Have you ever struggled with calculating your federal income tax? The tax code can be confusing and it causes a lot of misconception. However, we have simplified the basics of federal taxation
You don’t have to pay income tax on every cent you earn. To figure out your Net earnings, you need to subtract your business expenses from your gross income.
Once you’ve figured out your net earnings, you need to subtract them with your above-the-line deductions (student loan interest, retirement fund, and 50% of your self-employment income) to calculate your AGI. Now to figure out your taxable income, you need to subtract your below-the-line deductions from your AGI. The amount you achieve by following the previous step will put you in a certain tax bracket, which you have to go with.
The final step will involve you applying for the right % to the correct income levels and then adding it up to find the final amount.
Still, find it tricky?
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