TAX NEWS - 2010

Tax Calculators

When it comes to taxes, many of us are clueless about what our withholding should be, if we should pay an estimated tax or if we qualify for EIC (Earned Income Credit). The IRS and other websites offer these free tax tools, so just search for the term and take advantage of the free help. Take a look at these tax tools that will help you figure it all out:

- Withholding Tax Calculator: This tax calculator is just a bit easier to use than the worksheet that comes attached to the W-4 you will fill out with your employer. You can make sure that you are not withholding too much or too little from your paycheck and you can resubmit a new W-4 with your employer if you want to change your deductions. You can do this whenever you get a raise, sell or buy a home, a child leaves home and is no longer your dependent, or when you expand your family, even if adopting. If you change jobs and have a pay cut or increase, you should always explore your withholding options.

- Earned Income Credit (EIC) Assistant: This tax calculator will help you determine if you are eligible for EIC when you file your taxes. Your filing status (married filing jointly, single filing head of household, etc.), your income and dependent children, if any will all be taken into consideration. This calculator will not only help you to determine your eligibility but will also estimate the credit due you.

- Alternative Minimum Tax (AMT) Assistant: Some taxpayers may be subject to the Alternative Minimum Tax (AMT) and this calculator helps you to determine your personal responsibility. You can usually get an answer in 5-10 minutes and know in advance if you should fill in form 6251 with your 1040 tax return.

- Paycheck Calculator: Sometimes employers and their payroll offices can make mistakes. This tax calculator will help you to verify that the calculations on your paycheck are accurate and it can also help to estimate your 'bring home' pay when you start a new job.

All of the above are just what they are intended to be: tax tools. There is really no substitute for expert advice, so if you are completely bumfuzzled, consider asking a tax expert or searching for further answers on the internet. Understanding the IRS and the tax codes is an ongoing process as the rules change every year, even changing sometimes after you have filed your taxes for the previous year. Being proactive, being organized and being prepared will help you get through the next tax season unscathed (hopefully).