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Home > Tax News > July 2010

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TAX NEWS - 2010

How to Calculate Federal Income Tax

Financial health isn't something I talk about a lot on this blog, but it is very much related to physical health and I want to talk about it for a minute. We have gotten through the Christmas season and are starting not only a new year, but a new decade. With that said, we still have to pay our taxes for last year - and that scares a lot of people. My goal is to put your mind at ease a little.

Tax return forms can be very intimidating at first, but there really isn't anything to be scared of when you know how to calculate income tax. One way to take some of the mystery and fear out of taxes is to estimate your taxes and tax refund before you even start doing them or going to your accountant.

The first step to calculate income tax is to figure out how much money you made. You should have statements from your employer and any investments or interest you earned. After that, determine how many deductions you have like mortgage interest and charitable contributions. Subtract your deductions from your total income to come up with your taxable income. Once you have this, look up your tax on the federal tax tables. After you know the tax you owe, subtract credits like the credit for children and add in any penalties to get your final number. With any luck, you will have paid in more than you owe and the government will be sending you a big fat refund check.

Now that wasn't so hard was it. Try not to get stressed about your finances becase that will hurt your physical health. When you are ready to do your taxes, check out some of the online income tax software programs. You can save a lot of money compared to hiring an accountant.
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