Tax Return Calculator
Tax Return Calculators: A Taxpayer's Best Friend
Tax return calculators are a taxpayer's best friend when it comes to estimating your tax return. Many people do not know what a tax return calculator is or what they do, but I am here to explain what they are. Tax return calculators require a certain approach to provide the most accurate information. With that said, the information they provide has many uses besides simply determining your tax refund.
Tax return calculators are tools used to get a close estimate of how much an individual will get back or will have to pay in taxes. They are broken down into different sections such as basic info, income, deductions, credits and results. They ask for specific information such as whether or not you are married or single, how many children you have, whether or not you can be claimed as a dependent or if you are head of household. There is also a section to put your wages, business income, interest income etc. This section will ask for taxes withheld as well. The section for deductions asks about things such as IRA contributions, medical expenses, mortgage interest, as well as a plethora of other items. This is to determine whether you should itemize or take the standard deduction. Tax return calculators also determine tax credits for childcare, energy improvements, and education.
There is a certain way to approach tax return calculators. Once you have you have all w-2s and 10-99 forms, you are ready. Answer the questions about marriage status and number of dependents. This information determines the exemption amount and the standard deduction rate. The tax return calculator automatically calculates this for you. Next, input all income information from your w-2 or 10-99 form, any business income, interest income, or any other sources of income. Check your w-2 for taxes withheld and enter that information as well. Input any deductions for the year, and the tax return calculator automatically determines whether to itemize or use the standard deduction. It also walks you through anything that is a tax credit. After inputting all required information, the tax return calculator automatically determines your tax refund or taxes owed.
Tax return calculators have many other planning uses. They can be used in many "what if" scenarios to help make decisions. Use a tax return calculator to determine if your employer is withholding enough taxes. If you are an independent contractor or get a 10-99 form for any work performed, tax return calculators become an invaluable resource for determining the amount of money to save for paying taxes. Use the tax return calculator for estimating at the end of the year to determine whether you should make those last minute charitable donations or IRA contributions to lower your tax bill. Use a tax return calculator to determine how cashing in that old 401k will affect your tax return. These are just a few of the uses for a tax return calculator.
The American tax code can be a complicated animal, but it does not have to be if you use a tax return calculator. Now you know what it is, how to use it, and their many planning uses. Use tax return calculators as the valuable tools they are.