How to Figure Federal & State Taxes From Gross Income
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Be sure to research all possible exemptions and deductions.A young woman holding a pen, doing her taxes image by Christopher Meder from Fotolia.com
Calculate taxable income. The IRS taxes each individual on the money he earns minus the qualified deductions and exemptions.
Be sure to research all possible exemptions and deductions. Do not miss an opportunity to save money. - 2). Select the tax bracket that will apply. The following brackets are for single filers calculating income tax for 2010:
10 percent tax for income between $0 and $8,374
15 percent tax for income between $8,375 and $33,999
25 percent tax for income between $34,000 and $82,399
28 percent tax for income between $82,400 and $171,849
33 percent tax for income between $ 171,850 and $373,649
35 percent tax for income above $373,650
See the resources at the end of the article for an automatic calculator. - 3
Double check all math.Calculator image by Alhazm Salemi from Fotolia.com
Calculate taxes across all levels. Pay close attention to each tax level. Start with the total salary, say $100,000. A taxpayer with this income is in the 28 percent bracket; however, her total tax is not 28 percent. The actual total is calculated as follows:
$100,000-$82,400 = $17,600
$82,400-$34,000 = $48,400
$34,000-$8,375 = $25,625
$8,375-$0 = $8,375
These four values indicate how much tax is owed at each tax level. The actual tax owed must be calculated next by taking the amount earned at each level and multiplying that by the taxation amount.
$17,600 x .28 = $4,928
$48,400 x .25 = $12,100
$25,625 x .15 = $3,844
$8,375 x .10 = $838
Then add the totals of all tax levels ($4,928 + $12,100 + $3,844 + $838) to get a final taxation amount -- in this case, $21,710. - 4). Calculate state income tax in the same way according to the appropriate state data. The resources contain a chart with data for all 50 states.
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