Adding up your taxes can be confusing at times. Income is added, expenses are subtracted, taxes are calculated and then credits are subtracted and you still haven’t figured out what the bottom line is on your taxes. Unfortunately, taxpayers who are required to file income tax returns must go through this process each year.
Obtain a copy of federal form 1040, 1040A or 1040EZ, the federal tax forms you need to file your income tax return. In the income section of your 1040 form, add together all of your income from the tax year, which is provided for you on forms such as W2s and 1099s.
Add together any claimable expenses you paid during the year. For example if you are a teacher and you purchased items for your classroom, called educator expenses, you can claim the expense. Other expenses include tuition, student loan interest and alimony you paid. Subtract the total of your expenses from the total of your income to determine your adjusted gross income.
Determine your filing status and enter the amount of your standard deduction and your exemptions on the tax and credits portion of your income taxes. Subtract these amounts from your adjusted gross income to come up with your total income.
Use the Form 1040 instructions to locate the tax table. Using your total income and your filing status, locate the amount of tax you owe on the chart. Subtract any tax credits you can claim, such as child tax credits, education credits and earned income credits from the amount of tax you owe.
Add self-employment taxes and unreported taxes to the amount of tax you owe. This is the final amount of tax that the IRS requires you to pay. From this amount, subtract any tax you’ve already paid to the IRS for the tax year, such as federal withholding, estimated taxes and additional child tax credits.
Determine whether or not your payments are more than your tax. If so, you will receive a federal income tax refund. If the amount of tax you owe is more than the payments you’ve made, the difference needs to be paid to the IRS no later than April15.