Federal Tax is calculated based on the formulas set up by the Internal Revenue Service, carrying out the laws enacted by the United States Congress and signed by the President.
Tax Deductible Business Expenses
For each taxpayer, the calculation is made by filing a Form 1040 for U.S. taxpayers. The forms come in a simplified 1040-EZ format, up to the most sophisticated formats of 1040’s that also require the calculation of alternative minimum tax in place of the ordinary income tax.
The Form 1040 does not take into account the general “payroll taxes” for social security and medicare. Normally, these are paid 50% by an employer, and 50% is taken directly from an employee’s pay check. Federal income tax is typically also taken as a payroll deduction on top of the other federal payroll taxes.
The calculation for the individual taxpayer begins with his or her filing status, then covers personal exemptions, all items of income, deductions and credits. Within each of these categories, there are many specific items. For the taxpayer who is forced to pay the alternative minimum tax, many of the deductions are eliminated and the tax becomes much higher.
In order to calculate your own federal income tax, you need basic items of information, often provided to you by your employer, bank or other source. All you need to be able to do is to input some basic, personal information, and then a tax professional or tax software provider can do the rest for you.
A good starting point is to go to TurboTax Online and calculate your taxes. Check out TurboTax tax calculator today to get started.
You can visit TurboTax Online to find more answers to all of your 2009 economic stimulus payment questions. Turbo Tax has easy to use calculators and many other quick and easy tools to use for estimating your tax credits and benefits.