Calculating Your Taxes

The main problem in completing a tax return is to figure out what income is taxable and the deductions that can be claimed. The rest is largely mechanical: add and subtract correctly, follow the instructions on the tax return and comply with procedural requirements.
The following checklist might be useful:

1. Collect the taxpayer's data;
2. Review taxpayer's prior returns;
3. Select the proper tax return form;
4. Determine gross income by totaling all income not specifically excluded;
5. Compute the adjusted gross income (AGI) by subtracting the adjustments;
6. Subtract itemized deductions from AGI, if their total exceeds the correct standard deduction amount;
7. Subtract the correct number of exemptions to determine taxable income;
8. Use the tax table (if taxable income is under $100,000) or the tax computation worksheet (if taxable income is $100,000 or more) to determine/calculate tax amount;
9. In the following order:
1. Add any alternative minimum tax;
2. Reduce any tax due by any tax credits (such as child tax credit, credit for child and dependent care expense, adoption credit, etc);
3. Add other taxes (such as self-employment tax, household employment taxes);
4. Reduce tax by any payments (such as withholdings, estimated tax payments, earned income credit, etc)
10. Determine the tax refund amount or the amount owed;
11. Sign and file the tax return on time.