Instead of preparing an entire return, one of the best ways to estimate your income tax for the year is to use a tax calculator. The best part about using a tax calculator is the fact that you can do a lot more than just estimate your tax for the year. You can use it to help you get an estimate on what your refund will be, figure out the correct amount of withholding, and how certain life events will affect your tax return.
Getting a Good Estimate on Your Tax Refund
TurboTax has a free tool called the TaxCaster that will give you a good estimate on the tax return you will get this year.
All you will need to do is enter basic information such as your filing status, your estimated tax payments, your age, and deductions and credits you quality for. The calculator will then go to work and estimate the refund you should get based off all the information you provided.
However, it is important you keep in mind that this is just an estimate, there are so many factors that can affect how much of a refund you get there is no way to predict the exact amount. With that said, this calculator does give you a better estimate than most of the other calculators out there.
Correct Tax Withholding Estimates
One of the most frustrating things is when you pay the IRS more than you need to through tax withholdings. That is exactly why there is a withholding calculator that will give you a good estimate on the amount of allowances you should be claiming on your W-4 form.
All you need to do is provide some extensive information on your income and finances. You will have to give a bit more information when getting an estimate on this or else the calculator won’t be able to provide you with an accurate estimate. Before you use this calculator, you might want to evaluate the amount of deductions and credits you might qualify for because these can greatly affect the number of allowances you claim.
How IRA Contribution Calculators Can Help You
When you contribute to the IRA retirement account, you won’t know right away whether or not you will see any income tax savings. The good news is the fact that TurboTax has an IRA Retirement Calculator that will completely take the guess work out of this and give you a good estimate on the amount you will save (if you will save any).
All you have to do is enter some very basic information such as your annual earnings and filing status, the calculator will then do some calculations and let you know an estimate on your tax savings and will even tell you whether a Roth or a traditional IRA is the best option for you. Many people are worried about using these calculators because they feel like they are too hard to use or that they will have to give away too much personal information. This calculator is so easy to use, anyone can use it! You also won’t have to give away any personal information such as your social security number.
How life events affect your tax return
You all know that major life events can give you some great tax savings. These life events include (but are not limited to) getting married, having a baby, and making a big purchase such as a house. It is very hard to calculate on your own how much you can save on your taxes from these major life events, but TurboTax has a calculator you can use to help you determine the amount.
This calculator is also extremely easy to use, all you have to do is fill in your income, answer a few questions, and let the calculator do the rest.