Find answers on tax calculators and tax brackets

Find answers on tax calculators and tax brackets
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Income taxes imposed at the federal and state levels and filing tax returns are required by law. This year’s last date to file tax returns is 17th April. You need to prepare for this and you need to know what bracket you fall under to be able to file accurately. Using a tax calculator can help you a great deal but that is just an estimation based on the information you provide it.

Do tax calculators allow users to add incomes other than W2?

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There are many tax calculators available online. Choose one that allows you to add incomes from various sources – self employment, investments etc. – incomes that don’t show up in W2.

Why do different tax calculators throw up different refund amounts?

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Tax calculators are just an indication or an estimation of the refund amount. Every online tax calculator is different as it uses different algorithms. The amount of information it asks for and the amount of information you feed into the calculator also determines the amount it calculates.

How do I know the calculation is accurate?

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The accuracy of the amount the calculator throws up depends on the information you have fed into it. The calculation is only an estimation. You won’t know the actual refund till you actually file the returns. But as a rule of thumb, the more the information you give, the more accurate the estimation.

Is the information I put into tax calculators safe?

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These online calculators do not generally ask for sensitive information like your social security number. But if you aren’t too happy with divulging information then be sure the site has its security certificate. The site address should start with “https” and not “http”. The “s” denotes that it is secure and is what it claims to be.

What is tax preparation?

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The process of preparing income tax returns is called tax preparation and can be done by a taxpayer with or without the help of tax preparation software and online services. It can also be done by a professional – an attorney, certified public accountant or enrolled agent or by an unlicensed tax preparation business.

Are there tax preparation software available?

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Yes. The Free File Alliance is a group of tax preparation companies who’ve partnered with the IRS to provide free tax preparation software services for those with less than $62,000 of adjusted gross income. Those who make more than this amount can use Free File Fillable Forms, an electronic version of the IRS’ paper forms.

What are the other tax preparation software available?

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There are other software available and some of the popular ones are TaxSlayer, TaxACT, H&R Block at Home (formerly TaxCut), TurboTax and Intuit ProSeries.

Is it possible that the refund is less than what the calculator showed?

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Yes, it is possible, since the calculator is just an estimation. Three factors contribute to tax refunds – the taxable income, amount that is withheld from your paycheck for taxes – federal and state and of course the tax rate.

What is OIC?

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OIC is Offer in Compromise where the IRS may agree to settle for less that the amount the taxpayer owes. The IRS will consider this avenue if the taxpayer cannot pay the full amount through an installment method. A taxpayer can ask for an OIC by filling out the IRS.

Is it better to file taxes electronically?

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When you file electronically, you will get your refund faster. The IRS with respond just 24 hours after sending your tax return – a confirmation of receipt or a rejection notice.

How do I know what tax bracket I fall under?

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The more you earn the more tax you pay. The amount of taxable income that you earn will determine which tax bracket you fall under. If you’ve earned more this year than you did the last year, only the money that falls under that higher tax bracket is taxed at the higher rate. The marginal income tax bracket is the highest tax rate that one must pay. Currently there are six marginal income tax brackets for each federal filing status – 10, 15, 25, 28, 33, and 35 percent.

What are the federal filing statuses?

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Taxes can be filed under the following status – Single; married filing jointly; married filing separately; Head of household; Qualifying Widow/widower with dependent child.

Do states use tax brackets like the IRS?

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Every state is different when it comes to tax structures and rates. While some states have a tiered bracket system; some states employ one rate for all incomes and some require people to pay income tax at all. The states where no income tax is levied is Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

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