If you earn wage income, your employer will withhold income taxes from your paycheck on your behalf to pay your federal income tax, payroll taxes, and (in some cases) state or local income taxes. The amount of tax that is withheld depends on your income and the filing status, number of dependents, and other adjustments that you specified on your Form W-4.

At the end of the year, you will receive a W-2 form from each of your employers which shows your total earned wages, as well as the amount of tax that was withheld on your behalf. On the sample Form W-2 below, the federal income tax and payroll tax withholding amounts have been highlighted:

If your total income tax withholding exceeds your total owed income tax as calculated on your Form 1040, you will receive an income tax refund from the IRS. If your tax withholding is less than your owed income tax, you will be required to pay the difference when you file your income tax return in April.

With the tax withholding information from your Form W-2, you can estimate your owed income tax (or tax refund amount) with our income tax calculator.

One of the major considerations this election season is tax policy, and it’s impact on the middle class and the economy. This table shows a side-by-size comparison of some of the major tax policy items presented by each of the candidates and their proposed tax rates.

Notable, the majority of the Obama tax increases are the result of rolling back the Bush-era tax cuts, which have been extended for the past two years under a special recovery program. While President Obama plans to let these tax cuts expire, Mr. Romney would continue these tax cuts indefinitely under his income tax plan.

Mitt Romney’s tax cuts are centered on capitol gains and corporate income taxes. Some of the major beneficiaries of his tax plan would include investors (who would continue to enjoy 15% or lower income tax rates on capitol gains), and businesses, who would see tax cuts and a complete tax break for foreign-earned income. Romney has also called for a 20% reduction across the board on all tax brackets, while reducing the top tax bracket a total of 7 points from 35% to 28%.

President Obama, on the other hand, has made clear his position of maintaining current tax rates for individuals and families earning under $250,000 per year while raising taxes for individuals in the top tax brackets. Obama’s tax increases will almost exclusively effect the high-net-worth individuals who stand to gain the most from tax breaks under a Romney administration.

The middle class, which will decide this election, will not see a tax increase under either Romney or Obama’s tax plans. Many middle class taxpayers will see a tax decrease if Romney’s 20% tax reduction is passed, but the largest impact of Romney’s tax cuts will remain with those within the the upper tax brackets and the corporate and financial world.

In choosing between the two candidate’s vastly different tax platforms, for the majority of Americans it will come down to principals.  Mr. Romney’s position appeals to individuals who support cross the board tax breaks, while President Obama’s tax plan satisfies those who believe that heavy tax breaks are counter-intuitive in the current financial state .

• Cost Of Goods Sold - The cost of any goods or raw materials you purchase and resell is always 100% deductible. For example, a woman who sells paintings at a local craft show will be able to deduct the costs of paint and canvas for each piece sold.
• Advertising - All advertising fees are fully deductible. Examples include classified ads in the local paper, radio or television ads, and most sponsorships
• Business Supplies & Tools - The cost of any supplies and tools needed exclusively for business use are fully deductible. For an artist, any purchases of paintbrushes, easels, and other supplies can be deducted.
• Vehicle Expenses - Certain vehicle expenses – including rental costs and mileage – can be deducted for qualifying business use of your vehicle. Commuting expenses cannot be deducted.
• Contract Labor & Services - If you hire contractors or freelancers to work for your business, fees are fully deductible. You can also deduct fees paid to hire professionals such as lawyers and repairmen for business-related services.
• Office Expense - You can deduct any costs associated with maintaining your business workplace or office. If you work from home, you can deduct the percentage of your home costs directly related to your business.
• Travel & Entertainment - You can deduct travel-related business costs, and up to 50% of your qualifying business entertainment costs. All travel and entertainment costs deducted must be related solely to your business, and cannot include any recreational expenses.
• Additional deductions including depreciation, depletion, taxes, and insurance premiums may also be deductible based on your particular situation.

Business expense deductions for shareholders in an S-Corporation or Partnership

S-Corps and Partnerships are different from Schedule C businesses in that they can be owned by multiple shareholders. While these businesses are not subject to taxation like C-Corporations, business deductions in an S-Corp or a Partnership are reported on a business tax return and not on an individual shareholder’s tax return.

• An S-Corporation must report all business expenses  on Form 1120S, “U.S. Income Tax Return for an S Corporation”
• A partnership must report all business expenses on Form 1065, “U.S. Return of Partnership Income”

If the business has multiple shareholders, the deductions – like the income distributions – will effectively be equally distributed to all of the shareholders based on their investment in the company. If the business is owned by s sole shareholder, all of the deductions – and profit distributions – will flow through to that individual’s tax return as a distribution.

In addition to the normal deductible business expenses, S-Corps  and Partnerships also allow the easy deduction of wages, officer compensation, and employee benefits. See the excerpt the expenses section of Form 1065 (partnership income return) below.



Business expense deductions for employees with non-reimbursed business expenses

While fundamentally different from deducting expenses for a business in which you are an owner or shareholder, the IRS does provide a method for employees of a corporation to deduct business expenses they paid out-of-pocket. Generally, these expenses involve entertainment of clients (such as taking a client out to lunch to discuss business) or unreimbursed travel expenses (such as hotel or meal expenses).

If you itemize deductions on your personal income tax return, and your unreimbursed expenses amount to 2% or more of your AGI, you can itemize and deduct these expenses directly on your 1040. Keep in mind that general expense deduction rules, like the 50% entertainment deduction rule and mileage rates for business travel, also apply to employees claiming these expenses as an itemized deduction.

• Contents [hide]
• Withholding & Estimated Tax
  • Who pays income tax?
  • How does income tax withholding work?
  • Do I have to pay quarterly estimated taxes?
• Filing Your Income Tax
  • What tax deductions and credits can I qualify for?
  • How can I e-file my tax return online?
  • How can I check my tax refund status?
  • What are the penalties for failing to file or pay?
  • What is an IRS Tax Audit?
• Miscellaneous
  • How are state income taxes calculated?
  • How does the U.S. income tax compare to other countries?

1. Withholding & Estimated Tax

Who pays income tax?

The Federal Income Tax applies to most types of wage, investment, and self-employment income earned by all citizens or residents of the United States. If your income is over a certain threshold based on your age and filing type, you are required by law to file an income tax return (even if you don’t pay any income tax).

Even if you don’t legally have to file an income tax return, you may want to file a return anyway to get withheld income refunded or to claim refundable tax credits. All individuals with income over the threshold must legally file an income tax return, or risk paying penalties and interest.

How does income tax withholding work?

If you work a normal job and receive a regular paycheck, chances are your paychecks are subject to income tax withholding. Income tax withholding is the percentage of your income that is withheld by your employer from each paycheck and sent to the IRS to cover Federal Income Tax and payroll taxes.

All of the money witheld from your paycheck is credited against your tax account by the IRS. When you file your tax return on April 15th, the amount of income tax you owe will be compared to the total amount of money you have already paid through tax withholding over the course of the tax year.

If your tax withholding exceeds the amount of tax you owe, the IRS will send you the difference as an income tax refund. If you have not paid enough through withholding alone, you will have to pay the difference when you mail or e-file your tax return.

You can change the amount of each paycheck that is withheld by modifying your W4, which is on file with your employer’s Human Resources department. While paying to little through tax withholding could result in IRS fines, there is no advantage to pay too much in tax withholding – this only results in a large tax refund at the end of the year.

Do I have to pay quarterly estimated taxes?

If you are self employed or earn money through methods not subject to tax withholding (like investments or jobs that pay in cash), you may have to pay quarterly estimated tax payments to the IRS.

As a rule of thumb, if you have to pay over $1,000 to the IRS when you file your tax return you haven’t had enough tax withheld and must make quarterly tax payments. If you have a variable yearly income, you should have at least 100% of your last year’s tax bill – or 90% of this year’s expected tax bill – withheld or paid through quarterly tax payments.

Failing to make quarterly payments, if you are required to do so, can cost you in IRS penalties and interest – so make sure to make your payments on time. For more information on quarterly taxes, see How To Pay Estimated Taxes.

2. Filing Your Income Tax

What tax deductions and credits can I qualify for?

Tax deductions and tax credits are two of the most common ways of reducing your income tax liability. Tax deductions are expenses you can deduct from your total income before calculating your taxable income, while tax credits are credits that can be deducted directly from the amount of tax you owe.

Deductions: All Americans can claim the Standard Deduction on their tax return, which varies based on your filing status (but is approximately $6,000). Everyone is also entitled to one Personal Exemption for each dependent, including themselves, a spouse, and children.

You also have to option to itemize deductions instead of claiming the Standard Deduction – this allows you to deduct expenses including mortgage interest, property tax, and certain medical expenses. Generally, you should only itemize if your total itemized deductions add up to more then your Standard Deduction.

Credits: Popular tax credits for lower-income taxpayers include the Earned Income Tax Credit (EITC) and the Child and Dependent Care Credit. Students can claim the American Opportunity Tax Credit and/or the Lifetime Learning Credit, which can help offset tuition costs. Other popular credits include the Retirement Contribution Credit for qualified retirement savings accounts, and the First Time Homebuyer Credit for taxpayers purchasing their first home.

How can I e-file my tax return online?

E-filing your tax return is the quickest and easiest way to submit your forms to the IRS. The easiest ways to e-file are by using income tax software like TurboTax or by using a paid tax preparer. Lower and middle-income taxpayers can often get basic tax software at no charge through the IRS’s FreeFile Alliance program.

Premium tax software costs between $35 and $100, and professional tax preparers can cost more then $150. For more information about the different methods of e-filing your federal and state income tax returns, see How To E-File Your Tax Return.

How can I check my tax refund status?

If you e-filed your tax return, you can expect to get your refund direct deposited into your bank account in 10-21 days. Refunds for mailed returns can take up to two months to process. Once your tax return has been received, you can check the status of your refund through the IRS’s automated systems.

72 hours after e-filing, or 4 weeks after mailing your return, you can check your refund status by calling the IRS Refund Hotline at 1-800–829–1954 or by logging onto the Where’s My Refund tool on IRS.gov. For more details, see Requesting Your Income Tax Refund.

What are the penalties for failing to file or pay?

The IRS has a long laundry list of penalties and interest that will be immediately attached to your tax bill if you fail to file an income tax return or pay your complete tax bill. Here’s a list of some of the major penalties that apply:

• You pay a failure-to-file penalty if you don’t file your tax return, and a failure-to-pay penalty if you fail to pay by the due date
• Failure-to-file Penalty: 5% of unpaid taxes per month, up to 25%
• Failure-to-pay Penalty: 0.5% of unpaid taxes per month, up to 25%
• After 60 days, the minimum penalty is the smaller of $135 or 100% of unpaid tax

The failure-to-file penalty is very steep, and the IRS recommends that you file a tax return (or request an extension) even if you cannot pay your full tax debt by the due date. If you can prove that you did not file or pay due to reasonable cause, the IRS may agree to waive your interest and penalties.

What is an IRS Tax Audit?

An IRS Audit is a double-check of your tax return by IRS agents, which may result in changes to your return and the amount of tax you owe. IRS audits are often triggered by automated algorithms filtering for returns with abnormal combinations of deductions or tax credits, or the discovery of unreported income (like a 1099 that was not listed on your tax return).

The IRS will notify you of an audit by telephone or through the mail. Audits may be completely through the mail, but more often will involve you (or your representative) meeting with an IRS agent at the IRS Headquarters, a field office, or in your home. The IRS will propose changes to your tax return, and you have the right to agree, or to disagree and present supporting evidence through an appeal.

Generally, you can be audited on any of your last three years’ worth of tax returns. The statute of limitations for major errors can be extended to up to six years of tax returns.

3. Miscellaneous

How are state income taxes calculated?

Of the 41 states that collect a general income tax, most collect a progressive income tax based on marginal tax brackets just like the Federal Income Tax. Several states collect a flat (regressive) income tax instead of using tax brackets.

To simplify calculation, states often allow you re-use many aspects of your federal tax return on your state return – including your AGI, qualifications for popular tax credits, and itemized deductions. However, states often have unique standard deductions, personal exemptions, and tax credits. You will need to fill out your state tax return separately from your federal tax return, and ensure that you’ve adjusted your deductions and credits to reflect your state’s individual tax laws.

For more information, you can compare state income taxes and find out more about your state in our section Income Tax By State.

How does the U.S. income tax compare to other countries?

Compared to most other first-world countries, the United States has a relatively low personal income tax burden. Many European countries have maximum tax brackets of 50% or more, not including social security or other payroll taxes. The United States’ top tax bracket of 35% is among the lowest for developed countries.

In business income taxes, however, the United States lags behind a good percentage of the developed world. The chart below shows how the the United States ranks among 30 of the top first-world countries in personal and business income taxes.

Tax law is exceedingly complicated, and as many who have attempted to wade through piles of tax paperwork on their own can attest, often exceedingly frustrating to deal with manually. For many Americans who choose to handle their tax returns themselves, completing and double-checking tax forms can turn into a nightmare.

Luckily, dozens of tax software suites make it possible and even easy to manage and submit your tax returns online. Tax-Rates.org has reviewed some of the best income tax software available in order to help you choose the tools that are right for you.

• Contents
• TurboTax Software Review
• H&R Block At Home Software Review

H&R Block At Home Tax Software

Pros: H&R Block At Home is a home-use version of the same software H&R Block tax professionals use to complete their client’s tax returns.

Like TurboTax, H&R Block At Home easily imports data from previous tax returns, downloads employer data, and pre-populates forms to minimize repetetive work, as well as offers step-by-step tax rebate information.

H&R Block guarantees their tax software with the same guarantee they offer for in-person tax preparation including free audit support – a feature that costs extra with TurboTax.

Cons: Like TurboTax, H&R Block At Home provides free federal e-filing but does not offer free state e-filing unless you purchase an additional state package. Including the state e-filing package, H&R Block At Home is still cheaper then the equivalent version of TurboTax.

H&R Block At Home offers several versions of their tax software for taxpayers with investment, rental, or business income. Use this chart to compare the various versions of H&R Block At Home.

Overall:

H&R Block At Home comes with extraordinary value for a relatively low price compared to its main competitor, TurboTax.

Audit protection, consultation with H&R Block tax specialists, and the ability to use one copy of the software to file up to five federal returns are all bonuses on top of the already robust set of features boasted by this software package.

While TurboTax still has the majority market share, H&R Block at Home is competitively priced and provides all the features that can be expected of a premium income tax preparation software suite.

Learn more About H&R Block At Home 2012

As paper tax forms are slowly phased out by both the IRS and state revenue departments, taxpayers have been offered more and more incentives to handle their taxes online – including immediate receipt confirmation, automatic error checking, and faster tax refunds. Experts believe that by the end of the next decade, virtually all federal income tax returns will be filed – and paid – online, through the IRS’ eFile system.

1. What eFiling Options Are Available?

In order to eFile your tax return, you need to make use of the IRS’s FreeFile program, a suite of income tax software, or a paid tax preparer who is authorized to submit e-Filed returns to the IRS.

There are dozens of popular software suites and filing services available – which one you choose should depend on your yearly income and the complexity of your tax return. Here are some of the most popular options available for preparing and e-filing your federal or state tax returns.

	eFile Your Tax Return – Comparison of Income Tax Software
	IRS FreeFile – Third Party Software Some private companies, in affiliation with the IRS, offer free eFiling software for individuals with simpler tax returns. TurboTax (see below) is one such company. No free eFiling software is available through this program for individuals with an AGI of over $57,000. Not all states support free e-filing in this way.
	IRS FreeFile – Free Online Forms The IRS provides digital forms that can be used to eFile your own taxes, without the use of any tax preparation software. There is no income or complexity limit to use these forms. Keep in mind that these forms offer limited assistance in calculating or verifying your tax burden, and should only be used by experienced tax preparers.
	TurboTax – Tax Preparation Software TurboTax is the most popular brand of income tax preparation software in the United States, which provides both free (basic) e-filing services and paid tax preparation software for taxpayers with more complex tax returns. Basic tax returns (Form 1040EZ) can be e-filed for free through TurboTax’s software interface. Several premium editions of TurboTax exist for users who need to claim itemized deductions, investment income, and small business income. Read our review of TurboTax 2012
	H&R Block At Home – Tax Preparation Software H&R Block At Home, previously TaxCut, is TurboTax’s main competitor. As the name implies, H&R Block At Home is published by H&R Block, one of the largest tax preparation firms in the United States. H&R Block At Home is based on the same software used by professional tax preparers in H&R Block offices nationwide, and provides a more affordable tax prep option for individuals who wish to prepare and e-file their own taxes. Read our review of H&R Block At Home 2012
	Use A Paid Tax Preparer You can have your state and federal tax returns e-filed for you if you use a professional tax preparer to help complete your tax return. Professional tax preparers include specialists at tax-prep firms like H&R Block and Jackson Hewitt, CPAs from money management and financial services firms, and individual licensed tax preparers. A professional tax preparer can be a great asset, especially if you have a complicated tax return, but using a paid preparer will almost always be more expensive then buying tax software and e-filing your own return.

2. Which E-Filing Option Should I Choose?

If you can’t decide which of the options listed above are best for you, try to find the situation that best describes you below for our advice on weighing your e-filing options.

I’m a lower or average-income taxpayer with a simple tax return

If you made less then $57,000 this year, you’ll be able to use at least one of the professional tax preparation software suites available at no cost through the IRS’s FreeFile Alliance program. Free software from well-known companies like TurboTax should be more then sufficient to help you complete and e-file your tax return, and the savings you’ll get by avoiding software or tax preparer fees will be significant. Price: Free

I don’t qualify for the FreeFile program, but I still have a fairly simple tax return

If you earned too much to qualify for free tax software through the IRS FreeFile Alliance but still have a fairly simple tax return (mostly W4s and 1099s), any entry-level paid software package should be sufficient to file your return at a price that still beats most paid preparers. Price: $50-$60

Read reviews of TurboTax and H&R Block At Home

I have a fairly complicated tax return, but I’m familiar with filing my own taxes

If you have investment or business income, you’ll have to file more then just a 1040 form. If you are confident with your personal finances and are interested in saving money come Tax Day, an advanced tax software suite (like TurboTax’s Premium package) will offer step-by-step guidance in completing your tax return and qualifying for dozens of deductions and credits. Price: $100-$150

Read reviews of TurboTax and H&R Block At Home

I have a complicated tax return, and I don’t have much experience filing my own taxes

If you have a complicated tax return and don’t have the time or experience to file your own taxes, a paid tax preparer might be the best choice for you. A paid preparer will sit down with you individually and complete your tax return on your behalf, and attempt to help you minimize your tax burden through qualifying deductions and credits.

The benefits of a paid preparer include the ease of getting your return prepared, the experience of your preparer, and support during audits. The primary con of using a paid tax preparer is price – even a simple tax return will often cost more to file using a paid preparer then by using paid tax software. Price: $150-$500

Tax law is exceedingly complicated, and as many who have attempted to wade through piles of tax paperwork on their own can attest, often exceedingly frustrating to deal with manually. For many Americans who choose to handle their tax returns themselves, completing and double-checking tax forms can turn into a nightmare.

Luckily, dozens of tax software suites make it possible and even easy to manage and submit your tax returns online. Tax-Rates.org has reviewed some of the best income tax software available in order to help you choose the tools that are right for you.

• Contents
• TurboTax Software Review
• H&R Block At Home Software Review

TurboTax Federal & State Tax Software

TurboTax is a powerful tax suite that can handle both federal and state tax returns. The program is designed to ensure that you receive your maximum tax refund with simple multiple-choice questions that can help you claim over 350 updated deductions.

Pros: One of the best features about TurboTax is the wide variety of time-saving tools and features available. TurboTax can import tax data from previous years (even if you didn’t use TurboTax), and can instantly load W-2 forms and other tax information directly from your employer. This can save an incredible amount of typing and time.

Cons: The popular free version of TurboTax supports both federal and state returns, but only supports free e-filing for your federal return. You can print and send your state return in for free, but you have to purchase a state e-filing package ($39.95) if you want to e-file your state income tax return as well.

TurboTax has four editions, ranging from free software for basic returns to a full-service tax prep suite for self-employed business owners. You can compare the features, and price, using the table below.

Price & Features Comparison of TurboTax 2012 Editions
TurboTax Free Edition This edition is FREE if you file form 1040EZ	$0.00 Buy
TurboTax Deluxe Edition Suitable for most filers earning W-2 wages and 1099s. Supports 300+ deductions and credits	$49.95 Buy
TurboTax Premier Edition Specifically for taxpayers with investment income or rental properties	$74.95 Buy
TurboTax Home & Business Edition Files both advanced personal and business returns for self-employed taxpayers	$99.95 Buy

We found all editions of TurboTax to be intuitive and easy to use – the software offers turn-by-turn instructions and helpful suggestions to help you navigate through the various refunds and tax credits available, and can import and double-check all of the tax forms seamlessly in the background.

The program has been designed around prominently maximizing your refund on both your federal and state tax returns, as can be seen in the example screenshot below:

Overall: TurboTax is arguably one of the most well-rounded tax suites available, and definitely goes the extra mile when it comes to saving time and maximizing your tax refund.

If you have a simple tax return (with only wage income and 1099s), TurboTax Free is unbeatable for e-filing your federal return, both in ease and price.

For only $49, the deluxe edition is also an excellent buy for most taxpayers that offers the same or better guidance for a much more affordable price then a professional tax preparer.

Learn more about TurboTax Income Tax Filing Software

For the majority of American taxpayers, the amount of money withheld from their paychecks over the course of the year is even more then they actually owe in income taxes. As a result, when they file their yearly income tax return, they receive a federal income tax refund from the IRS.

1. Who has to pay estimated income tax?

There are many taxpayers who, for various reasons, do not pay sufficient taxes through withholding to pay off their complete tax burden. These taxpayers are usually self employed, have a non-traditional job, or earn the majority of their income from non-wage sources like investment income.

Because the money these taxpayers earn isn’t subject to tax withholding by an employer, the taxpayer may be required to send a quarterly check to the IRS to cover taxes they would have otherwise paid through tax withholding.

If you earn income that isn’t subject to tax withholding, you can use the following criteria to determine if you have to pay estimated income taxes:

1. Do you expect to owe more then $1,000 to the IRS when you file your income tax return in April?
   • YES – You are required to make estimated tax payments
   • NO – See step two
2. Will the total tax withheld from your income this year equal 100% of the tax you paid last year, or at least 90% of your tax burden this year?
   • YES – You do not have to pay estimated income tax
   • NO – You are required to make estimated tax payments

2. How much estimated tax do I have to pay?

The amount you have to pay in estimated taxes over the course of the year must be at least 100% of what you owed the IRS last year, or 90% of what you will owe the IRS this year.

If your yearly income is variable and can’t be predicted easily, or if your income this year will be significantly higher then last year’s, you may prefer to use last year’s income to determine your estimated tax payments.

If you choose to use last year’s income, just divide your total tax liability from your most recent 1040 by four to get your quarterly income tax payment. If you prefer to pay based on this year’s income, multiply your estimated income tax liability by .9 and divide the result by four to determine your quarterly estimated tax payment.

3. When do I make estimated tax payments?

The IRS, and most states that collect estimated taxes, require that you pay on a quarterly basis. The IRS’s notion of quarterly, however, does not line up perfectly with the fiscal quarters used by most of the private sector. The schedule below shows the due dates for your four 2012 quarterly tax payments.

4. How do I send my estimated tax payments to the IRS?

Just like your end-of-year tax payments, quarterly estimated tax payments can be paid with a check or money order through the mail or online through the IRS’s e-pay system.

If you choose to send your estimated tax payments through the mail, you must include a Estimated Tax Payment Voucher with your check or money order. A sheet of printable vouchers is included at the end of IRS Form 1040-ES.

Be sure to fill out your personal information on the payment voucher, and write your Social Security number on your check or money order to ensure your payment is credited to you.

The IRS has multiple processing centers for estimated tax payments, so you must send your payment to the IRS address assigned to your home state. Use this table to find the address you need.

5. Important Facts About Estimated Taxes

• If you underpay your estimated taxes (or don’t pay at all), you will be subject to a penalty and interest when you file your tax return in April
• If you are self-employed, your estimated tax payments must also cover Social Security and Medicare payroll taxes
• Late quarterly payments may be subject to a penalty. Payments must be postmarked by the due-date
• If you have to pay federal estimated tax, your state may also require you to make estimated payments on your state income tax. Check with your state’s Department of Revenue for details

If you have any questions about estimated tax payments, you can contact the IRS toll-free tax hotline at 1-800-829-1040 .

For many Americans, tax season can bring about a windfall in the form of a Federal income tax refund check. You will receive a refund check if and only if you paid more then your total tax debt over the course of the year through tax witholding. This article will teach you how to calculate your expected tax refund, and how to ensure that your refund check reaches you successfully.

Calculating Your  Total Tax and Total Payments

The size of your federal tax refund depends on two things – your total tax owed and your total tax witholding.

1. Calculate your total tax (including all deductions, adjustments, and other taxes) on line 61 of your 1040 form. This is the amount you owe.
2. Calculate your total tax payments on line 72. Tax payments include all income  tax withheld by your employer on line 62 (check your W-2 or 1099 forms), estimated tax payments on line 63, and any tax credits you may qualify for. The total on line 72 is your total tax paid.

Calculating Your Income Tax Refund

Your tax refund is simply the difference between the amount you paid and the amount you owe. If you paid too much, you have several options for your refund.

1. If your total payments on line 72 are greater then your total tax owed on line 62, write the difference in the refund box on line 73.
2. In lines 74 and 75, you can choose to have your refund paid to you (as a check or through direct deposit) or applied directly to next year’s taxes (useful if you have to pay estimated taxes).

Getting Your Tax Refund Quickly

Now that you’ve calculated your refund, there are several steps you can take to ensure you receive it in a timely manner.

1. eFile Your Tax Return - The IRS has to process millions of tax returns every year – if you eFile, they will be able to process your return (and your refund) much more quickly. eFiled returns will receive refunds in as little as 1-3 weeks, while paper returns can take up to 6 weeks to be processed.
2. Request Direct Deposit – Requesting that your refund be direct deposited instead of requesting a check can also speed up your refund process by up to a week. Direct deposit is fast and secure, and you can choose up to 3 separate accounts (including checking, savings, and retirement accounts) to receive your refund. You can request direct deposit on line 74 of your 1040.

If you eFile your tax return, you can expect to receive your refund within 10-21 days.

Checking Your Refund Status

Starting 72 hours after you eFile (or 4 weeks after you mail a paper return), you can check on your refund’s status through the IRS’ “Where’s My Refund?” system.  Collect the following information before making your refund inquiry:

• Your Social Security Number
• Your current filing status
• The dollar amount of the refund you requested (from line 73 of your 1040)

With this information in hand, you can check the status of your refund either online or over the phone by calling the IRS Refund Hotline at  1-800–829–1954 or by logging onto the IRS Where’s My Refund website.

Solving Problems With Your Refund

If you received an incorrect refund amount, your refund was never issued , or your refund check was lost or stolen, contact the IRS immediately at 1-800-829-1040 and they will be able to reissue your refund as necessary.

Getting Your State Income Tax Refund

If your state collects income tax, you must apply for a refund on your state income tax return, and you will receive a separate refund payment. Most states also provide an easy-to-use refund status portal – see your state’s income tax information page for more details.