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Why you should Estimate of Your Tax Liabilities

Taxation on our income has a substantial impact on the economic condition and development of a nation. It is considered the primary responsibility of every citizen to make a valuable contribution to the country.

Research shows that the pattern of taxation has changed during the development process of states, it has increased the level of taxation with an increasing importance placed on tax bases.

Taxation occurs in different patterns around the world,every country has different tax rates on incomes, revenues as well as on expenditures.  Most of us have a responsibility to pay federal income tax on our earned salary whether it is deducted from our paycheck or we pay it ourselves.

Before moving to further discussion, it is important to know about the federal income tax and how we can calculate it by some easy methods such as the US tax calculator.

What is the Federal Income Tax?

Federal Income is generated viataxes on earned income such as salary, wages, commission, tips, and unearned income includinginterest(s) and dividends for both individual and business. It is a crucial source of funding for the US Federal Government.

Taxes help the Federal Government to perform their roles and responsibilities more efficiently by providing essential services including benefits to the senior citizens, disabled, veterans, and low-income families. The revenue that is earned form the tax supports numerous important operations of government and is invested in various departments such as transportation, health, defense as well as international affairs.

Calculation of Federal Income Tax

Calculation of federal income tax is quite complicated, it has considered differently in every state of the US. In order to calculate the essential part is to begin with the Federal tax brackets, in which the US has seven diverse federal tax rates includes 10%, 12%, 22%, 24%, 32%, 35%, and 37%. Income tax rates and thresholds are publish in the Federal Tax Tables annually, these inform you about thetax rate that will be applied to calculate your taxable income. Click here if you need help regarding filing your independent contractor taxes.

Role of Tax Calculation

A clear estimate of your financial statement is essentialto know the about of tax due and prepare for and complete your periodic and/or annual tax return. Calculating your income with the US tax calculator in order to determine your net pay after taxes (how much of your annual income goes into your bank account) and to produce a clear statement of tax liabilities (how much of your hard earned money that you pay in various aspects of taxations such as Federal Taxes, Medicare, State Taxes, Social Security, and other payments).

The US Tax Calculator is the easiest way of understanding all your tax payments with a simple interface and inbuilt tax calculation without having the cost of an expert’s advice. During the calculation, there are a number of deductions made from your salary that is based on certain allowances or health concerns.

Tax calculators can ease your calculation related complications in a simple manner withfunctions to provide you all the deduction details and a simplified overview of your salary on a daily, weekly, monthly and annual basis along with the associated taxes  you are liable for and tax credits you are entitled to.

Moreover, the tax calculator is regularly updated and offers results in line with current income tax rates as well as social security information.  At the time of writing, the US Tax calculator is updated for the 2019/2020 tax year and also allows historical income tax calculation based on prior tax years.

 

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