Estimating Your Tax Returns

Written by: Christy Rakoczy

Tax returns are reports that are filed with the Internal Revenue Service, and are classified as either tax returns or as information returns. Essentially, tax returns are a declaration of your liabilities and your tax payments. An individual or a business must file their income tax returns each year under federal law, and must further file a state income tax return under state law. The government then uses these income taxes to fund activities, and services throughout the country.

Once you file your tax returns, the IRS takes approximately twenty calendar days to issue your return. You can check the status of your income tax return on the IRS website under the “What’s my Refund” link. You can check your status after plugging in your social security number, your expected tax return, and your filing number.

How to Estimate Your Tax Returns

To estimate your tax return, you need to run through some summary calculations. First, what is your filing status? For example, are you single, married, married and filing separately? Within this category, you then can then indicate if you fall under certain additional statuses such as sixty-five and older, or if you are permanently blind.

You’ll next need to figure out what your income is:

  1. Add up your wage, salaries, and tips and list your 401(k) or any other retirement plan contributions from work, as well as any spousal 401(k) contributions from their work.
  2. List your interest and non-stock dividends, stock/qualified dividends, short-term capital gains, long-term capital gains, business income (or loss), pension distributions (separated into those which are early distribution penalty, and those which are not subject to early distribution penalty, any unemployment compensation, any social security benefits, and any other income (such as gambling income, etc).
  3. Add your income together.

Next, you need to calculate any adjustments to your income that you need to make. Calculate your Health Savings Account deduction, any moving expenses, any self-employment health insurance deduction, any alimony paid, any IRA contributions, or any student loan interest that is paid. This will help you to determine your adjusted gross income and your tax bracket.

Exemptions and Credits

Once you know your income, the next key factor will be figuring our your deductions and credits. To do this:

  1. Determine the number of exemptions for yourself, and indicate the number of dependents that you support. You can list all children under the age of seventeen as dependents.
  2. Calculate the earned income credit. To determine this amount, calculate how many children you support under age nineteen, and the number of children over age eighteen and under twenty-four who are full time students.
  3. Finally, under earned income credit, you need to list the children over age eighteen who are disabled.

Depending upon your situation, you may also have deductions available such as a mortgage interest deduction, and a deduction for property taxes and business expenses. You need to list all of your deductions and deductible expenses as these can reduce your tax burden.

Using these numbers, go online and plug them into one of the many calculate refund tables available, such as the TurboTax Tax Caster. This will give you your estimated tax refund.


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Estimating Your Tax Returns

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