Enter your filing status, income, deductions and credits and we will estimate your total taxes. Based on your projected tax withholding for the year, we can also estimate your tax refund or amount you may owe the IRS. Please note this calculator is for the 2022 tax year which is due by April 18, 2023. We offer calculators for the tax years 2015, 2016, 2017, 2018, 2019, 2020, 2021, & 2023.
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The calculator on this page is for estimating 2022 taxes due in 2023. Click the following link to access our 2023 income tax calculator.
Filing status & dependents: |
Wages, salaries, tips: | $0.00 |
Income all other sources: | $0.00 |
Adjustments to income: | $0.00 |
Standard or itemized deduction: | $12,950.00 |
Taxable income: | $0.00 |
Total tax before credits: | $0.00 |
Total tax credits: | $0.00 |
Total tax after credits: | $0.00 |
Total payments & refundable credits: | $0.00 |
Your taxes are estimated at $0.00. |
Use the ‘Filing Status and Federal Income Tax Rates’ table to assist you in estimating your federal tax rate.
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| *Caution: Do not use these tax rate schedules to figure 2021 taxes. Use only to figure 2022 estimates. Source: Rev. Proc. 2021-45 | ||||
| 10% | $0 - $20,550 | $0 - $10,275 | $0 - $14,650 | $0 - $10,275 |
| 12% | $20,550 - $83,550 | $10,275 - $41,775 | $14,650 - $55,900 | $10,275 - $41,775 |
| 22% | $83,550 - $178,150 | $41,775 - $89,075 | $55,900 - $89,050 | $41,775 - $89,075 |
| 24% | $178,150 - $340,100 | $89,075 - $170,050 | $89,050 - $170,050 | $89,075 - $170,050 |
| 32% | $340,100 - $431,900 | $170,050 - $215,950 | $170,050 - $215,950 | $170,050 - $215,950 |
| 35% | $431,900 - $647,850 | $215,950 - $539,900 | $215,950 - $539,900 | $215,950 - $323,925 |
| 37% | Over $647,850 | Over $539,900 | Over $539,900 | Over $323,925 |
Choose your filing status. Your filing status determines the income levels for your Federal tax rates. It is also used to determine your standard deduction, personal exemptions, and many deduction or credit phaseout income ranges. The table below summarizes the five possible filing status choices. It is important to understand that your marital status as of the last day of the year determines your filing status.
| Married Filing Jointly | If you are married, you are able to file a joint return with your spouse. If your spouse died during the tax year, you are still able to file a joint return for that year. You may also choose to file separately under the status "Married Filing Separately". |
|---|---|
| Qualified Widow(er) | Generally, you qualify for this status for two years after the year of your spouse's death, as long as you and your spouse filed a joint tax return in the year immediately prior to their death. You are also required to have at least one dependent child or stepchild for whom you are the primary provider. |
| Single | Use this filing status if you don't qualify for any other filing status. Generally, if you are divorced, legally separated or unmarried as of the last day of the year you should use this status. |
| Head of Household | This is the status for unmarried individuals that pay for more than half of the cost to keep up a home. This home needs to be the main home for the income tax filer and at least one qualifying relative. You can also choose this status if you are married, but didn't live with your spouse at any time during the last six months of the year. You also need to provide more than half of the cost to keep up your home and have at least one dependent child living with you. |
| Married Filing Separately | If you are married, you have the choice to file separate returns. The filing status for this option is "Married Filing Separately". |
Choose 'no' if no one can claim you or your spouse as a dependent. Choose 'yes' if someone can claim you as a dependent. Choose 'Both myself and my spouse' if you both are dependents. You are a dependent if someone supports you and can claim you as a dependent even if they do not claim you as a dependent on their tax return.
Enter the number of dependent children that qualify for the child tax credit and age 6 to 17. In 2021, the tax credit is up to a $3,000 per child. To qualify, a child must be under age 18 at the end of the year. They also must be either your child, one of your siblings, your foster child, or a child of these relations (such as a grandchild). In addition, they must have lived with you for more than half of the year, not provide more than half of their own support and must be eligible dependent on your tax return.
Enter the number of dependent children that qualify for the child tax credit and are under age 6. In 2021, the tax credit is up to a $3,600 per child. To qualify, a child must be under age 6 at the end of the year. They also must be either your child, one of your siblings, your foster child, or a child of these relations (such as a grandchild). In addition, they must have lived with you for more than half of the year, not provide more than half of their own support and must be eligible dependent on your tax return.
Enter the number of dependent individuals that qualify for the "Other Dependent Credit". In 2021, you may be eligible for a nonrefundable credit of up to $500 per qualifying dependent. Generally, to qualify the dependent can't have already been claimed as a qualifying child, they must have lived with you for more than half of the year, not provide more than half of their own support and must be claimed as a dependent on your tax return.
Enter your total of all wages, salaries, tips, etc. For this entry only enter the amount for the primary taxpayer, do not include your spouse. This is normally the amount shown on your W-2 Form(s) in box 1 provided by your employer. You should also include any wages received as a household employee not reported on a W-2 (a W-2 may not have been provided if the amount was less than $2,300). It should also include any tips not reported to your employer - including allocated tips that appear on your W-2 Form(s) box 8.
Enter your spouse's total of all wages, salaries, tips, etc. For this entry, only enter the amount for your spouse. This is normally the amount shown on your spouse's W-2 Form(s) in box 1 provided by your spouse's employer. You should also include any wages received as a household employee not reported on a W-2 (a W-2 may not have been provided if the amount was less than $2,300). It should also include any tips not reported to your spouse's employer - including allocated tips that appear on your spouse's W-2 Form(s) box 8.
Check this box if your Medicare (W-2 Box 5) wages differs from the total of wages, salaries, tips, etc. (W-2 Box 1). If you don't have access to employer provided W-2s leave this box unchecked and we will assume that the amounts are the same. The Medicare (W-2 Box 5) wages will differ from the total of wages, salaries, tips, etc. only if you had non-taxable income that was subject to Medicare taxes such as a 401(k) contribution - or - if you had taxable income not subject to Medicare taxes such as health insurance paid by a S-Corporation on behalf of one of its owners.
There will be no change in your taxes unless you also pay self-employment taxes or are subject to the 0.9% Medicare sur-tax for compensation, wages and tips exceeding $200,000 ($250,000 if married filing jointly).
Check this box if your spouse's Medicare (W-2 Box 5) wages differs from the total of wages, salaries, tips, etc. (W-2 Box 1). If you don't have access to employer provided W-2s leave this box unchecked and we will assume that the amounts are the same. The Medicare (W-2 Box 5) wages will differ from the total of wages, salaries, tips, etc. only if you had non-taxable income that was subject to Medicare taxes such as a 401(k) contribution - or - if you had taxable income not subject to Medicare taxes such as health insurance paid by a S-Corporation on behalf of one of its owners.
There will be no change in your taxes unless you also pay self-employment taxes or are subject to the 0.9% Medicare sur-tax for compensation, wages and tips exceeding $200,000 ($250,000 if married filing jointly).
Enter your total of all wages, salaries, tips, etc. that were subject to Medicare withholding. This is normally the amount shown on W-2 Form(s) in box 5 provided by an employer. Leave this amount as $0 if you are unsure of the amount or do not have access to your W-2 Form(s). If this amount is $0 the calculator will use the amount entered into the normal wages, salaries, tips, etc. entry field.
The Medicare wages can be different from the total wages, salaries and tips (W-2 Box 1) when you have non-taxable income subject to Medicare taxes, such as 401(k) contributions or non-taxable combat pay. The amount can also be different if you had taxable income not subject to Medicare taxes, such as health insurance paid by an S-Corporation for one of its owners.
There will be no change in your taxes unless you also pay self-employment taxes or are subject to the 0.9% Medicare sur-tax for compensation, wages and tips exceeding $200,000 ($250,000 if married filing jointly).
For this entry only enter the amount for the primary taxpayer, do not include your spouse.
Enter your spouse's total of all wages, salaries, tips, etc. that were subject to Medicare withholding. This is normally the amount shown on W-2 Form(s) in box 5 provided by an employer. Leave this amount as $0 if you are unsure of the amount or do not have access to your spouse's W-2 Form(s). If this amount is $0 the calculator will use the amount entered into the normal wages, salaries, tips, etc. entry field.
The Medicare wages can be different from the total wages, salaries and tips (W-2 Box 1) when you have non-taxable income subject to Medicare taxes, such as 401(k) contributions or non-taxable combat pay. The amount can also be different if you had taxable income not subject to Medicare taxes, such as health insurance paid by an S-Corporation for one of its owners.
There will be no change in your taxes unless you also pay self-employment taxes or are subject to the 0.9% Medicare sur-tax for compensation, wages and tips exceeding $200,000 ($250,000 if married filing jointly).
For this entry only enter the amount for the spouse, do not include the primary taxpayer.
Enter your total taxable interest. This should also include your spouse's taxable interest if you are married filing jointly. This is normally reported to you either Form 1099-INT or Form 1099-OID.
This amount is only used to calculate taxable Social Security Benefits and Earned Income credit. If these are not part of your return, this entry will not change your results. Enter your (and your spouse's if married filing jointly) total tax-exempt interest reported to you (and your spouse if you are married filing jointly) on Form 1099-INT or Form 1099-OID. Also include any amounts on 1099-DIV reported as exempt interest dividends. Don't include any interest earned in an IRA, Health Savings Account, MSA or Coverdell education savings account. Tax-exempt interest entered here will not be carried to the Alternative Minimum Tax (AMT) calculation.
Enter your (and your spouse's if married filing jointly) total dividends for the year. This amount is normally reported to you on Form 1099-DIV. Note that your total ordinary dividends for the year will include as part of the total any qualified dividends received.
Enter your (and your spouse's if married filing jointly) total qualified dividends for the year. This amount is normally reported to you on Form 1099-DIV. Qualified dividends are the portion of your total ordinary dividends subject to the lower capital gains tax rate. Qualified dividends are typically dividends paid by a corporation in which you own stock (or a mutual fund that owns stock in the corporation).
Qualified dividends also have a minimum holding period of the underlying stock. For common stock dividends to be considered qualified dividends, you need to have owned the stock for at least 60 days during a 121 day period that starts 60 days before the ex-dividend date. The same rule applies for preferred stock but the holding period is 90 days during a 181-day period starting 90 days before the ex-dividend date.
Stock you own directly, not through a mutual fund or exchange traded fund, will report qualified dividends without regard to your holding period. If you bought or sold the stock during the year, you will need to determine if your ownership of the underlying stock meets the holding requirement.
Mutual funds and exchange traded funds will report qualified dividends with regard to their holding period of a stock owned by the fund. However, if you bought or sold fund shares during the year you will need to apply the same holding requirements to fund shares you own (or owned) as you would to a common stock. If you do not meet the holding requirement, qualified dividends reported to you by your fund should not be included as qualified dividends on your tax return.
If you did not itemize your deductions in the previous year, or you itemized deductions but elected to include sales taxes (instead of income taxes) this amount will be $0 regardless of any refund you received. Otherwise, the amount of your refund is taxable to the extent in which the over payment decreased your taxable income in previous year.
Enter the amount you received as spousal maintenance or alimony. Please note that a divorce or separation agreement executed after December 31st, 2018 is not considered income by the spouse receiving the payment. An amount should be entered only if the agreement was executed on or before December 31st, 2018. For more information see tax topic: 542 - Alimony.
This includes the total net profit (or loss) from self-employment which is reported on Schedule C. Also include net profit (or loss) reported on Schedule E, page 2 that is subject to self-employment taxes, such as being a general partner in a partnership. The calculator will use the amount entered to calculate your Schedule SE self-employment tax.
This includes a spouse's total net profit (or loss) from self-employment which is reported on Schedule C. It should also include a spouse�s net profit (or loss) reported on Schedule E, page 2 that is subject to self-employment taxes, such as being a general partner in a partnership. The calculator will use the amount entered to calculate your spouse�s Schedule SE self-employment tax.
This is the total profit you realized from the sale of assets such as stocks, bonds, collectibles, and other asserts owned less than one year. Short-term capital gains are taxed at regular income tax rates. For taxpayers above the income threshold for the Net Investment Income Tax (NIIT) there is an additional 3.8% NIIT tax.
This is the total profit you realized from the sale of assets such as stocks, bonds and real-estate owned more than one year. Long-term capital gains are taxed at lower, special capital gains rates and are calculated as follows (note that qualified dividends are calculated as if they were a long-term capital gain):
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| *Caution: Do not use these tax rate schedules to figure 2021 taxes. Use only to figure 2022 estimates. Source: Rev. Proc. 2021-45 | ||||
| 0% | $0 - $83,350 | $0 - $41,675 | $0 - $55,800 | $0 - $41,675 |
| 15% | $83,350 - $517,200 | $41,675 - $459,750 | $55,800 - $488,500 | $41,675 - $258,600 |
| 20% | Over $517,200 | Over $488,500 | Over $459,750 | Over $258,600 |
Other gains or losses not reported elsewhere. If you sold or exchanged assets used in a trade or business you may need to use Form 4797. Gain or Loss reported on Form 4797 is usually reported as part of the business on schedule C or Schedule D and not as an "other gain or loss".
Enter any IRA distributions that are taxable. This would normally include distributions from a Traditional IRA, simplified employee pension (SEP) IRA, or a SIMPLE IRA. This also includes conversions of any of these IRA accounts to a ROTH IRA. If in previous years you made any contributions to your Traditional, SEP, or SIMPLE IRA that were not tax-deductible, some of your distribution may not be subject to tax. See Form 8606 and its instructions for tax treatment in any of these situations.
Do not include any SEP, SIMPLE or Traditional IRA distributions that were rolled over to a Traditional IRA account. Do not include Roth to Roth rollovers or qualified ROTH IRA distributions.
This is the taxable portion of payment made by a pension or an annuity. This also includes distributions from Traditional 401(k), 403(b) and governmental 457(b) plans. Generally speaking, if you did not pay for an annuity or pension yourself, or if all contributions were made with pre-tax money, then all distributions will be fully taxable. If you purchased an annuity with after-tax money (for example from your personal savings NOT a retirement account), distributions from the annuity will have the taxable portion reduced by the amount paid for the annuity. This reduction in taxability is spread out over the remaining projected lifetime of the annuity owner. See 1040 instructions.
Oil and gas investment, when done as a general partner, can have intangible drilling costs that are considered an immediate loss of capital. This type of income reduction is both complex in its form and requirements. Please consult the IRS Oil and Gas Handbook for more information.
This type of investment income is subject to the 3.8% Net Investment Income Tax (NIIT). Any income already reported on another line should not be included here. Generally speaking this is income from any businesses that are passive activities to the taxpayer, and not reported elsewhere (for example, do not include income subject to self-employment taxes). This could include income from rental real estate, royalties, non-qualified annuities, partnerships, S corporations, trusts, etc. There are exceptions and additional rules that can impact whether a particular business or investment income is subject to the NIIT. Please contact your tax professional for additional information.
This is all income from any businesses that are NOT passive activities to the taxpayer, where the taxpayer materially participates, and not reported elsewhere (for example, do not include income subject to self-employment taxes). This amount is not subject to the 3.8% Net Investment Income Tax (NIIT). This could include income from rental real estate, partnerships or S corporations where the income is considered non-passive. There are exceptions and additional rules that can impact whether a particular business or other investment income is subject to the NIIT. Please contact your tax professional for additional information.
Farm income or loss (losses are entered as a negative number). Farm income is subject to self-employment taxes, which are automatically calculated.
Enter any unemployment compensation you (and your spouse if you are married filing jointly) received during the year.
This is the total of all Social Security and equivalent Railroad Retirement benefits you and your spouse (if you are married filing jointly) received in 2021. These benefits are reported to you on Forms SSA-1099 for Social Security and RRB-1099 for Railroad Retirement benefits.
This is for a group of income items and benefits normally excluded from your taxable income but included when calculating any of the following: 1) The amount of Social Security benefits that are taxable, 2) Phaseout of student loan interest deduction. This amount is the total of the following:
A portion of your Social Security benefits and equivalent Railroad Retirement benefits are included in your Total Income (and subject to income taxes and any other tax rules that are based on your total income) when your income exceeds certain thresholds. Note that we don't include the impact of a lump-sum election for payments received for prior year's benefits in this calculation. An overview of the calculation (the detailed worksheet is part of IRS Publication 915) is described below.
| Filing Status | Base Amount | 50% Phaseout |
|---|---|---|
| Married Filing Jointly | $32,000 | $12,000 |
| Qualified Widow(er) | $25,000 | $9,000 |
| Single | $25,000 | $9,000 |
| Head of Household | $25,000 | $9,000 |
| Married Filing Separately* | $0 | $0 |
Any other income you received during the year but not reported on another form. This could include income reported to you on 1099-MISC that was not already reported elsewhere, lottery and gambling winnings, prizes and awards, canceled debt, and the Alaska Permanent Fund Dividend.
Total income is calculated by adding lines 7 through 21 on your Form 1040. For most taxpayers this includes wages, salaries, tips, interest, dividends and gains and losses from a variety of activities.
If you were an 'eligible educator' in 2021 you are able to deduct up to $250 in expenses. If you are married filing jointly and both of you are 'eligible educators' the limit is $500 ($250 each). Eligible educators include kindergarten through 12th grade teachers, instructors, counselors, principals, or aides who worked in a school for at least 900 hours during the school year. The expenses can be for professional development courses related to what you teach or supplies you use in the classroom. Home schooling expenses do not qualify and nor do expenses that were reimbursed. Your total expenses must be reduced by any savings bond interest that was nontaxable for higher education expenses, nontaxable qualified tuition program earnings or distributions, and nontaxable distributions of Coverdell education savings account earnings.
This income deduction only applies to employee business expenses of Armed Forces reservists, qualified performing artists, fee-basis state or local government officials and employees with impairment-related work expenses. This includes non-reimbursed business expenses for vehicles, parking fees, tolls, transportation, lodging and other business expenses. Meals and entertainment are included but limited to 50% of the expense incurred.
Enter your Health Savings Account (HSA) contributions for 2021. The maximum contribution is $3,600 for single coverage and $7,200 for family coverage. To qualify for the deduction, you must have had a High Deductible Health Plan (HDHP) and contributed to your HSA account. Amounts contributed by your employer are not deductible. See Form 8889 for more information.
This amount is calculated for you. It is one-half (50%) of your total self-employment tax. Please see 'Self-Employment' tax for details on how this is calculated.
If you are self-employed and made contributions to retirement plan such as a SEP, SIMPLE or other qualified plan enter that amount here. For more information about these plans and contribution rules see publication 560.
Your health insurance premiums can be deducted from your taxable income if you are self-employed with net self-employment income, a partner with net earnings from self-employment, or received wages from an S corporation that you owned more than 2%. Note that for S corporations you can only deduct the premiums if they are reported as wages on your W-2. For the self-employed and for partnerships, neither you or your spouse can be eligible for health insurance from an employer to receive this deduction.
Enter any amounts from Form 1099-INT or Form 1099-OID that show a penalty for early withdrawal of savings. These penalties are usually incurred when you withdraw money from a certificate of deposit or a time-deposit account before it matures.
Enter any Traditional IRA contributions that are tax-deductible. Traditional IRA contributions are normally tax-deductible. However, if you have an employer-sponsored retirement plan, such as a 401(k), your tax deduction may be limited.
| Tax Filing Status | Income Phase-Out Range |
|---|---|
| Married filing jointly | $109,000 - $129,000 |
| Single, Head of Household or Married Filing Separately (and have not lived with spouse for last year)* | $68,000 - $78,000 |
| Married filing separately* | $0 - $10,000 |
| Married filing jointly (spouse has employer plan, IRA owner does not)** | $204,000 - $214,000 |
Enter the total student loan interest you (and your spouse if married filing jointly) paid for the year. Your allowable deduction is phased-out starting at $80,000 ($165,000 married filing jointly) and is completely eliminated at $95,000 ($195,000 married filing jointly). The calculator will automatically determine any phaseout amounts based on your income.
Payments for your spouse or former spouse as part of a divorce or separation agreement executed on or before December 31st, 2018 may qualify as an alimony payment deduction. Alimony is deductible by the payer spouse and is reported as income by the recipient for divorce or separations executed on or before December 31st, 2018. For more information see tax topic: 542 - Alimony or 2017 Tax Cuts and Jobs Act PART V—DEDUCTIONS AND EXCLUSIONS.
Total of all of your adjustments. This is sometime referred to as "above the line" deductions since they do not require filing Schedule A for itemized deductions. Total income minus your total adjustments equals your Adjusted Gross Income (AGI).
Adjusted gross income (AGI) is calculated by subtracting all deductions from the 'Adjusted Gross Income' section from your total income. AGI is used to calculate many of the qualifying amounts if you itemized your deductions.
Your standard deduction is used to reduce your taxable income if you do not use Schedule A to itemize your deductions, or if your Schedule A itemized deduction is less than your standard deduction. Your standard deduction is based on your filing status. For 2021, the standard deductions are:
| Filing Status | Standard Deduction |
|---|---|
| Married Filing Joint | $25,900 |
| Qualified Widow(er) | $25,900 |
| Single | $12,950 |
| Heads of Household | $19,400 |
| Married Filing Separately | $12,950 |
Enter your qualified medical and dental expenses for the year. This can include your health insurance premiums if you paid for them yourself (not through an employer sponsored plan) and you have not deducted them elsewhere. Your actual deduction is only for the amount that exceeds 7.5% of your Adjusted Gross Income (AGI). Enter your total expenses and we will calculate the actual deduction based on your AGI.
Enter the total of your 1) state and local property taxes and 2) state and local income taxes. If your state does not have an income tax (or you have paid more sales tax than income tax during the year) you can choose to include state and local sales tax paid instead of state and local income taxes
Taxpayers can deduct the interest paid on qualified residences for up to $750,000 in mortgage debt (the limit is $375,000 if married and filing separately). For mortgages that were originated before December 15, 2017, the limit is $1 million in total mortgage debt. This includes refinancing these mortgages as long as the amount owed is not increased as part of the refinancing.
Any interest paid on first, second or home equity mortgages over the limit is not tax-deductible. Only home equity loans that are used to buy, build or substantially improve the home that secures the loan are included. All other home equity loans do not have an interest deduction. Mortgage interest is reported on Form 1098.
You can also include the amount you paid for "points" (which reduces your mortgage interest rate). Mortgage insurance premiums paid may be deductible in 2021.
Enter your total gifts of cash to qualified charitable organizations (check, credit card, actual cash, payroll contributions or 'texted' contributions include on your phone bill). If you itemize on Schedule A, 2021 allows you to deduct up to 100% of your Adjusted Gross Income (AGI). If you use the standard deduction the calculator will include a charitable contribution deduction (of up to $300, $600 for Married Filing Jointly). This deduction, available when you don't itemize, first appeared in 2020 as part of the CARES act. It was increased in 2021 to $600 for married couples filing jointly.
Enter your total gifts of non-cash to qualified charitable organizations. The amount should be the fair market value of those gifts, not the amount originally paid. Note that non-cash donations do not qualify for a tax deduction unless you itemize your deductions on Schedule A and your total Schedule A deductions are greater than your standard deduction. In addition, most non-cash gifts are limited to 50% of your Adjusted Gross Income (AGI). This calculator will limit your gifts to 50% of your AGI when calculating your taxes. It is beyond the scope of this calculator to calculate the special situations that may have different deductible limitations. You may include amounts in this line that were not allowed on previous year's Schedule A due to the AGI limitation but the total will remain limited to 50% of your AGI.
Your total itemized deductions from Schedule A.
Check this box to use your Schedule A Itemized Deductions even if the standard deduction would produce a lower tax amount. For example, if you are married filing separately and your spouse is itemizing their deductions, you are not able to use the standard deduction on your return. Checking this box will calculate your tax with your itemized deductions and disregard the standard deduction.
This is the higher of your Standard Deduction or your Itemized Deduction. If you checked 'do not use standard deduction' this is always your Itemized Deductions.
The Qualified business income deduction (QBID) reduces your taxable income by 20% of your qualified business income, subject to certain limitations. Calculating your QBID is not included in this calculator but you can estimate the amount with the following Total the QBI for all of your pass-through entities. This will be reported on your Schedule K-1 or Schedule C for a sole proprietorship. See irs.gov for more information.
| Single and Heads of Household | Married Filing Jointly | |
|---|---|---|
| AGI at or below | $164,900 20% of business income from qualified trades or businesses including Specified Service Trade or Business (SSTB)es | $329,800 20% of business income from qualified trade or business including specified services or businesses. |
| AGI in range has prorated deduction | $164,900-$214,900 Phase-out of QBID deduction for Specified Service Trade or Business (SSTB). Phase-in of employee wage requirements for all other businesses. | $329,800-$429,800 Phase-out of QBID deduction for Specified Service Trade or Business (SSTB). Phase-in of employee wage requirements for all other businesses. |
| AGI above | $214,900 No QBID deduction for Specified Service Trade or Business (SSTB). QBID limited to 50% of employee wages paid or 25% of employee wages paid plus 2.5% of invested capital. | $429,800 No QBID deduction for Specified Service Trade or Business (SSTB). QBID limited to 50% of employee wages paid or 25% of employee wages paid plus 2.5% of invested capital. |
Which entities are considered Specified Service Trade or Business (SSTB) is not clearly defined. The following are specifically identified as NOT a SSTB: real estate brokers, property managers, architecture, engineering and bankers. For all other businesses you are considered a SSTB if you are in the trade or business of performing services as an employee – or – if the business is a Specified Service Trade or Business (SSTB) as defined by Section 1202(e)(3)(A).
Section 1202(e)(3)(A) includes any trade or business involving the performance of services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of one or more of its employees.
This is your Adjusted Gross Income (AGI) minus your standard deduction or itemized deduction (whichever is larger) minus any Qualified Business Income Deduction (QBID).
This is the total federal income tax you owe for 2021 before any tax credits, AMT or other non-income taxes.
Any foreign tax credit per Form 1116.
This is a credit for daycare for children under age 13 or other dependents during a time when they are unable to care for themselves. The taxpayer, and spouse if married filing jointly, must work, looked for work or been a full-time student. The maximum allowed expenses are $8,000 for the first eligible child and $16,000 for two or more eligible children. The credit starts at 50% of the expenses for adjusted gross income up to $125,000. The credit drops slowly to 20% of expenses and fully phases out for adjusted gross income greater than $438,000. The credit is fully refundable for tax year 2021. See for 2441 for complete instructions.
Enter any education credits you can claim from Form 8863 line 23.
Enter any retirement savings contribution credit you can claim from Form 8880.
A $500 nonrefundable credit for each dependent who is not a qualifying child.
This is a credit for residential installation of qualified energy saving or producing equipment. This includes qualified solar electric generating equipment, solar water heating equipment (other than for hot tubs and pools), geothermal heat pumps, wind energy generators or fuel cell power plants. The credit is 30 percent of qualifying expenses. This credit was renewed in 2020 through 2021. See Form 5695 for more information.
Enter the total American opportunity credit that you are able to claim from Form 8863 line 14. This amount is limited to $2,500 per eligible student.
Any non-refundable portion of an American opportunity credit (AOTC) that you are able to claim. The AOTC non-refundable portion is $1,500 per eligible student.
Enter any other tax credits you can claim. Tax credits entered here will not reduce your tax liability below zero (these are non-refundable credits).
Alternative Minimum Tax (AMT) income adjustments will be added to your Alternative Minimum Tax Income (AMTI) when calculating AMT. Please do not include any itemized deductions or taxable refunds for state and local taxes, they are handled separately. Income adjustments to include would be additional items on Form 6251 lines 7 through 21. Enter your total (either actual or estimated) amount here. It is beyond the scope of this calculator to determine all of the individual AMT income adjustments.
The alternative minimum tax is an alternative tax for high income taxpayers. There are only two tax rates 26% or 28% that replace the normal income tax rates. Please see Form 6251 Alternative Minimum tax - Individuals for more information. A summary of how the Alternative Minimum Tax (AMT) is calculated is as follows:
| Filing Status | Exemption Amount | Exemption Phaseout Threshold |
|---|---|---|
| Married Filing Jointly | $114,600 | $1,047,200 |
| Qualified Widow(er) | $114,600 | $1,047,200 |
| Single | $73,600 | $523,600 |
| Heads of Household | $73,600 | $523,600 |
| Married Filing Separately | $57,300 | $523,600 |
Taxpayers with health insurance from their State Health Insurance Marketplace generally get a prepaid credit sent directly to the insurance company. This credit is used to reduce or eliminate the cost of health insurance. The Marketplace uses IRS Form 1095-A to report the amounts received. Taxpayers who get Marketplace Health Insurance must reconcile the information on IRS Form 8962 using their Form 1095-A. The reconciliation can result in an additional tax or a refund of excess premiums paid out-of-pocket by the taxpayer.
Self-employment tax (schedule SE) is calculated by taking your total 'net farm income or loss' and 'net business income or loss' and multiplying it by 92.35% (this is done to adjust your net income downward by the total employment tax that would have been paid by an employer, had you not been self-employed). If the result is less than $400.00, you do not owe any self-employment tax on this income.
If the result is greater than $400 you owe self-employment taxes. In 2021, income up to $142,800 is subject to the 12.4% tax paid for the Social Security portion of self-employment taxes (FICA). All self-employment income is subject to the Medicare tax of 2.9%.
If you were also an employee during the year, your employee counts toward the $142,800 threshold where the Social Security tax ends. If your total employee wages exceed $142,800 in 2021 you will not owe additional Social Security taxes for self-employment. You will, however, still owe the Medicare 2.9% tax.
Enter any Social Security and Medicare tax you owe from unreported tip income. See Form 4137 for more information.
If you made withdrawals from any IRA, qualified retirement plan or other tax-advantaged account and owe a 10% early withdrawal penalty (or other penalty) enter the penalty amount here. Please see Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.
Enter any advanced Earned Income Credit you received as reported on your W-2 Forms, line 9. Also enter any household employment taxes you owe (use Schedule H to determine this tax amount).
If you received a first-time homebuyer credit and sold your home, you may have to repay part of the original credit. Please see Form 5404 for more information.
Income, such as wages and self-employment earnings, that were subject to Medicare taxes have sur-tax of 0.9% for amounts exceeding $200,000 ($250,000 if married filing jointly). This is automatically calculated based on all income entered as wages, salaries, tips, etc., all income entered as Business income or loss (Schedule C & E subject to self-employment taxes) and Farm income (Schedule F).
Investment income is subject to the Net Investment Income Tax (NIIT) when you have net positive investment income. Net investment income is total of all investment income, subject to the tax, where losses can offset gains in any given year. Any business income or loss that is subject to Self-Employment taxes is never considered investment income neither is business income from organizations where you actively participate (such as many S Corporations and Partnerships). The tax is 3.8% for all amounts above income thresholds for your filing type.
| Filing Status | NIIT tax Threshold |
|---|---|
| Married Filing Jointly | $250,000 |
| Qualified Widow(er) with dependent child | $250,000 |
| Single | $200,000 |
| Heads of Household | $200,000 |
| Married Filing Separately | $125,000 |
Total of all Federal income taxes withheld for the year. This would typically be reported to you on Form W-2 for employment wages and Form 1099 for other income.
The child tax credit for 2021 is fully refundable and is $3,000 for each qualifying dependent age 6 to 17 and $3,600 for each qualifying dependent under age 6. There are two phase outs for this credit. The first phase out is for $1,000 for children 6 through 17 and $1,600 for children under 6 starting at up to $150,000 for married filing jointly and qualifying widow filing status, $112,500 for head of household filing status, and $75,000 for single and married filing separately. The second phase out is for the remaining $2,000 of credit per child starting at $200,000 for all but married filing jointly filing status, which phases out is $400,000 of adjusted gross income.
Under these rules, taxpayers do not have to have earned income so even taxpayers with no taxable income are eligible for the credit, but they do have to file a tax return to get it.
| Filing Status | Maximum AGI for Full Credit | AGI No Credit |
|---|---|---|
| Married Filing Jointly | $150,000 | $50 reduction for every $1,000 over threshold |
| Qualified Widow(er) | $150,000 | $50 reduction for every $1,000 over threshold |
| Single | $75,000 | $50 reduction for every $1,000 over threshold |
| Heads of Household | $75,000 | $50 reduction for every $1,000 over threshold |
| Married Filing Separately | $75,000 | $50 reduction for every $1,000 over threshold |
| Filing Status | Maximum AGI for Full Credit | AGI No Credit |
|---|---|---|
| Married Filing Jointly | $400,000 | $50 reduction for every $1,000 over threshold |
| Qualified Widow(er) | $400,000 | $50 reduction for every $1,000 over threshold |
| Single | $200,000 | $50 reduction for every $1,000 over threshold |
| Heads of Household | $200,000 | $50 reduction for every $1,000 over threshold |
| Married Filing Separately | $200,000 | $50 reduction for every $1,000 over threshold |
Earned Income Credit (EIC) is a tax credit available to low income earners. In some cases the EIC can be greater than the total income taxes owed for the year. This provides an income tax refund to families that may have little or no income tax withheld from their paychecks. This calculator will determine if you qualify for the Earned Income Credit, and if so, how much.
Enter the number of children in your family that qualify for the Earned Income Credit (EIC). The IRS has a set of three requirements that must be met to have a child considered qualified.
This is any income from wages, salaries, tips or any other earned income that is taxable. Do not include any non-taxable benefits in this total. Also include any earnings from farms, farm partnerships or businesses that did not require payment of self-employment taxes. Do not include any scholarships, penal income, annuity or pension income.
If you received income from any of these sources, it does not qualify for the Earned Income Credit. Your eligible Earned Income is reduced by this amount.
If you received any non-taxable combat pay, the IRS allows you choose whether to figure your EIC with or without this pay included. This calculator will automatically choose the option that produces the highest EIC.
Check this box if you or your spouse will be at least 19, or 24 years old or older if a full- time student, at the end of the year. To qualify for the Earned Income Credit, either you or your spouse (if you are married) must be at least 19, or 24 years old if a full- time student, at the end of the year. This rule only applies to people without any children. Your response is not used if you have 1 or more qualified children.
You cannot be a qualifying child of another person and receive Earned Income Credit. If you meet the requirements to be a qualifying child of your parents based on the EIC rules, you are unable to claim any EIC for yourself. This is the case even if your parent or parents do not qualify for EIC and whether or not you have any qualifying children of your own.
Check this box if you (and your spouse if married) lived in the United States for more than six months of the year. You must have lived in the U.S. for at least six months and one day during the current year. This only applies if you do not have any qualified children. For military personnel, you are able to include any time spent on extended deployment as living in the U.S.
Your total tax credits. This amount is subtracted from the total tax amount.
Total of all tax payments made in 2021. This includes tax withheld from Forms W-2 and 1099, and estimated taxes paid, earned income credit and excess Social Security tax withheld.
Most individuals and businesses in the United States are obligated to pay taxes and file tax forms to the Federal government. To prove you pay your fair share, you’re required to file a tax return annually to the Internal Revenue Service (IRS). Filing taxes are usually done between the last week of January to April 15. The period when you can send your tax return is called the tax season.
Uncertain? Have Questions?
This site offers free calculators and guides, though the tax code is large and complex. If you have specific questions, be sure to read the associated IRS documentation and seek advice from your financial advisor or accountant.
Filing may be confusing especially with newly enacted tax provisions under the 2021 American Rescue Plan Act (ARPA). Components such as the tax treatment of 2020 unemployment benefits and phaseout thresholds for economic impact payments were changed.
The tax-filing process is a way for the government to track how much income you’ve earned, along with how much tax you’re supposed to pay based on your income. It also monitors how much you actually paid, and if you’ve paid insufficient taxes. As people pay taxes throughout the year, many workers have tax money directly withheld from their paychecks.
If you overpaid, like most taxpayers do, the government gives it back to you as a refund. But if you underpaid, you must prioritize paying the needed amount. Tax refunds can be substantial, which can help you save and pay for important expenses. Overall, it’s crucial to file your taxes properly and take advantage of standard tax deductions.
Though millions of Americans file taxes each year, it doesn’t make the process easy. When you sit down to review your tax forms, you’re bound to get perplexed. Besides actually paying taxes, going through the trouble of arranging your tax file can be overwhelming. This is especially true if your finances are more complex, or is not as straightforward as other workers or business owners.
In this article, we’ll guide you through the most common tax form taxpayers use, which is the 1040 form. The 1040 tax form is what people use to file their personal and family tax return. It helps you compute how much you earned and guides you through income adjustments you need to make.
We’ll explain the following aspects of taxes as they relate to the 1040 form:
When you first start working, your employer usually asks you to fill-out a W-4 tax form. The information you write in the W-4 tax form determines how much taxes are withheld from your salary. It includes pertinent personal information, such as whether you’re single or married, if you have dependents, and how much you’re expected to earn over the year.
Your filing status is an important basis for calculating your taxable income. This is determined by your family situation and your marital status. Taxpayers may fall into five types of filing status: single, married filing jointly, married filing separately, head of household, and a qualified widower with a dependent child or children. If you are eligible for more than one filing status, the IRS tax filing interview selects the result with the lowest tax amount.
Tax brackets specify your required tax rate based on your income level. In the U.S., the government uses a progressive tax system where the rate increases as your income grows. As a result, people with higher incomes fall into brackets with high tax rates. Meanwhile, lower income earners fall into brackets with low tax rates.
The following table shows 2022 filing status and tax rates:
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 10% | $0 - $20,550 | $0 - $10,275 | $0 - $14,650 | $0 - $10,275 |
| 12% | $20,550 - $83,550 | $10,275 - $41,775 | $14,650 - $55,900 | $10,275 - $41,775 |
| 22% | $83,550 - $178,150 | $41,775 - $89,075 | $55,900 - $89,050 | $41,775 - $89,075 |
| 24% | $178,150 - $340,100 | $89,075 - $170,050 | $89,050 - $170,050 | $89,075 - $170,050 |
| 32% | $340,100 - $431,900 | $170,050 - $215,950 | $170,050 - $215,950 | $170,050 - $215,950 |
| 35% | $431,900 - $647,850 | $215,950 - $539,900 | $215,950 - $539,900 | $215,950 - $323,925 |
| 37% | Over $647,850 | Over $539,900 | Over $539,900 | Over $323,925 |
The IRS recommends updating your W-4 form every time you experience major life changes that impact your tax obligations. This includes events such as marriage, divorce, and the birth of a child. You should also update it whenever you receive unexpected sources of income.
Each year, employers send withheld taxes to the IRS. The IRS then records and monitors how much each individual, company, and organization has paid in taxes. For self-employed individuals or those who don’t have a company that withholds taxes for them, you’re still required to withhold taxes from your salary. You can do this by filing estimated tax payments. Estimated tax payments are usually paid by sole proprietors, partners, and S corporation shareholders if they expect to owe taxes worth $1,000 and above when their return is filed.
The above rates are separate from Federal Insurance Contributions Act (FICA) taxes which fund Social Security and Medicare. Employers and workers typically pay half of the 12.4% Social Security and 1.45% Medicare benefit each, for a total of 15.3%.
Individuals who are self-employed pay self-employment taxes. This means they cover both halves of the tax.
For 2022, the FICA limit is on the first $147,000 of income. Note that this limit is adjusted annually according to changes in the average wage index.
“The OASDI [Old-age, Survivors, and Disability Insurance] for wages paid in 2022 is set by statute at 6.2 percent for employees and employers, each. Thus, an individual with wages equal to or larger than $147,000 would contribute $9,114.00 to the OASDI program in 2022, and his or her employer would contribute the same amount. The OASDI tax rate for self-employment income in 2022 is 12.4 percent… Tax rates under the [Medicare] HI program are 1.45 percent for employees and employers, each, and 2.90 percent for self-employed persons.”
In a tax plan outlined by President Biden before the 2020 election, he announced possible policies that would increase taxes for individuals with income over $400,000. However, this change has not been enacted. Some tax scholars also believe it is unlikely to be implemented.
Gains on asset sales which are held for at least a year are taxed at lower rates than ordinary income. In the U.S., purchasing property comes with certain tax advantages. When you pay interest on mortgage payments, you can claim a deduction in your tax returns.
While income from rent is not tax deductible, owning real estate in the long-term is subject to lower capital gains taxes. When you hold on to your asset longer, you give it time to increase in value and lower its tax burden. Short-term capital gains, in contrast, have higher rates than long-term capital gains which are held for a year or more.
The following table shows 2022 capital gains tax rates for different tax filing statuses:
| Tax Rate | Married Filing Jointly or Qualified Widow(er) | Single | Head of Household | Married Filing Separately |
|---|---|---|---|---|
| 0% | $0 - $83,350 | $0 - $41,675 | $0 - $55,800 | $0 - $41,675 |
| 15% | $83,350 - $517,200 | $41,675 - $459,750 | $55,800 - $488,500 | $41,675 - $258,600 |
| 20% | Over $517,200 | Over $488,500 | Over $459,750 | Over $258,600 |
There are only three brackets for long-term capitals gains tax. These are taxed at graduated thresholds set at 0%, 15%, and 20%. Most taxpayers who declare long-term capital gains are usually at the 15% threshold or below.
You earn capital gains when you sell a capital asset for more than what you paid for. Different capital assets include real estate, stocks and bonds. Taxes you pay on capital gains are determined by how long you keep the property before you sell it. Long-term capital gains are obtained from assets that are held for a year or beyond.
When the new year comes around, people get ready for tax filing. Between late January to early February, you will likely receive a W-2 from in the mail from your employer. Make sure to hold on to this form. The W-2 form details all the wages you earned and taxes withheld throughout the year. You’ll need this document in filing your taxes moving forward.
The W-2 form contains all the information you must include in your 1040 or 1040EZ tax form. Your tax forms come with organized boxes and instructions as you fill them out. Note that it’s your duty as a working citizen to file your tax return on time. This is mandatory even if you’re not receiving any refunds.
Apart from the W-2 form, there are other tax forms you might need based on your job status. You’ll also need other tax forms to deduct certain types of interest payments.
1099 Forms
Individuals who are self-employed or independent contractors usually receive 1099 forms. These forms do not include withholding information because self-employed taxpayers are expected to remit their own taxes throughout the year. Banks and investment companies may also issue 1099 forms if you’ve accumulated interest on income. The following are common types of 1099 forms:
1098 Forms
Individuals receive a 1098 form if they’ve made interest payments on a mortgage or a student loan. This basically reports the interest payments and expenses you can deduct. For homeowners, you’ll receive a 1098 mortgage interest statement detailing how much interest you paid throughout the year. If you’re paying for college tuition, you’ll receive a 1098-T or tuition statement form that reports the tuition you paid. Depending on the amount of interest payments for the year, you might be entitled to tax deductions or tax credit.
Next, you must gather all necessary financial information to complete your tax return:
Under the 1040 form, you’ll need to submit additional forms called ‘schedules.’ This depends on the deductions or credits you need to claim, or any additional taxes you need to report. There are 3 main tax schedules:
While your taxes are determined by your income, you don’t pay taxes based on your total earnings. The government allows individuals to deduct a certain amount on their income which is exempted from taxes. The main deduction you make is called the standard deduction.
Standard deduction is the specific dollar amount that lowers your taxable income. The standard deduction for 2021 is $12,550 for single filers, and $25,100 for those married filing jointly. Individual taxpayers are qualified to make standard deductions based on their filing status. You also have the option to itemize deductions, but this only makes sense if your total deductions exceed the assigned threshold.
For a complete list of 2022 Federal income tax standard deductions, refer to the table below.
| Filing Status | Standard Deduction |
|---|---|
| Single | $12,950 |
| Qualified Widow(er) | $25,900 |
| Married Filing Separately | $12,950 |
| Married Filing Jointly | $25,900 |
| Head of Household | $19,400 |
Tax deductions are beneficial in reducing your taxed income. You can deduct money from the amount you owe or the amount you should have paid by claiming authorized deductions from your tax bill. It’s not even a secret. It’s part of the tax-filing process, and the IRS actually publishes a list of tax deductions and credits on their website.
There are certain deductions that are more common than others. The tax code is written in such a way that some deductions just apply to more individuals. Common tax deductions you should be on the lookout for are the following:
If any of the above apply, it’s easy to take some deductions from the taxes that you have to pay. With tax deductions, you want to make sure you’re maximizing how much you can get from tax cuts on your bill.
Taxpayers can itemize deductions if they’ve spent more than the standard deduction amount for the year. But for the most part, only about 10% of U.S. taxpayers can provide itemized deductions on their tax return. The following list shows different expenses that can be written as itemized deductions:
Tax deductions and credits both reduce your tax bill by adjusting your income. While these might seem similar, the difference is in which part of the tax filing process they are applied to.
Tax deduction reduces your taxable income, which essentially impacts the tax rate used to compute the taxes you owe. Getting a tax deduction might result in a larger refund because your tax rate is reduced. For instance, suppose you earned $50,000 in total income and you qualified for $10,000 in deductions. Your taxable income for that year will be reduced to $40,000 instead of $50,000. If your status is single during the 2022 tax year, your tax rate will be reduced from 22% to 12%.
Deductions are often categorized into two types: above-the-line deductions and below-the-line deductions. The line this refers to is your adjusted gross income (AGI). AGI is determined by taking above-the-line deductions. Once you find your AGI, you can also determine if you’re eligible for below-the-line deductions.
Tax credits, on the other hand, lowers how much you owe in taxes. The annual income tax charged to you is called your tax liability or tax bill. Tax credits basically reduce your tax bill, which immediately lowers the amount you need to pay in taxes. Tax credits can be better than deductions because they directly lower the amount of taxes you owe. There are two main types of tax credits: refundable and nonrefundable tax credits.
In 2017, the Tax Cuts and Jobs Act was signed by former President Trump. It changed the overall tax bracket rate while increasing the standard deduction. These reforms to itemized deductions simplified individual tax requirements for millions of households. Rather than itemizing various deductions, which increases compliance costs, many taxpayers benefited from taking the expanded standard deduction. But after December 31, 2025, if the Congress permits it, most changes to the individual tax code will revert to pre-TCJA standards.
In addition, the 2017 TCJA enacted 3 major changes which had a significant impact on homeowners:
1
Mortgage Interest Deductibility Limit: In the past, homeowners could deduct interest paid on up to $1,000,000 of mortgage debt, specifically for those who are married and filing jointly. After the TCJA, the new limit was lowered to $750,000, though homeowners who are refinancing an existing mortgage may still qualify for the old limit. For single taxpayers and those who are married and filing individually, the cap is now $375,000, which was $750,000 in pre-TCJA years.
2
Home Equity Interest Deductibility: In the past, second mortgage interest was deductible. After the TCJA, interest paid on HELOCs and home equity loans are no longer deductible, except for one condition. The loan proceeds must be used to build or substantially improve the homeowner’s dwelling.
3
SALT Limit: High-income filers who own homes in expensive coastal areas will find their state and local tax deductions have been limited significantly, to a cap of $10,000 per year.
As mentioned above, in 2017 President Trump pushed through tax cuts which had a significant impact on taxpayers. While taxes were reduced, Federal spending never was, so the national debt kept growing. By 2020, the COVID-19 crisis blew up the global economy and gave the United States wartime level deficits and national debts as lockdowns destroyed employment prospects and kicked in social safety net spending programs.
The World Economic Forum published a book titled COVID-19: The Great Reset.
Politicians at the highest levels rarely keep their campaign promises. Moreover, enacting many changes can require bipartisan buy in from both houses of the Congress. During his campaign for the 2020 presidential election, President Biden promised to lift the top individual rate from 37% to 39.6%, while increasing the corporate tax rate from 21% to 28%. In addition to lifting the top marginal personal tax rate, President Biden mentioned plans of a 12.4% Social Security payroll tax on any income above $400,000 per year.
“The dividing line is no accident: It was intentionally set to far exceed any definition of the middle class. And it spares much of the coastal professional class that is an important part of the Democratic coalition.”
The Washington Post reported that President Biden’s tax plans would reverse part of President Trump’s steep corporate tax cut in 2017. The plan includes higher levies on investment income and a higher top marginal tax rate. These tax increases are among the most controversial factors in the administration, which has caused friction with many business groups. That, as well as the administration’s $1.9 trillion stimulus plan, which was financed by adding to federal debt.
For 2022, refer to the following lifetime learning credit income limits:
| Filing Status | Max. Income for Full Credit | Max. Income for Partial Credit |
|---|---|---|
| Single | $80,000 | $90,000 |
| Qualified Widow(er) | $80,000 | $180,000 |
| Married Filing Separately | $80,000 | $90,000 |
| Married Filing Jointly | $160,000 | $180,000 |
| Head of Household | $80,000 | $90,000 |
Comparing the 1040 Form with the 1040EZ
Before the redesigned 1040 form was implemented in 2018, the 1040EZ form was designed for filers with more basic, uncomplicated tax situations. The 1040EZ form lived up to its easy name because it was a shorter and much simpler version of the 1040 form.
But after the 2017 TCJA, a new 1040 consolidated the 1040, 1040A, and 1040EZ forms into a single 1040 form. This is the tax form everyone must use now to file their tax return. However, if you have back taxes from 2017 and earlier, you may still use the 1040EZ form by getting in touch with the IRS.
There are various reasons why people might need to file for extension on taxes. You might do so because you’ll be out of the country when taxes are due. Perhaps you have a complex business partnership, or your partner suddenly fell ill right in time for tax season. In some cases, you might be serving in the military and won’t be back from a combat zone for a while. If you cannot file or pay your taxes when they are due, you should request the IRS for a later due date.
It is up to the discretion of the IRS if they grant extensions on tax payments. The IRS usually will agree to the extension, as long as the taxpayer has a good reason to ask for one. In this respect, those who feel they need a little more time should file the extension using form 4868. It is certainly a much better option than not filing the taxes or not paying at all.
Catching Up on Back Taxes
Unpaid taxes are a very serious issue. If you failed to file your taxes properly or pay the right amount, expect the IRS to know. They will come after you for unpaid taxes—with additional fines, fees, and interest. Don’t be shocked to receive mail stating the amount they claim you owe versus the amount you actually paid.
In extreme cases, the IRS had people living overseas such as John McAfee jailed awaiting extradition.
If the IRS claims you underpaid your taxes, you can challenge their claims. There are courts that allow you to question the taxes they say you owe. That being said, if you think the IRS is in fact correct in their estimations, you should certainly prioritize making the payment.
Unpaid taxes from previous years may include penalties. This can accrue daily compound interest until the matter is settled.
A lot of people who receive an IRS bill for unpaid taxes cannot afford to pay in full. These people usually face financial hardships, and would have paid it if they had enough money. With this situation in mind, the IRS allows taxpayers to make a partial payment or a payment plan. Individual taxpayers can use form 9465 to take care of a partial payment setup they made with the IRS. Make sure to diligently make your payments as agreed to remain on the good side of the IRS.
Though doing taxes may be stressful, receiving a tax refund is a great advantage. To obtain your tax refund, it all starts with going back to your employer. As previously mentioned, the information in your W-4 tax form will determine your current tax status. If you’re not aware of this, you should talk to your employer about how your tax filing status is currently set up.
Most employees put either zero dependents or one dependent when they file their tax status. Between the two, the difference in how much taxes are taken out is pretty big. Any person is allowed to claim one dependent. They can get even more dependents on their tax filing if they are married or have children.
The more dependents a person has, the less will be taken out their paychecks for taxes on a weekly basis. On the other hand, if they claim fewer dependents, more taxes will be taken from their salary. But even with overpayments, the money comes back to the taxpayer as a refund.
It all depends on whether you would like to receive that money on your weekly paycheck, or if you’re okay receiving it as a lump sum refund during tax season. Some people prefer to receive it as a large amount so they can save, use the money to pay off debts and important expenses, or fund vacations.
How Long Does It Take to Get a Tax Refund?
A refund is issued typically within six to eight weeks of filing an accurate and complete paper tax return. If you file your income tax return electronically (e-file), you should receive your refund in less than three weeks. It can even be faster if you opt for a direct deposit. This is counted from the date the IRS receives your tax return.
Depending on how you file your tax return and how you’ll receive your refund, the following table shows an estimated tax refund schedule:
| Filing Method | How You’ll Receive the Refund | When to Expect the Refund |
|---|---|---|
| e-file | Direct deposit | 1-3 weeks from filing date |
| e-file | Paper check in the mail | 3 weeks or longer from filing date |
| Mailed paper tax return | Direct deposit | 1 month or longer from when IRS receives your tax return |
| Mailed paper tax return | Paper check in the mail | 2 months or longer from when IRS received your tax return |
Tax preparation is a booming industry. As you’ve observed, tax forms put out by the government are complicated. It is often easier for some people to get assistance from a tax professional who can help file their taxes more efficiently. If you don’t want to go to a professional to do it, you can at least use tax preparation software that helps cut down on some of the workload.
Tax professionals are available at outlets such as H&R Block, Jackson Hewitt, Liberty Tax, and many others. Some of those places are open all year long to assist you with your tax concerns, even when it’s not tax season. You can call or schedule an appointment whenever it’s most convenient.
Common Tax Software Programs
Some popular tax software products are TurboTax, TaxAct, and H&R Block At Home. These are all great software programs that can walk you through the process to ensure your taxes are paid. Using these products will still require some of your time and attention, since you need to fill in all the necessary tax information into the computer program.
That being said, it is still a lot quicker than filing taxes traditionally with pencil and paper. Software programs prepare and electronically file tax returns from any computer or mobile device with internet access. The old method would still require you to mail your tax return, which adds more time to the process.
It is our sole duty as citizens to pay federal income taxes each year. To ensure we pay our fair share, the IRS requires us to file an annual tax return. This details how much income we’ve earned in a year, how much tax we’re supposed to pay, along with how much we actually paid. Take note of tax credits and deductions for 2021, as you might be eligible for certain tax benefits under employment, medical, or child care benefits according to the American Rescue Plan Act.
When you fill out tax paperwork with your employer, it determines your tax filing status. You also have the option to include a dependent, especially if you have a child. You can either be single, married filing separately, married filing jointly, the head of a household, or a qualified widow(er). Your tax filing status, along with your assigned tax rate, will determine the amount of tax you need to pay.
Individual taxpayers are all allowed by the government to make certain deductions on their income. The primary deduction you make is called the standard deduction. This amount is based on your tax filing status, which is adjusted annually to account for inflation. Itemized deductions make the most sense if your total deduction surpasses the standard deduction amount. That said, it’s important to maximize the deductions you need to make the most out of your tax refund. You may also qualify for certain tax credits based on your income and filing status.
A tax deduction essentially lowers your taxable income. A lower income means you can receive a lower tax rate on your tax filing period. As a result, this increases your tax refund, which you can save or use for more important expenses. Taxes are normally filed every year from January until the 15th of April. In certain cases, you may have valid reasons for not submitting on time. When this happens, you can ask the IRS for an extension to file your taxes.
Remember, always seek professional tax advice if there is something you do not understand. The tax code is very difficult to comprehend at times, and asking for help is crucial. Doing research and getting assistance is a much better option than guessing or doing nothing at all to get your taxes in order.
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