If you are looking for ways on how to calculate federal tax, your first post of call should be the IRS website. They provide an online IRS withholding calculator, which will allow you to work out the calculations without too much trouble.
The site will also provide first hand information of any important updates on tax legislation that you need to be aware of.
There are several factors that will contribute to your calculations, including your marital status, and the number of exemptions, or withholding allowances you are entitled to.
The Washington State University provides a brilliant and clear example of how to calculate federal tax on their website. This example is particularly useful if you prefer to work out your calculations on paper, rather than online (not everyone is comfortable sharing such personal information online unless completely necessary).
The mathematics and calculations involved may, at first glance, seem complicated. However, the WSU website breaks down the calculations in to four easy steps, and provides plenty of resources and examples to show you how the calculation is made, whether you are claiming as a single, as married, or as head of household. The Minnesota House of Representatives also has a website page dedicated to further explaining how to calculate federal tax.
Personally, in the first instance, I recommend doing the calculation online. It is far easier if you're looking for a ball park figure, or if you're unsure on some of the information you are providing. If the thought of doing this online really is uncomfortable, or the whole prices in itself is simply too overwhelming, do not hesitate to request some professional help. The assistance shouldn't cost a great deal, but could make all the difference to the peace of mind you feel.
The important thing is to strike the balance. Withhold too little, and you end up receiving a rather large tax bill, which can be incredibly daunting and frightening. Withhold too much, and although you will be rewarded a refund, you will find your pay check somewhat short throughout the entire year, which could see you struggling to live. In the current economic climate, it's worthwhile taking the extra time to work out exactly what you require in living costs, as well as the tax you will need to pay. This is not a time to be second guessing your incomings and outgoings, so pay extra attention during these difficult times. |