How to Estimate How Much I'm Going to Receive in Taxes
- 1). Determine the amount of the withholding/estimated tax payments you will make during the year. Federal and state taxes are paid throughout the year. The most obvious example occurs with your wages if you are employed. Your employer will "withhold" a certain amount of your wages to pay the federal government, which will satisfy your ongoing tax requirements during the tax year. For some larger transactions where you recognize a large gain, you may have to pay additional taxes to satisfy your tax obligations. Take all of these payments that you have already made, and estimate how much you will pay during the year.
- 2). Estimate your wages for the tax year. Most people know how much they plan to make during a given year. Estimate how much you will make in wages based on your expected future employment prospects.
- 3). Estimate other income. With most other income being taxable, you need to project what other sources of income you can expect to realize this year. Pay special attention to investments you are planning to cash in, profits and deductions earned by partnerships and S Corporations you are a part of, and rental income you may gain from property you own. These are the most common types of income after wages.
- 4). Complete your tax return using estimates to determine tax liability and refund. The best way to determine what you can expect to pay in taxes or receive in a refund is to complete federal and state returns using your estimates. This process will provide you with an adequate picture of your state and federal tax responsibilities as well as show how much you will receive in refunds.
