Taxpayers can calculate their 2014 refund or taxes owed by finding gross income, applying all relevant deductions, subtracting deductions from gross income and multiplying the amount remaining by the appropriate tax rates, according to the Internal Revenue Service. Personal income tax is calculated and filed on Form 1040.Continue Reading
A taxpayer's tax refund or tax due depends on many factors, such as tax withheld, filing status as of the last day of 2014, dependants and income, according to the Internal Revenue Service. The first step in calculating income tax is finding gross income, or the total income, including income from employment, investments and other sources, such as alimony or government aid. From gross income, taxpayers can begin to deduct relevant expenses, such as student loan interest and deductible IRA contributions, and take applicable personal and dependant exemptions to reach adjusted gross income.
To calculate taxable income from adjusted gross income, taxpayers can further reduce income with additional standard or itemized deductions, such as mortgage interest, medical expenses, charitable contributions and property tax paid, states the IRS. The allowable deductions and the amount that can be deducted varies from year to year based on the current tax code.
Once taxpayers apply deductions and exemptions for 2014, they are left with taxable income, or the amount of income subject to income tax, reports the IRS. This amount is offset by any tax withheld throughout the year, as well as any estimated quarterly payments. In addition, tax credits such as education or child credits further reduce tax. If the remaining amount is positive after subtracting all credits and tax paid, tax is due to the IRS. If it is negative, the IRS must refund money to the taxpayer.Learn more about Income Tax