Our mission is to protect the rights of individuals and businesses to get the best possible tax resolution with the IRS.

  • (818) 938-2211
Pinterest Facebook Instagram Youtube Twitter
Tax Relief Center
  • Blog
  • State Taxes
    • State Tax Deductions
    • State Tax Information
    • State Tax Preparation
    • State Tax Rates
    • State Tax Refund
    • State Tax Return
  • Federal Taxes
    • Federal Tax Deductions
    • Federal Tax Information
    • Federal Tax Preparation
    • Federal Tax Rates
    • Federal Tax Refund
    • Federal Tax Return
  • Tax Help
    • Late Tax Filing
    • Retirement Taxes
    • Tax Penalty
    • Tax Relief
  • Solutions
    • Lower Taxes
    • Tax Debt Relief
    • Tax Resolution Services
    • Tax Reviews
    • Tax Solutions
  • Resource Center
    • Tax Calculator
    • Tax Forms
    • Tax Guides
    • Track Your Refund
Menu
  • Blog
  • State Taxes
    • State Tax Deductions
    • State Tax Information
    • State Tax Preparation
    • State Tax Rates
    • State Tax Refund
    • State Tax Return
  • Federal Taxes
    • Federal Tax Deductions
    • Federal Tax Information
    • Federal Tax Preparation
    • Federal Tax Rates
    • Federal Tax Refund
    • Federal Tax Return
  • Tax Help
    • Late Tax Filing
    • Retirement Taxes
    • Tax Penalty
    • Tax Relief
  • Solutions
    • Lower Taxes
    • Tax Debt Relief
    • Tax Resolution Services
    • Tax Reviews
    • Tax Solutions
  • Resource Center
    • Tax Calculator
    • Tax Forms
    • Tax Guides
    • Track Your Refund

How Federal Tax Refund is Calculated

Feature | How Federal Tax Refund is Calculated

January 29, 2018 By Michael Taggart Leave a Comment

With tax season just around the corner, you may be wondering how federal tax refund is calculated. Will you be receiving a refund from the IRS this year? It’s always nice to receive one that serves as padding, for spring spending. Read on, to help you figure out exactly how much you’ll be receiving in federal tax refunds this year. An IRS tax calculator is always useful.

How Federal Tax Refund is Calculated: Understanding Tax Refunds

What Tax Withholding is for

What Tax Withholding is for | How Federal Tax Refund is Calculated

When you receive your salary, you’ll see certain tax amounts withheld on your payslip. This is your withholding tax. It’s the amount withheld by your employer, so they can pay it to the IRS.

Most Americans spend most, if not all, of their money before they can pay their taxes. This is why the federal government created a system that lets it receive taxes, even before taxpayers get their hands on their take-home pay.

Do You Qualify For IRS Back Tax Relief? Take The Quiz Now!

Why the IRS Issues Refunds

Why the IRS Issues Refunds| How Federal Tax Refund is Calculated

Your employer determines the rate of your withholding tax by calculating your income, personal allowances, and other taxes you want to be withheld, as listed on your W-4 form.

Sometimes, however, your rate of withholding tax is greater than your actual tax liability, or the amount of tax you have to pay. This is why the IRS issues tax refunds to taxpayers, who qualify at the end of each tax season.

How Federal Tax Refund is Calculated

Good news from the #IRS if you’re a business owner with few employees. Find out about filing annually at https://t.co/RUYYwjgrXM pic.twitter.com/MCgmlCpFom

— IRS (@IRSnews) December 19, 2017

To find out how much you’re getting from the IRS, you need to do the following:

1. Determine your annual income

To determine which tax bracket you fall into, you need to know your income. It’s important that you keep track of all your income sources, including your salary, bonuses, commissions, property rentals, and investment earnings.

You can also look out for your copy of Form W-2, which the IRS sends out every January. This is your Wage and Tax Statement. It lists out wages paid and taxes withheld, for the past year.

2. Find out if you have tax deductions

Tax deductions allow you to reduce your taxable income and possibly, receive a bigger refund. Some common tax deductions include health expenses, charitable contributions, and work-related travel and education expenses.

You have the option to choose standard deductions, or itemized deductions. If your itemized deductions are lower than the standard deductions, choose the latter.

These are the standard deductions for federal tax returns, for the tax year 2017:

Do You Qualify For IRS Back Tax Relief? Take The Quiz Now!
  • Single – $6,350
  • Married Filing Jointly – $12,650
  • Head of Household – $9,350
  • Personal Exemption – $4,050

PRO-TIP: If you’re married, you may want to file taxes jointly, because this can lead to a bigger tax refund than if you filed separately.

3. Calculate your tax liability

Your tax liability is simply the amount of tax you have to pay. This depends on which tax bracket you fall into.

Tax brackets change every year, along with how much income you make, so make sure you check with the IRS first.

4. Know your tax credits

Unlike tax deductions, which reduce your taxable income, tax credits reduce your actual tax liability. Make sure to check which credits you qualify for, to ensure you get a sizable federal tax refund.

Common tax credits include the following:

  • Earned Income Tax Credit
  • Child and Dependent Care Credit
  • American Opportunity Tax Credit

5. Calculate your tax refund

Subtract your tax deductions from your income, to determine your taxable income. Next, find your tax bracket, to determine how much tax you need to pay before subtracting tax credits that you are eligible for. The result is the total amount of taxes you owe the federal government.

If your withholding tax is greater than your total income tax, you can expect to get a refund. You can calculate the total amount simply by subtracting your total tax from your withholding tax.

 

If you want to maximize your tax refund, check out this video by the Steve TV Show. Here, Steve Harvey talks to a CPA from TurboTax, to teach you how you can maximize your tax refund, and make money from tax returns:

With tax season coming in, you might want to get ready for filing your taxes. Now that you know how federal tax refund is calculated, you’re in a better position to maximize your refund, and get the most out of your tax return.

Any other tips, comments, and suggestions on how you can get a bigger tax refund? Let us know! Share your thoughts in the comments section below.

Up Next: What are the Gift Tax Limits this 2017?

0.0
00

Filed Under: Federal Tax Information, Federal Tax Refund, Federal Taxes

Let Us Know What You Think Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Follow Us:

  • Facebook
  • Instagram
  • Pinterest
  • Twitter
  • YouTube

Popular Articles

  • Don’t Miss These Posts On Tax Relief Center…
  • IRS Debt Forgiveness Program: Are You Eligible?
  • Return Taxes Frequently Asked Questions | Where Is My Tax Refund?
  • What To Do When You Receive A Notice Of Deficiency From The IRS

Join Us On Instagram!

For immediate assistance with an IRS tax matter call (818) 938-2211, or request online.
Tax Help Solutions
TaxReliefCenter.Org is owned and operated by:
Envoy Media Group, Inc.
19350 Business Ctr Drive, Suite 101
Northridge, CA 91324
  • About Us
  • Contact Us
  • Privacy
  • Terms Of Use

This copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only.

Copyright © 2021 · Tax Relief Center


Disclaimer - TaxReliefCenter.org does not provide direct tax relief services but upon request, serves as a locator service for BBB accredited companies. This is a free informational website that is not affiliated with the IRS. The information on this website is for general information purposes only and nothing on this site should be taken as legal advice for any individual tax case or situation. Prior to enrolling in any tax resolution program, it is recommended that consumers seek the advice of a tax accountant or tax resolution specialist to fully understand all program details. Upon the request of visitors, free tax resolution reviews are provided with no obligation to enroll in, or purchase, any product or service.