Income Tax Calculator

An online federal income tax calculator helps to estimates the refund or potential owed amount based on federal tax return 2019 and 2020. Also, this federal income tax estimator helps you to calculate:

• Taxable income
• Total deductions
• Marginal tax rate
• Effective tax rate
• Estimated federal taxes
• Federal taxes withheld

This US income tax rates calculator is specifically designed for residents of the U.S. and entirely depends on the tax brackets of 2019 and 2020. And, remember that the 2020 tax bracket values can be taken into account for 1040-ES estimation, planning ahead, or comparison for tax rates.

Now, let’s move ahead to know how to calculate tax (federal tax rates 2020-2019) with the calculator and manually (step-by-step), and different other factors that assist you to figure out your total income taxes. But, before that, let’s we start with the basic definition of federal income tax.

What is The Federal Income Tax?

The federal income tax normally directed by the Internal Revenue Service (IRS). It is one of the largest foundations of revenue for the federal government of the U.S. Every American who is working and serving the state is legally bound to file a federal income tax return with the IRS every year. Other than that, there are many people who pay their taxes the whole year usually in the form of payroll taxes they are withheld from their paychecks if they do not pay tax. Some of the important key factors about federal income tax are discussed below:

• You can calculate federal Income tax if you are living in the U.S. it will be based on tax rates that range from 10% to 37%. If you are a regular taxpayer, then you can lower your tax burden and also the amount of taxes by claiming deductions and credits. However, you can calculate the amount of tax by the federal income tax rate calculator as well.
• You can take help from financial advisors to understand how taxes will fit into your overall financial goals once you calculate your tax via 2019 – 2020 tax calculator.
• Financial advisors can support you in making plans where you can make investments. They will guide you while keeping in mind all of your financial plans, including your retirement, your homeownership, your insurance policy and many more, just to make it sure that you are preparing in an organized way for the future.

For convenience, you can try this free online salary calculator that helps to calculate annual income and converts your salary amount to their corresponding values based on certain payment frequencies.

What is a Taxable Income?

Before you pay any amount as a tax to your state, it is important to calculate your proper taxable income. After that a federal income tax estimator 2020 – 2019 can help you to calculate your taxes. For calculating your taxable income there is simple process:

• First of all, estimate your gross income.
• Now subtract all the deductions and exemptions such as contributions to a 401(k) or pension plan.
• The amount you will get as a resulting figure will be your taxable income amount.
• Now you can calculate you tax according to your income with federal tax calculator 2019 and 2020.

Different Other Taxable Income:

There are few other taxable incomes explained below with how much will be the income tax with every amount that any person earns:

Interest Income:

Most interest will be taxed as ordinary income that usually includes the interest that is earned on checking and savings accounts, CDs, and on all the income tax refunds. Though, there are some exceptions as well that are municipal bond interest as well as private-activity bonds.

Short Term Capital Gains/Losses:

It is known as the Income that will earned as a profit or as a loss from all those assets that are by a person for less than 12 months. Any person has to pay the normal amount of tax for it.

Long Term Capital Gains/Losses:

It is the income that will be earned as a profit or as a loss from the sale of all those assets that are the property of any person for more than one year. Taxation rules for this income will be applied according to the ordinary income marginal tax rate.

However, a free income tax calculator 2019 and 2020 will be a great support to calculate such amount of tax. Rules are:

• 0% whenever an ordinary income marginal tax rate is 10% or 15%
• 15% when anyone’s ordinary income marginal tax rate is higher than 15% and lower than 39.6%
• 20% when anyone’s ordinary income marginal tax rate will be 39.6%

Federal income tax calculator automatically assumes that your no long-term capital gains originate from:

• collectibles
• section 1202 gains
• un-recaptured 1250 gains

Such category of capital gains is taxed at 28%, 28% and 25% respectively except your normal income tax bracket has a lesser rate.

Ordinary Dividends:

All dividends should be taken as ordinary except those who are specifically classified as qualified. Tax will be same as the tax of normal income rules.

Qualified Dividends:

Qualified dividends have to pay the tax that has a less amount these than the ordinary dividends. There are various strict measures in place for dividends to be lawfully defined as qualified dividends. Their range of taxation will be as high as 23.8%.

Passive Incomes:

Differentiation among the passive and active income is the most significant thing as taxpayers can claim their passive losses. Passive income of any individual usually comes from two places:

• From all the Rental properties.
• From the businesses that don’t need material contribution.

Any extreme passive income loss can be accumulated until used or subtracted in the year the taxpayer organizes the passive activity in a taxable contract.

What are federal income tax brackets & tax rates?

The IRS freshly revealed the tax brackets for this year 2020, and as a wise man it’s not ever too early to start preparation to lessen your coming tax expenses.

With the availability of tax brackets and tax rate in 2020 you can make a plan about how you can handle your 2020 finances in a tax-efficient way. Moreover, you can make comparisons between income tax rates in 2019 and income tax rates 2020 via these brackets. For the year 2020 tax rates didn’t change. They’re similar as the seven tax rates in effect for the 2019 tax year. they are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Yet, the tax bracket ranges were accustomed, or “indexed,” to observe the increase. There are federal income tax tables in the following that are representing tax brackets but you can also make these calculations via free tax calculator as well:

Tax Brackets (2019-2020)

Tax Brackets (2020-2021)

How Tax Brackets Work?

The United States has a progressive tax system, that explains that how to calculate tax brackets with ease. It assists people with higher taxable incomes to calculate their higher federal income tax rates.

• If you are “in” a tax bracket it doesn’t mean that you have to pay that federal income tax rate on everything you are earning. The progressive tax system explains that all those people who has higher taxable incomes are subject to higher federal income tax rates accordingly. All those people who has lower taxable incomes have a lower federal income tax rates.
• Your states decide that how much tax you have to pay. They divide your taxable income into chunks. These chunks are also known as tax brackets and each chunk gets taxed at their equivalent tax rate.
• The uniqueness of this process is that no matter in which bracket you are; you won’t have to pay that tax rate on your whole income.

For convenience, try the above federal income tax rate calculator that simply calculates the income tax rates 2019 and 2020 corresponding to the tax brackets.

Now, let’s define the term “Filing Status”!

What is My Filing Status:

Filing status is that parameter that determines the income levels for your Federal tax bracket. It is significant in the calculations of your standard deduction, your personal exemptions, and deduction that phase out incomes. Our federal income tax calculator also uses the filing status to tells you how much is federal income tax amount you get back (refund) or owed.

Have a look on different filing status below that are the most important factors to calculate the income tax:

Married Filing Jointly:

In case of marriage, you will be able to file a joint return with your partner. But If your spouse died during the year of tax, then you will still be able to file a joint return for the same year. You may also pick to file distinctlyas “Married Filing Separately”.

Qualified Widow:

When you and your partner filed a joint tax return but later your spouse died then it will come in the category of qualified widow. For this it is also mandatory to have at least one child who is dependent on you.

Single:

For this status there are three cases:

• A divorced person
• All those who are legally separated
• All the unmarried people

Head of Household:

It is the status for all those people who are unmarried and pay for more than half of the cost to keep up a home. People can choose this status if they are married, but didn’t live with their partner at any time for the duration of the last six months of the year.

Married Filing Separately:

When you are married, you can choose to file separate returns. Your filing status for this option will be “Married Filing Separately”. For all these filing status you can make an estimate about your tax amount with the help of free tax estimator.

About Income Tax Calculator:

An online federal income tax rate calculator allows you to calculate your refund estimate or also estimate of how much you may owe. Our federal tax return calculator helps U.S residents to calculate tax refunds the based on the tax brackets of 2020 & 2019. This tax finder helps you to manage your income tax situation and plan ahead.

There are several other factors that are calculated by with tax estimator, just swipe down to know about them!

How to Calculate Income Tax With This Calculator:

The federal income tax calculator 2020 and 2019 is 100% free, just follow these steps to obtain the estimated federal tax rates corresponding to the tax brackets:

Inputs:

• First of all, you need to select the “Tax Year” from the designated drop-down, it can either be for “2020 (return filed in 2021)” or “2019 (return filed in 2020)”
• Then, you have to enter your total income into the designated box of this tool
• Now, you need to choose the “Filing Status” from the given drop-down list, it can either be “Single filers”, “Married, Filing Jointly”, “Married, Filing Separately”, “Married, Filing Separately”, “Head of Household”, or “Qualified Widow”
• Right after, you need to enter your exact age in years
• Then, you need to enter the value for “401 (k) contribution” (it is optional field): as these limits are set by the Internal Revenue Service (IRS) and subject to adjustment each year
• Now, enter the amount you contribute to a traditional, Roth or other types of IRA in the given field of “IRA Contribution” (it is optional field)
• Then, you need to add the amount of “Taxes Paid or Withheld” into the designated field of this tool
• Now, you have to choose the tax deductions method from the drop-down of “deductions” field, it can either be “Standard Deduction” or “Itemized Deductions”. For standard deduction, the calculator will consider the value by default, while for itemized deductions, you need to add the exact amount
• Once done, simply hit the calculate button of this calculator

Outputs:

The free income tax estimator will calculate:

• Estimate the amount that you will get back (tax return or refund)
• Estimate the owed amount
• Taxable Income
• Total Deductions
• Marginal Tax Rate
• Effective Tax Rate
• Estimated Federal Taxes
• Federal Taxes Withheld

IRA Contribution:

Basically, IRA refers to an individual retirement account and it allows you to save some money for retirement in a tax-advantaged way. You make some contributions with money from which you will be able to deduct on your tax return according to income tax rates 2020. Any of your earnings has the ability to potentially grow the tax-deferred till you extract them in retirement. Furthermore, you can estimate tax return 2019-2020 with the support of income tax calculator 2020. It is designed to aid individuals in building up a retirement nest egg by permitting them to save and invest some money on a tax-advantaged basis.

401(k) Contribution:

A 401(k) is a feature that represents a qualified profit-sharing plan to allow the workers to donate a specific portion of their salaries to the individual accounts. Elective salary delays are omitted from the worker’s taxable income. Furthermore, all Companies can make contributions to their employees’ accounts.

Taxes Paid or Withheld:

Withholding or withheld tax is that income tax which will be collected from wages when any employer pays an employee. The first phase of withholding tax dates back to 1862. Initially it was only used to raise the funding for the Civil War. Basically, it is the amount which is against the income taxes the employee must have to pay during the year. on the other hand, when any employee pays the taxes it will be referred as taxes paid.

What Are Tax Deductions:

Income tax deductions usually arise from our own expenses. They support you to lower your tax bills generally by dropping the percentage of the adjusted gross income that is normally subject to taxes. At handfundamentally two categories of deductions:

• Above-the-line (ATL)
• Below-the-line (BTL) itemized deductions

Modified Adjusted Gross Income (MAGI):

It is the process that is used to analyze whether a taxpayer is capable for certain tax deductions. It is basically AGI with certain deductions that are added back in. The deductions mainly are:

• Interest on student loan.
• Deductions on tuition fees.
• Deduction on Passive loss
• Deduction on passive income
• Deduction as an exclusion for income from the saving bonds of U.S.
• Deduction on Rental losses
• Deduction on loss from any publicly traded corporation

Above-the-line Deductions:

ATL deductions usually reduce the overall AGI. It means that you have to pay the tax on less income. The chief benefit of ATL deductions is that they are allowed under the alternative minimum estimated income tax. Common examples of ATL deductions are:

Traditional IRA contributions:

This deduction will be applicable only if the Modified Adjusted Gross Income surpasses annual limits. Note that this deduction is only for the traditional IRA contributions, not for Roth IRA contributions.

Moving expenses:

If you are moving from one place to another for your business then tax on it will be fully deductible, as long as they are not repaid by the taxpayer’s employer.

Below-the-line Deductions:

This deduction is always limited to the amount of the real deduction. For example, a $1,000 deduction will decrease net taxable income by $1,000.

Mortgage interest:

It will be applicable regular mortgage but only up to a certain limit. All those Loans that aren’t safe debt on a home are measured as a personal loan, which are not deductible.

Charitable donations:

All those donations that are foe the purpose of charities are capable for tax deductions.

Medical expenses:

Deductions will be applicable for all those expense that are paid for the prevention, diagnosis, and for the medical treatment of any kind of physical and mental illness.

Job searching:

All those expenses that are directly linked with the search for a new job. If the total expenses crossed two percent of adjusted gross income, then the qualifying expenses over the threshold can be deducted.

Smoking cessation:

If you are Participating in any smoking cessation activity, then it will be considered as medical tax deduction.

What is the standard deduction vs. itemized deduction?

Itemized deductions are always greater than the standard deduction. The higher the itemized deduction is; the lower taxes will be paid. Though, this is usually more boring and involves saving a lot of receipts. The yearly standard deduction is a stationary amount that will be determined by Congress. In year 2020, it is $12,400 for only single taxpayers and $24,800 for the married taxpayers who are filing jointly. This percentage is slightly higher than the year 2019.

The 2020-2019 federal income tax calculator automatically figure out whether the standard or itemized deduction depends on the given inputs, and calculates the largest two tax values in the estimated calculation of tax due or owed.

Note: An individual cannot claim the standard as well as itemized deductions in the same year.

What Are Tax Exemptions?

Generally, tax exemptions are financial releases with the purpose of decreasing, or in some cases completely removing the taxable income. It does not only apply to the personal income tax; for example:

• All the income for the purpose of charities.
• All the income for and from the religious organizations is generally exempt from taxation.
• On some international airports, there are tax exempt shops in the form of duty free international shops are also available.
• It also includes the state and local governments who are not being subject to pay the federal income taxes.

Personal Exemptions:

Any personal tax exemption is that amount that is deductible from the adjusted gross income depending on taxpayers and also on the total numbers of dependents who claimed on a tax return. A person can have claimed as a dependent on one tax return will not be able to claim again on another tax return.

What Are Tax Credits?

Congress formulates and then hands out the tax credits to all the taxpayers. For all the taxpayers, they support to lower tax bills by reducing the amount of tax they own. It is significant to make the division among non-refundable and refundable tax credits.

• Nonrefundable credits have the ability to reduce total tax liability to $0, but it cannot go beyond $0. If there is any unused non-refundable tax credit it will be expire and cannot be approved for the next year.
• Alternatively, A refundable tax credit amounts give taxpayers entitlement to the full amount. Refundable tax credits are usually less common than non-refundable tax credits. Both can be estimated via the 2020-2019 income tax calculator

Some of the examples of some common tax credits are divided into the four groups explained below:

Income:

It is one of the most noticeable refundable tax credits and is usually only accessible to low or moderate-income households who are making up to a little over $50,000.

Children:

It is possible to claim up to $2,000 for one child, and out of $2000 there is a specific amount of $1,400 which is refundable.

Education:

The requirement to claim it is at least 18 years of age. Individual should not be a full-time student, and cannot be claimed as a dependent on any other person’s return. In America there is a maximum annual credit of $2,500 for every student.

Environmental:

All those properties that are powered by solar, natural wind, geothermal energy, or fuel-cell technology falls in this category.

What About Dependents?

A dependent person refers to the person who is supported by you and for that person you can claim a dependency exemption. In the year 2016, every dependent you claim permits you to receive a $4,050 decrease in your taxable income. Moreover, you may also obtain a tax credit of up to $1,000 for each dependent child who is under the age of 17 years. The credit is, though, phased out for at greater revenues and earnings.

Are You Someone’s Dependent?

If no one can claim as your spouse or partner, then you will choose not to be dependent on someone. But you have to select ‘yes’ if somebody can claim you as a dependent. On the other hand, you will Pickboth “you and your spouse” if you both are dependents.

Dependents Qualifying for Child Tax Credit:

You may be allowed to a child tax credit in case of each qualifying child below the age of 17 years at the end of the year if you have claimed an exemption for that child. The credit is, though, phased out in case of greater profits and higher incomes.

Taxable IRA Distributions & Deductions?

It refers to all the IRA distributions that are taxable. It would normally comprise:

• All the distributions from a Traditional IRA,
• Simplified employee pension IRA,
• Simple IRA.
• Changes of any of these IRA accounts to a ROTH IRA.

If in the past years you have made any of the contributions to all the above options that were not tax-deductible, then some of your distribution may not be subject to tax. So these deductions will basically not include any of the above that were rolled over to a Traditional IRA account. But, if you have an employer-sponsored withdrawal plan, such as a 401(k), your tax deduction may have a certain limit. However, an income tax calculator can assist you in this regard along with the calculation of federal income tax.

How to Calculate Federal Income Tax Rate? (2019-2020)?

You can try an online federal income tax calculator to calculate federal income tax rates 2020 (return filed in 2021) and 2019 (return filed in 2020) that depends on different input parameters: your total income, filing status, age, 401(k) contribution, IRA contribution, taxes paid or withheld, and deductions. Also, we help you to do a manual (step-by-step) calculation for the federal income taxes you will owe in the 2019-2020 filing season, which depends on the Trump Tax Plan.

You can easily calculate tax rates by following the given steps:

• First of all, you have to calculate your adjusted gross income (AGI) by simply taking your total household income and simply reducing it by certain items such as contributions to your 401 (k)
• Very next, from AGI you ought to subtract exemptions and deductions (it can be either itemized or standard) to attain your taxable income. Remember that exemptions can be claimed for each taxpayer as well as dependents like one’s spouse or children
• Then, your taxable income based on your filing status applied to the tax brackets (it can either be 2019 or 2020) to calculate federal income taxes owed for the year

What is Alternative Minimum Tax (AMT) Income Adjustments?

It is one of the obligatory substitute to the standard income tax. The AMT amount can be calculated without the standard deduction or personal exemptions. Furthermore, it also doesn’t permit most itemized deductions, such as:

• State income tax
• Local income tax
• All the business expense
• Applied mortgage interest
• All the applicable property taxes.

If any of the taxpayers makes more than the AMT exemption amount, then they will be required to pay the greater amount of either the AMT or their standard income tax. The AMT have a deepimpact in higher tax brackets and it also eliminates many of the deductions. The AMT brings in near about $60 billion in one complete year when it comes to federal tax revenue from the top 1% of the taxpayers. On the other hand, there are some ways via which anyone can try to avoid paying the AMT:

• Lower accustomed gross income by maxing out donations to retirement accounts such as 401(k), IRA, or a well-being savings accounts.
• If you have reduced itemized deductions.
• If you have an Increased charitable contribution.

Usually, only those taxpayers who has adjusted gross incomes which also exceeds the exemption should have to worry about the AMT. Additionally, the IRS offers an online AMT Helper to find out whether a taxpayer will be affected by the AMT.

What Is the Effective Tax Rate?

The effective tax rate is said to be as the actual amount of federal income taxes paid on an individual’s taxable income. It only referred to federal income taxes, and so excludes payments such as Federal Insurance Contributions Act or FICA taxes, state taxes, self-employment tax, and local taxes. The alternative to the effective tax rate is to simply measuring an individual’s marginal tax rate.

Effective Tax Rate (ET) Formula:

Effective Tax Rate (ET) = Taxes Paid / Taxable Income

Do You Know Effective Tax Rate Only Applies to Federal Income Tax?

Remember that it is immensely important to understand that your effective tax rate is not the total amount that you pay in taxes.

Effective tax rate (ET) is referred to as the actual rate that you pay in federal income taxes. However, American residents pay a wide range of taxes in addition to the federal income tax. (In fact, around 44 percent of Americans don’t earn enough amount of money to pay income taxes at all). These can include:

• Payroll Taxes (otherwise said to be as FICA Taxes)
• State and Local Income Taxes
• State and Local Sales Taxes

What Is the Marginal Tax Rate?

The marginal tax rate is referred to as the tax rate that you pay on an additional dollar of income. In the U.S (United States), the federal marginal tax rate for an individual increase as income rises. This method of taxation is also said to be as progressive taxation, requires tax individuals depend upon their earnings, and with low-income earners should be taxed at a lower tax rate than higher-income earners.

No doubt, taxes are unavoidable in the U.S, and without planning, the annual tax liability can be very uncertain. An online tax liability calculator helps you to manage tax liability along with the average marginal tax rates.

Key-points:

• The marginal tax rate is said to be as the rate of tax that paid on the next dollar of income
• Under the progressive income taxation method that account for federal income tax in the U.S, the marginal rate of tax increases as income increases
• Remember that marginal tax rates are separated by income levels into seven tax rackets

Just add the values into the given fields of the above federal income tax calculator to estimates marginal tax rate, effective tax rate, and certain other parameters related to federal income tax 2020-19.

FAQ’s:

What percentage of your income should be taken out for federal taxes?

The federal individual income tax has 7 tax rates that are ranging from 10% to 37%. The tax rates apply to the taxable income – adjusted gross income minus (-) either the standard deduction or allowable itemized deductions. That’s the reason why the income up to the standard deduction or itemized deduction is taxed at a zero rate.

What is the federal income tax on $10 000?

It’s all depends on tax brackets, the 10% tax rate applies to income from $1 to $10,000, the 20% applies to income from $10,001 to $20,000; and the 30% tax rate applies to all income above $20,000. According to this system, individual that earning $10,000 is taxed at 10% paying a total of $1,000.

Is it better to claim 1 or 0?

If you claim 0, then remember that you’ll get less back on paychecks and even more back on your tax refund. And, if you claim 1, then simply you’ll get more back on your paychecks and less back on your tax refund when you going to file next year.

How do I calculate income tax in excel?

Let’s suppose that you have got the tax table in the Range A5:C12, and your income is place in the cell C1. Now, you can easily calculate your income tax as follows:

• In first step, you have to add a differential column to the tax table. In the D6 Cell, you have to type 10%, in the D7 Cell type the formula = C7-C6, and then simply drag the AutoFill Handle to the whole differential column
• Very next, you just need to add an Amount column right to the new tax table. In the E6 Cell, just type the formula =$C$1-A6 ($C$1 is the cell with your income), and right after, just drag the AutoFill Handle to the whole Amount column
• Then, you ought to add a Tax column right to the new tax table. In the F6 Cell, you just have to type the formula =E6*D6, and now you need to drag the AutoFill Handle until negative results appear
• Finally, you have to click into the cell in which you will place the income tax, and all you need to sum all positive numbers in the Tax column by using the formula =SUM(F6:F8)

What is federal income tax used for?

Federal income taxes are taken into account to provide for national programs including veterans and foreign affairs, national defense, social programs, physical, human, community development, law enforcement; and interest on the national debt.

What Tax Bracket Am I In?

The United States (U.S) has seven federal income taxes that are 10%, 12%, 22%, 24%, 32%, 35% and 37%. Typically, the tax brackets are assists to understand what income tax rates will apply to your taxable income in federal income tax calculations. Our federal income tax calculator will also use the federal income tax brackets 2019-2020 to calculate the income tax rates will apply to your taxable income.

End-Note:

This 2019 and 2020 online federal tax calculator is the best support to make the estimates about the refunds as well as the potential owed amount that will be applicable on an income federal tax. The income tax estimator shows the tax calculations that depend on the federal income tax brackets of 2019 and 2020. The calculator-online makes no claims on the accuracy of this tax calculator inputs and results, even there is no guarantee for the accuracy of the content contained here-in. Once you make a calculation with this calculator, you should have to consult to a Qualified Federal Income Tax Advisor before making any finance tax-related decisions.

References:

From the source of Wikipedia: Federal Income tax in the United States: Sources of U.S. income tax laws and much more

From the source of investopedia: State Income Tax vs. Federal Income Tax

From the source of taxfoundation: Summary of the Latest Federal Income Tax Data, 2020 Update

From the source of (Internal Revenue Service) irs:gov – Federal Income Tax Withholding

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