Simple Tax Estimator is an ready-to-use Excel Template that help you compute your federal income tax. So This template consists of computations of adjustments, Tax credit, itemized deductions etc.
However, A user needs to input in respective cells and it will automatically estimate your tax liability.
Furthermore, It is better for a taxpayer to prepare priory for tax returns in advance. So, Filing near the deadline might cost you with more money.
Moreover, You may miss some necessary deductions, tax credits, and other items which might increase your taxable income. Thus increasing your tax amount.
So, We have created a simple tax estimator in excel with predefine formulas. Enter the amounts in white cells only. Blue colored cells contain formulas and references for calculations.
Contents of Simple Tax Estimator
Simple Tax Estimator mainly consists of 2 sections.
- Taxability Details
1. Taxability Details
However, Taxability details consist of following:
- Filing Status.
- Number of Dependents.
- Number of Personal Exemption.
- Total Personal Exemptions.
- Number of Filer Above 65 years of Age.
- Tax Bracket.
Similarly, Select your filing status from drop-down list. Single, Married filing jointly, married filing separately or Head of Household.
Assumptions consist of the following:
- Gross Annual Income
- AGI – Adjusted Gross Income
- Standard Deductions
- Itemized Deductions
- Personal Exemptions
- Total Taxable Income
- The Tax Credits
- Tax Estimate.
So, Gross annual income is the total of income from all sources.
To calculate your adjustments use the table given beside the Simple Tax Estimator. Just enter the amounts applicable for you.
Similarly, It will automatically reflect in the template as it refer to the respective cell.
Adjustments include following details:
- Educator expenses.
- IRA deduction.
- Student loan and interest deduction.
- Tuition and fees deduction.
- Health savings account deduction.
- Moving expenses.
- 50% of self-employment tax.
- Self-employed Health Insurance Deduction.
- Other Self-Employed Plans (SEP, SIMPLE).
- Penalties paid for early withdrawal of savings.
- Alimony paid.
Adjusted Gross Income
AGI = Gross Income – Adjustments
If your itemized deductions are higher then only go for it. Otherwise, a standard deduction is always a better option.
As mentioned earlier, if the filer is above the age of 65 years, then they can additionally take $ 1,550 as a Standard Deduction.
Thus, It will automatically calculate the amount as per number of dependents.
So, Total Taxable Income
= AGI – Standard Deductions – Itemized Deductions – Personal Exemptions.
At the end, there are tax credits. If you are entitled to tax credits then you will calculate your tax credit in the section below adjustments.
Moreover, You need to enter your applicable tax credit. It will automatically reflect in the sheet through cell reference
Lastly, there is the tax estimate.
Tax Estimate = Taxable income X Tax Bracket – Tax Credits.