Calculating your income tax returns has become easier now. You can simply sit at home and get the estimation of your income tax liability. And one of the best parts about this is that it is a completely free tool. Yes, I am talking about the income tax calculator. It is a free and easy and simple to use tool which you can use sitting at your home or office or from any location.
Taxfyle’s tax calculator is designed in a special way to help your business become successful. With the help of this tool, you will get an accurate estimation of your tax liability, which you won’t have got in any other case or scenario. Now, before I tell you how this tax calculator works, let me just brief you about tax filing status which is equally important.
Filing the Correct Status
One of the most important inputs of this income tax calculator is filing your status. This may sound very simple and easy, but it’s not. Let me define it how. Choosing the correct filing status will help the income tax calculator to apply the correct standard of deduction and also tax rate to your income. The various kinds of statuses which are there in the tax calculator are –
The first and foremost option is – single. If you have never been married then you should choose the status as single. If you were divorced or separated during the tax year, then you should choose the option as single only. If you are married any time during the tax year then you should choose married as an option.
Married Filing Jointly & Married Filing Separately
Now, in that also, ‘married filing jointly’ and ‘married filing separately’ can have a huge impact on your tax rates and standard deduction. So, you should talk with your spouse as to which one you should file. You can use the tax return calculator, to better understand the financial impact on both. So, you can choose both of them and take out an estimate as it’s a free tool.
You can also choose, ‘head of the household’ to find out your taxes if you were single during the year and should meet this criteria- i) you paid more than half the cost for maintaining the house during a year, ii) A qualifying person lived with you more than 6 months (parents need not be included, but you need to provide more than half of their financial support.)
It is because you can claim them (i.e. your parents) as dependent on your tax return. And the last option is qualifying widower in the income tax return calculator. If your spouse passed away at any time during the previous two tax years also note you must have a dependent child to be able to file as a qualifying widower.
How Income Tax Calculator Works?
The tax calculator helps in determining your tax liability and refund. With the advanced version, you will be able to calculate your adjusted gross income. (AGI).After that, it will be applicable to your tax rate and then your tax liability will be determined. This is how the income tax calculator works.
