Xero’s free income tax calculator

List all your sources of income – including any second jobs, business earnings, and rental income. Add these up and put the total at the top of the template. Then work out your total business expenses – things you bought to help with your work, like office equipment, phone bills, and vehicles. Next, enter your personal deductions (your tax-free income). The income tax calculator then works out your taxable income for you.

On the left-hand side of the income tax calculator, enter the federal income tax rate – the template automatically calculates the correct amount. Something to note: the US has a progressive system of tax, meaning you pay more tax as you earn more. The higher earners will therefore pay their income tax at different rates – and so the estimate given by the calculator will be just that, an estimate.

Next, let’s add your other taxes. If you’re self-employed you’ll generally pay self-employment (SE) tax (a Social Security and Medicare tax for people who work for themselves). If this applies to you, enter this figure in the calculator, then add your state tax and local tax. Do you sell taxable products? If so, enter this tax rate too. The income tax calculator then automatically adds these amounts to your tax bill to estimate your tax liability.

Now, the things that lower your tax bill! Do you get employee benefits like healthcare, childcare, and pension plans? How about research and development (R&D) credits? Check the IRS website to see which credits you’re eligible for, then enter the amounts they’re worth on the right-hand side of the income tax calculator.

And that’s it! The income tax calculator works out your total estimated tax liability. It might show you owe an amount in tax, which you’ll pay after your next tax return. Or – if your tax liability is less than what you’ve already paid (through withholding amounts, say) – you might get a refund from the tax office. Please note: the income tax calculator gives you an approximation – your final tax filing may calculate a different amount, so be sure to keep accurate tax records during the year.

With an estimate of how much tax you owe, you’re in a much better position to look ahead with your finances and budgets, make substantial business decisions, and set aside money for your tax bill. And if you estimate your income tax early enough in the financial year, you’ll have plenty of time to prepare for your tax filings. Generally, self-employed businesses need to make quarterly estimated tax payments. These estimated payments are then included in your year-end tax return, due April 15.

The income tax calculator is designed for small business owners, freelancers, and anyone self-employed. It replaces manual calculations and time-consuming spreadsheets with a simple-to-use template, so you can confidently estimate your tax bill.

Xero’s template gives you an estimate of how much tax you owe instead of a guaranteed figure. The more accurate the numbers you enter – for your expenses, credits, and so on – the more reliable the calculations. Talk to a tax professional for advice on your income tax if you have any questions.

No – the person receiving child support doesn’t pay tax on this income. The tax office doesn’t levy tax on child support payments, in the same way it generally doesn’t impose tax on children’s clothing, car seats, and books.

Absolutely – just add up your incomes and enter the total at the top of the income tax calculator. Do the same for your business expenses and personal deductions. The calculator then gives you the total estimated amount of tax you’ll owe for all your income sources. However, keep in mind the calculator only applies a single tax rate to the total income.

As often as you need to. Use the tax liability calculator whenever you plan your finances – maybe you’re thinking of increasing your daily rate, or seeing how much money you have left after paying your tax bill this year. Save the small business tax estimator to your desktop so you can quickly do the math.

You might need to pay income tax on as much as 85% of your Social Security benefits, depending on how you file taxes and what your income is.

Federal income tax is a standard tax on your earnings. Here’s the basic formula: Income tax = Taxable income x Tax rate. The rate of tax – and the tax brackets – are set by the IRS, so check their website for the latest info. And before calculating your tax, figure out the start and end dates of your tax year.