How To Estimate Income Tax Refund ?
Tax pay is vague. For most people, who file their tax returns, it is good while they receive refunds. For many of them who do not file, it remains unknown as to how to calculate the refund. However, the process to estimate income tax refund is very easy and simple.
Just estimate the total taxable income and then use various tax tables to determine the overall income tax for the financial year. After calculating this, compute the total amount you have paid during the financial year. In case the amount paid is more than the actual income tax, then you are entitled for a refund or else get ready to pay extra if the case is otherwise.
What is withholding?
The amount your employer keeps separately from your salary which is due to you is the withheld amount. This total amount deducted throughout the year is equivalent to the sum you are likely to pay as the tax during the total year. The employer takes into consideration the exemptions you may claim during the current year.
How it is determined?
The withhold amount is based not only on your due Federal income taxes but also your social security taxes, Medicare taxes and also state income taxes. As a matter of fact one portion of your salary is always kept separately towards these (total of 7.65 percent out of which Social Security tax is 6.2 percent and Medicare tax is 1.45 percent).
Estimating tax refund:
Now your tax refund is the amount which is the difference between the amount withheld towards federal income tax and the actual income tax for the year.
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