How to Compute Tax Percent Brackets for Personal Income
With tax season fast approaching it is time to start gathering necessary information. You may have earned a little more or less this year and are wondering what tax bracket that will put you in. Luckily, the IRS website offers a calculator to help figure this out. It can be tricky without these simple steps.
- Figure out how much money in total you made this year. This would be considered gross income, not the money you actually brought home per paycheck. This could include any money that you earned from wages and tips to dividends and pension payouts.
- Add up any and all deductions you will be taking this year. This could include items such as 401k contributions or student loan interest. Any alimony or child support that you pay can also be deducted from this amount. If you contributed to a health insurance HSA fund, that amount can be deducted as well.
- Subtract all deductions from the gross income that you figured out earlier. This will give your adjusted gross income (AGI). The adjusted gross income is the number that you will use to figure out your tax bracket.
- Proceed to the IRS website and locate the table that shows the different tax brackets. Using the adjusted gross income you just calculated and what your filing status is, find your tax bracket. Your filing status will either be single or married and is noted on the table to make it easier to differentiate the two brackets. This will give you some idea of the kinds of taxes that will be owed this year, if you calculated everything correctly. Sometimes deductions can be missed which could throw you into a whole other tax bracket.