Federal Income Tax Calculator

Total Income:
Highest Tax Bracket:
Taxable Income:
Tax Liability:
Income After Tax:
Standard Deductions:
Itemized Deductions:
Income Adjustments:
Tax Exemptions:
Tax Credits:


Income

Personal Income

Wages (W-2 box 1)

Gather all your W-2 statements from each job you worked during the year. Look in Box 1 of the W-2. This is your total wages.

Taxable Interest

Interest earned from savings accounts and CD's (Line 8a) is taxable as ordinary income. Interest you earned in Treasury bonds is NOT taxable (Line 8b). You will usually get a 1099-INT from the bank or financial institute stating your interest earned. (then subtract any fees or early withdraws you paid).

Tax Exempt Interest

You don’t have to pay ordinary tax on interest earned from state and local municipal bonds. Tax-exempt interest is not required to be reported to you on Form 1099-INT or Form 1099-DIV, but usually financial institutions send out a notices with the total annual amount of interest earned.

Ordinary Dividends

Ordinary dividends are taxable as ordinary income unless they are qualified dividends.

Investment Income (1099-B)

Ordinary dividends are taxable as ordinary income unless they are qualified dividends.

Qualified Dividends

Qualified dividends are ordinary dividends that meet the requirements to be taxed as net capital gains. It's important to understand that on Form 1099-DIV, qualified dividends are included in ordinary dividends. If you receive $350 in qualified dividends and $150 in nonqualified dividends, you'll receive a Form 1099-DIV that shows $500 in ordinary dividends (the total from both categories) and $350 in qualified dividends (the subcategory that gets special treatment). On your tax return you'll report the entire $500 as income, but the $350 of qualified dividend will end up being taxed at a lower rate.

Taxable Refunds

Any state income tax refund you received last year might need to be included on your federal income tax return. If you itemized your deductions on your federal tax return last year and you claimed a deduction for State and Local Taxes, then you need to figure the taxable portion of your state refund. However, if you claimed the standard deduction on your federal tax return last year, your state tax refund is not taxable. You can skip Form 1040 Line 10. Documents needed are Form 1099-G and Form 1040 and Schedule A.

Alimony Recieved

Alimony payments received from your spouse or former spouse are taxable to you in the year you receive them. Because no taxes are withheld from alimony payments, you may need to make estimated tax payments or increase the amount withheld from your paycheck. CHILD SUPPORT YOU RECIEVE IS NOT TAXABLE.

Income From Business

Business Income

What Counts as Business Income?

Business income is income you earned because you owned and operated a business. The IRS explains business income this way: "If there is a connection between any income you receive and your business, the income is business income. A connection exists if it is clear that the payment of income would not have been made if you did not have the business." (Publication 334)

Business income includes:

  • Income received for services rendered as an independent contractor, freelancer, or other non-employee position;
  • Income received for manufacturing or selling merchandise;
  • Income received from government contracts;
  • Fair market value of property or services received through bartering.

Self Employment Income

Self-employed individuals, sole-proprietors, independent contractors and persons who have net earnings of $400 or more are required to pay self-employment tax by filing Schedule SE (PDF), attached to their Form 1040. Read more on IRS.gov

Self-employed business owners can use the shorter Schedule C-EZ to report their business income and expenses. You qualify to use Schedule C-EZ if your total business expenses are $5,000 or less. If your expenses are more than $5,000 or if you are reporting a business loss (expenses are greater than your income), then you must use the longer Schedule C.

Other Business Gains Or Losses

Any profit (or loss) from the sale of assets used in your trade or business. Report using Form 4797 (attachment is required). If the same asset was used for both business and personal purposes, you must allocate any gain between Form 4797 and Schedule D.

Other Income

Short Term Capital Gain or Loss

Gain/loss on sale of asset held for one year or less. Get information from forms 1099-B, 1099-DIV and broker statements. Report using Form 8949 (attachment is required) Read more on IRS.gov: http://www.irs.gov/publications/p17/ch26.html

Long Term Capital Gain or Loss

Gain/loss on sale of asset held for more then one year. Get information from forms 1099-B, 1099-DIV and broker statements. Report using Form 8949 (attachment is required) Read more on IRS.gov: http://www.irs.gov/publications/p17/ch26.html

Taxable IRA Distributions

Distributions from an IRA, 401(k) or other retirement plan generally must be included as part of your taxable income. If you were unable to claim a tax deduction during the year for your IRA contribution, your distribution is only partially taxable. If you were able to claim a tax deduction in the year of the contribution your distribution is fully taxable. Report using Form 8606 (attachment is required). Withdrawals from a retirement account may be subject to an additional tax of 10% if the distribution is made before you reach age 59.5 years old.

Taxable Pensions And Annuity

Under the General Rule, you figure the taxable and tax–free parts of your annuity payments using life expectancy tables prescribed by the IRS. Read more at IRS.gov: http://www.irs.gov/publications/p939/index.html

Unemployment Compensation

If you received unemployment compensation during the year, you should receive Form 1099-G (should arrive sometime in January), showing the amount you were paid. Any unemployment compensation received must be included in your income. Read more on IRS.gov: http://www.irs.gov/individuals/employees/article/0,,id=130505,00.html

Taxable Social Security Benefits

Social Security benefits may be non-taxable or partially taxable, depending on your total income from other sources and your filing status. Read more on IRS.gov: http://www.irs.gov/taxtopics/tc423.html and more: http://www.irs.gov/publications/p915/index.html

Gambling Winnings

Gambling winnings are fully taxable regardless of whether you receive a Form W-2G or any other reporting form. Gambling income includes – but is not limited to – winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes. The payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment. You may not use Form 1040A or 1040EZ.
Basic information

Number of Your Dependents

You can claim one exemption for each person who is supported by the income from a single tax return.

This is a specific amount of money that can be deducted for each qualifying person in the household, and the amount changes from year to year.

The qualifying child or relative must be a citizen, resident alien or national of the United States, or a resident of Canada or Mexico. An exception may apply for an adopted child that is not a citizen, national or resident alien.


The qualifying child or relative must have a valid identifying number:
  1. Social Security number
  2. Individual Taxpayer Identification Number
  3. Adoption Taxpayer Identification Number

Select Filing Status

Your tax filing status will affect your tax rate. Married people are paying less taxes then Single.

Someone Claim YOU as Dependent?

If you are claimed as a dependent on another person's tax return you cannot claim your own personal exemption.

If you are claimed as a dependent on another person's tax return, the amount of the standard deduction is reduced.

Generally, the amount of the standard deduction is limited to the greater of $950, or your earned income for the year plus $300.

The amount of the standard deduction for a dependent cannot be higher than the regular standard deduction amount.

Do you claim yourself?

By claiming yourself or your spouse, in 2012 you will be qualified for:
  • Standard Deduction (2015) = $6,300 ($12,600 if both);
  • Personal Exemption (2015) = $4,000 ($8,000 if both)

Do you claim spouse?

By claiming yourself or your spouse, in 2012 you will be qualified for:
  • Standard Deduction (2015) = $6,300 ($12,600 if both);
  • Personal Exemption (2015) = $4,000 ($8,000 if both)

Have qualifying child dependent?

Having a qualifying child as a dependent can allow you to claim certain tax benefits, like:
  • Head of household filing status
  • Child Tax Credit
  • Additional Child Tax Credit
  • Child and Dependent Care Credit
  • Earned Income Tax Credit
  • Additional personal exemption for each dependent

Have qualifying relative dependent?

Relative can be your dependent if the person meets four tests.
  1. Not a Qualifying Child Test
  2. Member of Household or Relationship Test
  3. Gross Income Test
  4. Support Test

Are you older than 65 y.o.?

There is an additional deduction amount for taxpayers age 65 or older. The IRS considers you 65 on the day before your birthday.

Is your spouse older than 65 y.o.?

The additional deduction amount for age will be allowed if you or your spouse are age 65 or older on the last day of the tax year.

Are you blind?

If you or your spouse were blind at the time of filing, you can increase your standard deduction amounts.

If you are partly blind, you must get a certified statement from an optometrist or eye doctor declaring you cannot see better than 20/200 vision in one eye, or that your field of vision is not more than 20 degrees.

Is your spouse blind?

If you or your spouse were blind at the time of filing, you can increase your standard deduction amounts.

If you are partly blind, you must get a certified statement from an optometrist or eye doctor declaring you cannot see better than 20/200 vision in one eye, or that your field of vision is not more than 20 degrees.
Tax Deductions

Taxpayers who don't have enough itemized deductions to exceed their standard deduction are better off using their standard deduction as that will result in the lowest federal income tax.

What are Standard Deductions?

The standard deduction is a dollar amount that reduces the amount of income subject to tax. You cannot take the standard deduction if you are claiming itemized deductions. The amount of standard deduction is based on a taxpayer's filing status. The standard deduction amount can change from year to year depending upon inflation.

I want to itemize my deductions

An itemized deduction is an eligible expense that individual taxpayers in the United States can report on their federal income tax returns in order to decrease their taxable income.

Itemized Deductions

Regular Itemized Deductions

Amortizable Bond Premium

Subtract the bond premium amortization from your interest income from these bonds. Report the bond's interest on line 1 of Schedule B (Form 1040). NOTE: There is no deduction possible for bond premiums related to tax-free bonds.

Gambling Losses

You cannot deduct gambling losses that are more than your winnings. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

Home Office Expense

Homeowners can deduct a portion of their utilities, home insurance, property taxes, mortgage interest, and home repairs as business expenses. Homeowners who work at home can even claim a tax break for depreciation on the business portion of their home. Read more: Publication 587 - Business Use of Your Home.

Medical Expenses

If the total of your medical expenses is less than 7.5% of your adjusted gross income (AGI), you are not eligible to take a single dollar’s worth of the medical expense deduction. Medical expenses include expenses related to diagnosis, cure, mitigation, treatment, or prevention of disease, or treatment affecting any function or structure of the body. Expenses must not be paid out of a tax-free medical savings or health savings account. Read more on IRS.gov: IRS Publication 502

Investment Interest Expense

Mortgage Interest

Deduction is limited to interest on debts secured by a principal residence or a second home. Interest is deductible on only the first $1 million of debt used for acquiring, constructing, or substantially improving the residence, or the first $100,000 of home equity debt regardless of the purpose or use of the loan. You should receive a Form 1098, Mortgage Interest Statement, from each mortgage lenders. This form reports the total interest that you paid during the tax year. You do not have to attach this form to your tax return. Read more in IRS.gov: Publication 936, Home Mortgage Interest Deduction.

Mortgage Points

Certain charges you pay to obtain a home mortgage. Points are usually charged based on a percentage of the loan amount. Read more in IRS.gov: IRS Tax Topic 504 - Home Mortgage Points and Publication 936

Real Estate Taxes Paid

State and local income taxes, real estate taxes, and many other types of taxes can be included as federal tax deductions on your return, provided that you carefully follow the established procedures, and document everything. At the end of the year you should recieve an annual mortgage statement from your bank (Form 1098). The statements reports how much taxes you paid in real estate taxes.

Work Educational Expenses

Education expenses required to maintain or improve skills relating to your current job, or required to meet legal or employer requirements, are considered work-related educational expenses. These expenses may be deductible as an itemized deduction. Either 1) American Opportunity Credit or 2) Lifetime Learning Credit or 3) work-related tuition and fees deduction, but not both or all together, may be taken for any student in a year.

Miscellaneous Itemized Deductions

Accidental Loss

Charitable Contributions

If your total non-cash contributions are over $500 for the year, you must file Form 8283 with your return. You can deduct amounts contributed by check, cash, payroll deduction, or credit card to a qualified charitable organization, as long as you have one of these: written acknowledgment from the donee, Bank, credit card, or payroll record. You can also deduct the value of property, such as used clothing or publicly traded shares of stock, contributed to a qualified charitable organization. Out-of-pocket expenses related to volunteer work for a qualifying organization are deductible unless you were reimbursed. You can also include mileage (at 14 cents per mile) for use of your car related to volunteer work.

Unreimbursed Expenses

Job Search Expenses

Deductible job search expenses can include travel expenses (transportation, lodging and 50% of food) if you go away from home overnight, employment-agency fees, want ads, and the cost of printing and mailing resumes. You can claim these expenses even if your search was unsuccessful. However, the deduction is limited to the cost of searching for a job in your field. If you're a paralegal who wants to become a trapeze artist, you can't deduct the cost of finding a job at the circus.

Tax Advice Expenses

Fees paid to your account, CPA or tax preparer to help you prepare and file tax return.

Safe Deposit Box Rental

Fees paid to the bank or other institution for safe deposit box.

Fees to Produce Income

Depreciation on home computers used for investments, fees to collect interest and dividends, investment fees and expenses, trustee's fees for your IRA, if separately billed and paid, clerical help and office rent in caring for investments.

Income Producing Property Fees

Depreciation on home computers used for investments, maintenance and repair fees of income producing property.

Employee Vehicle Expenses

Employees required to use their cars on the job can deduct either actual expenses or the standard mileage rate (50 cents per mile for 2010 driving; 51 cents a mile for 2011, plus parking and tolls).

Professional Education Expenses

Because of the 2% test consider claiming the Lifetime Learning credit instead of claiming education deduction for the cost of courses designed to maintain or improve the skills needed for your present job.
Tax Adjustments

There are some items you can deduct even if you don't itemize - these items are called adjustments to income.

Alimony Paid

Alimony payments you make under a divorce or separation instrument are deductible if certain requirements are met. Any payments not required by such a decree or agreement do not qualify as deductible alimony payments. CHILD SUPPORT YOU PAY IS NEVER DEDUCTIBLE.

Domestic Production Activities

Businesses with qualified production activities can take a tax deduction of 10% from NET INCOME (qualified production activities income - qualified production activites expenses). For a business with only one line of business, this will be the same as gross income. For businesses with multiple lines of business, income will need to be allocated. Not qualified production activities: Construction services that are cosmetic in nature, such as painting; leasing or licensing items to a related party; selling food or beverages prepared at a retail establishment.

Educator Expenses

Because of the 2% test consider claiming the Lifetime Learning credit instead of claiming education deduction for the cost of courses designed to maintain or improve the skills needed for your present job.

Property Expenses

Because of the 2% test consider claiming the Lifetime Learning credit instead of claiming education deduction for the cost of courses designed to maintain or improve the skills needed for your present job.

Health Savings Account Deduction

A health savings account (HSA) is a tax-exempt trust or custodial account that you set up with a qualified HSA trustee to pay or reimburse certain medical expenses you incur. You must be an eligible individual to qualify for an HSA. Contributions to an HSA are tax-deductible. Earnings, such as interest and dividends, in the health savings account are tax-exempt at the federal level. Withdrawals from a health savings account are tax-free as long as the funds are used for qualified medical expenses. Read more on IRS.gov: IRS Publication 969, Health Savings Accounts

IRA Deduction

Moving Expenses

If a new job is more than 50 miles farther away from your old house than your old job was, then you can deduct the cost of getting yourself, your family and your positions to the new location. You can claim this tax saver regardless of whether you itemize deductions, so it is not subject to the 2% rule.

Penalty On Early Savings Withdrawal

If you paid a penalty for the early withdrawal of funds from a time savings account or certificate of deposit, you can deduct it, even if it exceeds the interest income you earned on the account during the year. The Form 1099-INT or Form 1099-OID you received will show the amount of any penalty you were charged.

Student Loan Interest

Because of the 2% test consider claiming the Lifetime Learning credit instead of claiming education deduction for the cost of courses designed to maintain or improve the skills needed for your present job.

Tuition and Fees Deduction

Professional Education Expenses

One Half Of Self Employment Tax

Self Employed Health Insurance

One Half Of Self Employment Tax
Tax Credits

If you had income tax withheld during the year, you generally should be sent a statement by January 31 of the next year, showing your income and the tax withheld. Depending on the source of your income, you will receive: 1) Form W-2, Wage and Tax Statement or 2) Form W-2G, Certain Gambling Winnings, or A form in the 1099 series.

Federal Income Tax Withheld

If you had income tax withheld during the year, you generally should be sent a statement by January 31 of the next year, showing your income and the tax withheld. Depending on the source of your income, you will receive: 1) Form W-2, Wage and Tax Statement or 2) Form W-2G, Certain Gambling Winnings, or A form in the 1099 series.

Estimated Taxes Paid

Take credit for all your estimated tax payments made during the year. Include any overpayment from the prior years you had credited to your current year's estimated tax. You must use Form 1040 or Form 1040A if you paid estimated tax. You cannot file Form 1040EZ.

Foreign Tax Credit

You may claim a tax credit or an itemized deduction for taxes paid to foreign countries. You do not need to live or to work in that foreign country in order to claim this benefit. A tax credit reduces your US tax liability on a dollar-for-dollar basis, and so is generally more valuable than a deduction which reduces your taxable income. Read more on IRS.gov: Publication 514, Foreign Tax Credit for Individuals.

Child And Dependent Care

The Child and Dependent Care Credit is available to families who pay childcare expenses. The expenses must have been incurred so that you and your spouse can work or look for work. The credit is based on a percentage of the expenses you pay. You may be able to claim the credit for child and dependent care expenses. If you are married, both you and your spouse must have earned income, unless one spouse was either a full-time student for 5 months of the tax year or was physically or mentally incapable of self-care. An individual is physically or mentally incapable of self-care if, as a result of a physical or mental defect, the individual is incapable of caring for his or her hygiene or nutritional needs, or requires the full-time attention of another person for the individual's own safety or the safety of others. Read more on IRS.gov: Publication 503, Child and Dependent Care Expenses.

Elderly Or Disabled Credit

The Credit for the Elderly or Disabled provides a tax credit for certain qualifying individuals. You figure your tax credit on Schedule R (for Form 1040) or Schedule 3 (for Form 1040A). Read more on IRS.gov: Publication 524, Credit for the Elderly or the Disabled.

Retirement Savings Contributions

The credit is a percentage of savings, from 10% to 50%. The credit also depends on your overall income and filing status. To claim the credit, you will need to fill out Form 8880 (PDF) and attach it to your Form 1040A or 1040.

Child Tax Credit

The Child Tax Credit is available to families that have a qualifying child under the age 16. The credit is non-refundable, which means you must have tax liability to claim the credit. Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income. Read more on IRS.gov: Publication 972, Child Tax Credit

Adoption Credit (Form 8839)

An eligible child is a child under age 18. Eligible expenses include: court costs, attorney fees, travel (including meals and lodging), and other expenses related to adopting a child. If you are adopting a foreign child you can take the credit only after the adoption process is finalized. To claim this credit, you'll need Form 8839, Qualified Adoption Expenses.

Mortgage Interest Credit

Publication 530, Tax information for First-time Homeowners

Qualified Electric Vehicle

Form 8834 Instructions

General Business Credit

Form 8801 Instructions

Home Energy Credit

Save your receipts, or make copies of them, and the Manufacturer Certification Statement for your records. Tax credits can only be claimed once, and are limited to the year in which they are purchased: If you claimed a home energy improvement tax credit on your 2010 taxes, you cannot take an additional credit for the same purchase on your 2011 taxes. There is a $500 lifetime limit on the federal tax credits that expire in December 2011 (not those that expire in 2017). If you have received a total of $500 or more in these tax credits from 2006-2010, you are not eligible for any more.

Education Credits

Either the American Opportunity Credit or the Lifetime Learning Credit can be claimed for each eligible student, but you cannot claim both in any year.

American Opportunity Tax Credit

The American Opportunity Tax Credit can be claimed for expenses paid first four years of post-secondary (higher) education. You can claim this credit for education expenses incurred by 1) Yourself, 2) the Your Spouse, or 3) Your Dependent. The American Opportunity Credit is worth up to $2,500 per student for four years of post-secondary education. The credit is 40% refundable, up to $1,000, so it can benefit even those with no tax liability. For individual taxpayers, the American Opportunity Credit phases out if modified adjusted gross income is between $80,000 and $90,000. For married filing joint, the credit phases out if MAGI is between $160,000 and $180,000.

Life Learning Credit

To claim Life Learning Credit the student must attend school on at least a part-time basis. You can claim this credit for education expenses incurred by 1) Yourself, 2) the Your Spouse, or 3) Your Dependent. Credit allows for a 20% tax credit for first $10,000 of qualified tuition and expenses to be fully creditable against the taxpayer’s total tax liability. The maximum amount of the credit is $2000 per eligible student.


Disclaimer:
This website, and the information contained within, is provided for general guidance only and is not intended to be an authoritative statement of law. It does not contain all tax laws or rules. All information on website is provided on an as-is basis. No liability will be accepted for the outcome.
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