Use the Tax Planner Summary page

In addition to showing all the totals from the Tax Planner's schedules and worksheets, the Tax Planner Summary shows several fields that it has calculated in the course of estimating your tax liability.

  • Income area
    • Total Income: This is the sum total income from the Tax Planner pages for wages, interest/dividend income, business income, capital gains and losses, and other income.
  • Adjustments area
    • Adjusted Gross Income: The Adjusted Gross Income field is a running total that is calculated automatically based on your entries on the Income pages. This is your taxable income before deductions and exemptions.
  • Tax Computation area
    • Taxable Income: The Taxable Income field is calculated automatically. It is your income after adjustments, deductions, and exemptions.
    • Income Tax: The Income Tax field is calculated automatically. It is your tax liability before other taxes and credits are calculated.
    • Total Tax: The amount shown in the Total Tax field in the Tax Planner is the estimated amount of tax you will owe for the tax year.
    • Marginal Rate/Average Rate: The Marginal Rate is the percentage of tax you'd pay on the next $1,000 of income you earned. The Average Rate is the percentage of your income that you owe for federal taxes, on average. It is calculated by dividing your total tax by your adjusted gross income. Although many textbooks define the marginal tax rate as the percent of tax paid on the last dollar earned, we chose a calculation based on the next $1,000 of income. We believe that, given the stair step nature of the tax rate structure, it better represents the amount you're being taxed on additional (marginal) income. .

    The Tax Planner includes a table of tax rates you can view.

  • Tax Due area
    • Remaining Tax or Refund Due: The Remaining Tax Due or Refund Due field shows the amount of tax due or refund projected.
    • Remaining Tax: The projected amount of tax you could owe at year's end. If the remaining tax due is more than $1000, you may need to make quarterly estimated tax payments or increase withholdings to avoid penalties and interest when you file your return. The regulations about who needs to file quarterly estimated tax payments are complex, and you should consult IRS publications or a tax professional to make a final determination. However, a tax due of more than $1000 should be a warning to investigate whether you need to file quarterly estimated tax payments or change your withholding allowances on your W-4.
    • Refund Due: This is the projected amount of refund you should receive at year's end. If the projected refund due is significant, you may want to consider reducing your planned estimated tax payments or withholdings.


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