How to Calculate Income Tax Return

Determine Total Income: Add up all sources of income, including wages, investments, and side jobs, using forms like W-2s and 1099s.

Subtract Deductions: Choose between the standard deduction or itemized deductions to lower your taxable income.

Calculate Taxable Income: Subtract your deductions from total income to find your taxable income.

 Apply Tax Bracket: Use your taxable income to determine your tax rate based on the IRS tax brackets.

 Subtract Tax Credits: Apply any eligible tax credits, such as the child tax credit, to directly reduce the tax owed.

Account for Withholding: Subtract any taxes already withheld from your paychecks throughout the year.

Compare to Payments: If your tax liability is greater than your withholding, you’ll owe; if less, you’ll get a refund.

 Use Tax Software: Tax software can do the calculations automatically, ensuring accuracy and saving time.