People with “traditional” employment have their companies withhold taxes from their paychecks and send it to the IRS. Small business owners keep up with the “pay-as-you-go” IRS system by making estimated tax payments.So, how can individual taxpayers estimate their taxes? People should also know they can take advantage of a free tax calculator online. Whether you have an employer or are self-employed, you must know how to estimate taxes this year (especially with the change in tax laws). Here’s how to do that.
How to Estimate Taxes with Online Tools and Tax Considerations
Several tax calculators are available online. This is the easiest way to determine possible tax weight. For example, tax processors like TurboTax have their own online calculators. Though several calculators making use of the Trump tax system are usable on the Internet, none of them have perfect results. Even the most advanced Trump tax calculator is not exempt from potential errors.
Regardless, these tax tools will provide what people need when it comes to their tax burdens. Whether it’s a joint filing or a single account, the IRS 2018 tax calculator will show a breakdown of the tax estimate.
Itemized vs Standard Deductions
Tax deductions….Standard vs Itemized – helpful information. https://t.co/hXwsMFciug
— David Burton (@DBurtonTX) March 2, 2018
State and local tax deductions’ limit on a tax return per individual are now at $10,000. This means unmarried couples with each individual paying SALT worth $10,000 will get a combined return of $20,000.
Changes in the tax bill mean that standard deductions are more favorable for taxpayers than are itemized deductions. Many people don’t have itemized deductions, so they have the option to use the standard deduction to lower their taxable income.
Taxpayers will have to assess which type of deduction provides the bigger tax benefit. Examples of itemized deductions are medical expenses, job expenses, investment interests, fuel costs, and so on. Knowledge of one’s potential tax deductions is important in getting tax estimates.
Pre-Payment of Tax Duties
People who paid their tax obligations before the 1st of January this year took advantage of the previous tax law on itemized deductions. Homeowners try to be unaffected by the new rules on SALT (Sales and Local Tax) deductions.
They pre-pay their property taxes to make use of the old tax code without the $10,000 cap. This applies to taxpayers who have more than $10,000 in itemized deductions. Pre-payment of taxes will also provide an overview of the applicable deductions and tax estimate.
Online Payment of Quarterly Estimates
Quarterly tax estimates are available online. The process is a quick and easy way to take care of payments. To begin, go to the IRS website at www.irs.gov, then click on the “Payments” tab. In the Payments page, choose Direct Pay to show the five sets of the Direct Pay process. Under “Reason for Payment” click Estimated Tax. Select the tax year for payment, then click Continue.
The IRS website will guide you through the final four steps of making the payment. This includes identity verification, payment information, reviewing the details, and confirmation. That’s how easy it is to make a payment of quarterly estimates online.
Here’s a video by CBS This Morning about the cap on SALT deductions:
Many free online tools are available to help individuals estimate taxes, but these tools mean nothing without knowledge of the new tax codes affecting these changes. It pays to be informed about these changes so that you can make the right decisions when preparing your taxes, thereby avoiding any tax burden that might come your way.
Did you find this article useful in getting an estimate of your taxes? Share your thoughts in the comments section below!