How to Calculate US Income Taxes?

The US taxation system is applied to all individuals employed and living in the US. At the federal level, personal income, corporate income and capital gains are all taxed on a progressive scale, that is, corporations and companies are taxed more than individuals. The US taxation system functions at different levels of federal, state and local levels.
1. Federal income tax
The /federal income tax/ is the /tax/ levied by the Internal Revenue Service (/IRS/) on the annual earnings of individuals, corporations, trusts, and other legal entities.
 The federal individual income tax has seven tax rates ranging from 10 percent to 37 percent. The rates apply to taxable income—adjusted gross income minus either the standard deduction or allowable itemized deductions.
The federal income tax calculator considers the following factors into account-
1. Household Income – Includes wages, salaries, investment returns, retirement accounts, and welfare payments 2. Location 3. It is the city or general vicinity where the primary place of business or employment is located, regardless of the location of the individual’s residence. 4. Filing Status- 5. The five filing statuses are: single, married filing jointly, married filing separately, head of household, and qualifying widow/er with dependent child. 6. 401(k) Contribution- 7.  A 401(k) Plan is a defined-contribution retirement account that allows employees to save a portion of their salary in a tax-advantaged manner. 8. IRA Contribution- 9. An IRA (individual retirement account) is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth. 10. Itemized Deductions- 11. It is an expense that can be subtracted from adjusted gross income (AGI) to reduce your tax bill.
2. State income tax
State Income taxes, which vary by state, are a percentage of money that you pay to the state government based on the income you make at your job. Most states that impose income taxes, however, use progressive tax systems, where higher levels of income are taxed at a greater percentage rate, as is the case with the federal income tax system.
3. IRS income tax
The IRS encourages everyone to use the Tax Withholding Estimator to perform a “paycheck checkup.” This will help you make sure you have the right amount of tax withheld from your paycheck. The amount of tax withheld can be calculated using IRS income tax calculators.
4. Tax refund
Tax refunds are calculated by subtracting the amount of federal income taxes withheld from your total income taxes due for the year. If the amount withheld from your paychecks for taxes exceeds the amount you owe, then you will receive a refund.
As important as our social duty of tax payment is, it is all the more important to make sure that we conduct this duty right and by the law. We at NTPA (National Tax Prepares of America), resolve to help and support you through this tax season, ensuring accuracy like no other in your tax filings, helping you commit to your civic duty.