Determining the amount of your income tax refund is a very simple process. If you have an accountant do your taxes, or if you have TurboTax, you will be walked through this process as you do your taxes. However, if you are doing your taxes on your own, determining your refund is about as easy as doing some simple math, and making sure that all your ducks are in a row financially. Here is how you actually go about determining your tax refund.
The first step in determining your refund is to determine what your income was for the past year. This will be displayed on your W-2, or if you don’t have that handy, if you have your last paycheck you should be OK. Take the amount you made before taxes, and that will be your income. So if you made 49,493 dollars before taxes last year, that is the income number you start with.
What you are going to do next is take your income, and subtract any credits or deductions that you may have. So for example if you made 49,493 the past year, and you have 1200 dollars in credits, and deductions, you will have an adjusted gross income of 48,293 dollars. This is the number that you will use to start determining your tax bracket.
Every year you get a standard deduction, or an itemized deduction, and any exemptions you may have. The standard deduction is 3500 dollars this year, so if your don’t have tax write offs more than 3500 dollars you would use the standard deduction. The exemptions depend on your filing status. If you are single you file a 1, if you have a child you get an exemption for that. More details can be found on your tax forms, and instruction booklet.
So after taking out the deduction, and the exemption, which is 5450 dollars this year, you get your new income level. So after subtracting the two dollar amounts, we now have a total of 39,343 dollars. Say that you are in the ten percent tax bracket, you would be taxed on ten percent of that income, or 3,934 dollars. Now you wouldn’t actually be in that tax bracket for that income level, but just for the sake of the math we will use that. You can find your actual tax bracket on-line, at Irs.gov.
The last step is to take that number, and subtract any federal tax already taken out of your paychecks this year. So if you had 4398 withheld from you, you would take that number from your taxable income. The result would be a negative 436 dollars, so you would be refunded that money. You can then file your taxes on-line, or by the mail, and the government will issue you a check in a few days if you do it electronically or a few weeks if you do it by mail.
Hopefully this gives you a good idea of how it is done. For your own tax situation, go to a professional, or to Irs.gov if you have any specific questions. Hopefully you will have a large refund, and a easy tax season. Enjoy!