What is Income Tax?
Income Tax is the required taxation in correlation with an individual’s earned income from labor. Income tax is classified as a ‘progressive’ tax due to the fact that the required income tax payments are contingent upon the gross amount of income earned by that individual. Income Tax is classified as a direct tax, which means that the respective taxpayer is required to submit any or all taxation payments to the Federal Government in a direct fashion – devoid of a middleman or intermediary. Similarly, income tax refunds are disbursed in a direct fashion from the Federal Government to the individual taxpayer.
What is an Income Tax Calculator?
AnIncome Tax Calculator is a tool that can is typically accessed through online taxation resource websites, which provides an estimation of any or all applicable withholdings, taxes, and refunds with regard to the initial Income Tax undertaken by an individual, entity, or company. Income Tax Calculators are fashioned in order to allow individuals to input appropriate financial information in specified fields, upon which an estimation of applicable taxation is rendered:
• Income Tax Calculators may not factor specifications and exceptions that exist within specific tax circumstances, withholdings, and refund policies
• Upon utilizing anIncome Tax Calculator, individuals are encouraged to remain cognizant of the accuracy latent within their respective entries; misinformation or falsified data may skew the final results
• However, a vast array of Income Tax Calculators exist, which range from Income Tax Calculators provided – or sponsored - by specific tax preparation services to privately-offered Income Tax Calculators
• Those interested in utilizing Income Tax Calculators are encouraged patronize reputable services and websites providing specific, IRS-accredited tax resources
• Calculations rendered by Income Tax Calculators may vary on a case-by-case basis and may differ depending on both the specific calculator used, as well as the website hosting that calculator; any or all official tax calculations should only be obtained by an authorized Income Tax preparation service or Department of Taxation
Income Tax Calculator Fields of Input
With regard to the calculation of income tax – both withholding and refunds – individuals may be required to input the following information in order to obtain the most accurate calculation:
Dependents: A dependent is an individual - or individuals - for whom the taxpayer claims responsibility on their W-4 income tax form(s). The W-4 income tax form is required in order to regulate the initial amount of withholding that a taxpayer may expect to undergo; individuals claiming more dependents will typically experience a smaller amount of earned income withheld on a paycheck-to-paycheck basis – however, individuals who do not claim any dependents will oftentimes receive larger tax refunds.
Report of Earned Income: An income tax calculator may require an individual to input a variety of earned income reports, which may include both a gross-earned income report, as well as a net-earned income report. Gross Income is the amount of income earned by an individual prior to tax withholding, while net income is the amount of income earned subsequent to taxation withholding
Deductibles and Expenses: Income Tax Calculators may prompt a user to input any - or all – products or services undertaken by an individual tax payer for which taxes are foregone or relieved; in many cases, products and services facilitated with regard to one’s occupation may be tax deductible