With tax season just around the corner, you might wonder if you overpaid or underpaid your income tax. If the question "How much in taxes will I owe?" is in the forefront of your mind, you can get a rough idea of whether the government owes you or you owe the government, thanks to some helpful tools and information from Tax Chimp and the Internal Revenue Service.
Determine Your Filing Status
The IRS recognizes four filing statuses: Single, Married couples filing separately, Married couples filing jointly and Head of household.
- Single filers: unmarried persons with no dependents
- Married couple filing separately: A couple who is married but wants to file separate tax returns
- Married couple filing jointly: A couple who is married and files both their incomes on the same tax return
- Head of Household: A person who may or may not be married, but has dependents and is the primary wage earner in the household
In general, single and married couples filing separately pay higher taxes than those who file jointly or as head of household. Fill out the worksheet in the IRS tax booklet to determine your correct filing status.
Find Your Tax Bracket
There are seven tax brackets for the 2018 tax year that range from 10 percent up to 39.6 percent. Each filing status has its own bracket. Let's say your filing status is single, and you earned $100,000 in 2017. That places you in the 28 percent tax bracket. Here is the entire breakdown, retrieved from the Moneychimp tax bracket tool:
- $0 - $ 9,525 = 10 percent
- $9,526 - $ 38,700 = 15 percent
- $38,701 - $ 93,700 = 25 percent
- $93,701 - $195,450 = 28 percent
- $195,451 - $424,950 = 33 percent
- $424,951 - $426,700 = 35 percent
- $426,701 and above = 39.6 percent
But these are just the ranges, not the actual tax due. To determine how much in taxes you will owe on $100,000 if filing single, look at the bold column of this chart:
- $0 - $ 9,525 = 10 percent
- $9,526 - $ 38,700 = $952.50 + 15 percent of the amount over $9,525
- $38,701 - $ 93,700 = $5,328.75 + 25 percent of the amount over $38,700
- $93,701 - $195,450 = $19,078 + 28 percent of the amount over $93,700
- $195,451 - $424,950 = $47,568 + 33 percent of the amount over $195,450
- $424,951 - $426,700 = $123,303 + 35 percent of the amount over $424,950
- $426,701 and above = $123,916 + 39.6 percent of the amount over $426,700
So, for $100,000 in income, you would owe $20,842 in taxes.
19,078 + [28% * (100,000 - 93,700)]
Keep in mind that this is your taxable income before deductions and tax credits. Your actual tax is based on your Adjusted Gross Income.
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The Difference Between Standard and Itemized Deductions
You have two deduction options: standard or itemized. If you take the standard deduction, it's a flat rate depending on your tax filing status. These are the deductions for 2018:
- Single or Married couples filing separately: $6,500
- Married couples filing jointly: $13,000
- Head of household: $9,550
For many, the standard deduction is the best option, but if you have a lot of expenses, such as property taxes, out of pocket medical expenses, home mortgage interest or unreimbursed business expenses from your job, adding up your itemized expenses can't hurt. Whichever amount is higher, take that deduction.
Other Credits that Can Lower the Tax Burden
Several other deductions and credits can lower your taxable income. These include:
- Lifetime Learning Credit
- Adoption Credit
- Transportation and Parking Benefits
- Student Loan Interest Deduction
- Child and Dependent Care Credit
- Medical Savings Accounts
Qualifying for these credits and deductions depends on income, filing status and whether you have qualifying dependents.
Which Taxes Can I Get Back as a Refund?
The amount of your refund depends on your income and deductions. If you earned $100,000 but deliberately overpaid federal income tax (you had the government take out more than was required), you could get those monies back after credit and deductions are applied. The only taxes never refunded are FICA and self-employment. FICA is Social Security and Medicare, and you will pay into those programs until you retire. If you are self-employed, that tax counts as the employer tax and therefore is not refundable.
Congress is currently working on a new tax bill which could change standard deductions, but as of this writing the above-mentioned deductions are accurate.
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