Business & Finance Taxes

How to Figure Out Income Tax

    • 1). Download an IRS 1040 Form, along with the 1040 instructions from the IRS website.

    • 2). Determine what your filing status is and your exemptions. Refer to your W-4 to figure out the exemptions you are claiming. You may claim yourself, your spouse and dependents.

    • 3). Determine your total income. Include your salary and any tips, fringe benefits, alimony, welfare benefits, unemployment benefits, interest and dividends.

    • 4). Subtract any exemptions, deductions and adjustments from your total income. This will give you your estimated taxable income.

    • 5). Refer to the 2009 IRS tax tables in your 1040 instruction booklet to determine your tax rate for your taxable income. This will give you your tax liability.

    • 6). Subtract any tax credits that you qualify for, such as the Earned Income Credit, from your tax liability. The remainder is a good estimate of your income tax liability.

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