gov/forms-instructions
Every year come tax season it’s a mystery to a lot of people as to how much they’ll pay in taxes. Whether or not they’ll get a refund and how large it may be. Over the next few minutes I’ll walk you through how you can demystify taxes and know exactly how much you owe.
I’m Bradford with a Penny Pincher’s Guide to Personal Finance, first make sure to give the video a like so we know to make more like it.
Let’s use an example to illustrate exactly how you’ll go about things.
Big picture, you need to first determine what your income is using your W-2; in this example Joe made $50,000 last year. Then subtract any tax deductions you qualify for to determine what your taxable income is. Joe is filing as single, no dependents, and without any complications from investments, he uses the standard deduction of $12,550. So, his taxable income is $37,450.
From there you’ll use the IRS tax tables to calculate what taxes you owe. Running the table, we know that Joe owes $4,298.
Now that you know how much you owe in Federal income taxes, you need to apply any tax credits are eligible for which will reduce what you owe in taxes which in some cases will result in the government owing you money. Tax credits like the child tax credit or the earned income tax credit are common, but Joe doesn’t qualify for any in this situation.
With your final amount that you owe in taxes (positive or negative) you will compare that with the income tax withheld on your W-2. Joe’s employer withheld a total of $6,754 which is what he would have owed without the standard deduction.
The last step is to compare your withholding amount on your W-2 with what you owe in taxes. If your W-2 shows you withheld more money than you owe in taxes, that difference is your tax refund. If you owe more than what was withheld, that is how much you owe in taxes plus any fines. For Joe that means he will receive a tax refund of $2,256.
Now if your tax situation isn’t as simple as Joe’s then you might want to use a tax prep software to find all the deductions and credits you qualify for AND if you make less than $73,000 the IRS Free File Program will let you file your taxes with some of the top tax prep software’s completely for free.
#irs #taxes #taxseason
DISCLOSURE: We are not financial advisers. The ideas presented in this video are for entertainment purposes only. Although the information is researched and vetted beforehand, it may not be up to date at the time of viewing. Please do your due diligence and research on the topic. You (and only you) are responsible for the financial decisions that you make.
Смотрите видео How Much Do I Owe in Taxes? Income Tax Calculation онлайн без регистрации, длительностью часов минут секунд в хорошем качестве. Это видео добавил пользователь A Penny Pinchers Guide to Personal Finance 05 Февраль 2022, не забудьте поделиться им ссылкой с друзьями и знакомыми, на нашем сайте его посмотрели 10,085 раз и оно понравилось 279 людям.