I worked part-time all year and I also collected unemployment. I get $100 each week for unemployment and $180 each month for my part-time job. I have two dependents and I want to know if I will get any tax refund this year.
Joy via Facebook
There are 4 areas to consider when estimating your tax refund before actually completing your tax return.
Please note there are numerous additional factors that can affect your net refund amount, but this information will give you a head start on estimating your potential refund.
Any income earned during the year should be claimed on your tax return. After your total income is calculated, the standard deduction (or itemized deductions) and personal exemption amounts will be subtracted to determine your taxable income amount.
Therefore, what is considered income?
The main source of income for most taxpayers is generally wages or salaries from full-time or part-time employment. Wages are generally reported to you on Form W-2 issued to you by your employer.
If you worked multiple jobs during the year, you should receive a Form W-2 from each employer.
Enter all of your Form W-2s into your tax return. If filing a joint return, both you and your spouse should enter both of your Form W-2s.
In addition to wage income, you may also have income from investments, business activities, retirement plans, or other income.
Investment income can include interest income, dividend income, and capital gains or loss income.
Some common forms that investment income is reported on are Form 1099-INT, Form 1099-DIV, Form 1099-OID, Form 1099-B, and Form 1099-S.
Retirement plan income can be from an individual retirement account (IRA), a pension, or an annuity and will be reported to you on Form 1099-R.
In addition to the income types mentioned above, you may also have income from unemployment benefits (Form 1099-G), gambling winnings (Form W-2G), alimony, social security benefits (Form SSA-1099 or RRB-1099), or miscellaneous income (Form 1099-MISC) to name a few.
Your filing status determines your standard deduction, a set amount that is deducted from your income. This deduction is used to determine the amount of income for which you are taxed.
For 2013, the standard deduction amounts are as follows:
When filing your return, you can elect to use the standard deduction or itemize your deductions using Schedule A.
Some common itemized deductions include state income taxes, real estate taxes, charitable donations, mortgage interest, and medical expenses.
Generally, you should claim whichever deduction results in a larger refund (or less tax owed).
Claiming dependents on your tax return generally has a positive effect on your refund amount.
In addition to the standard deduction (or itemized deductions), you can typically claim a deduction for personal exemptions.
If you can be claimed as a dependent on another person’s return, but are still filing your own tax return, you need to indicate this on your return. You also are not allowed a personal exemption because the personal exemption can only be claimed on the return on which you are claimed. If you are claimed as a dependent on another person’s return, your personal exemption is claimed on that person’s return.
If you are able to claim yourself on your own tax return, you are allowed a personal exemption.
If you are filing a joint return, you are allowed a personal exemption for both you and your spouse. You can claim a personal exemption for each of your dependents as well.
For 2013, the personal exemption amount is $3,900 per person.
The personal exemption amount is similar to the standard deduction in that it reduces your income in order to find your taxable income amount.
In addition to the extra personal exemptions for dependents, claiming dependents on your return may also qualify you for more tax credits.
Dependents are factored into amounts for the following common credits: child tax credit, additional child tax credit, earned income credit, and child and dependent care credit.
Now that we have talked about what determines your taxable income amount, you can estimate your refund amount.
Tax credits can be categorized two ways – nonrefundable tax credits and refundable tax credits.
Nonrefundable tax credits are just that, nonrefundable. That means they are limited to your tax amount. These credits can only be claimed in total up to your tax amount, resulting in a total tax of $0.
If you have a nonrefundable tax credit and cannot claim all of the credit because your tax amount is less than the credit, you do not get a refund for the amount that exceeds your tax amount.
Refundable tax credits, on the other hand, are not limited to your tax amount. Refundable tax credits, in addition to offsetting any total tax amount, can increase your refund amount. You will receive full credit for a refundable credit regardless of your tax amount.
Some common nonrefundable tax credits are credit for child and dependent care expenses (Form 2441), education credits (Form 8863), child tax credit (Schedule 8812) and residential energy credits (Form 5695).
Some common refundable tax credits are income tax withholding payments, estimated tax payments, earned income credit (Schedule EIC), additional child tax credit (Schedule 8812), and American Opportunity education credit (Form 8863).
Withholding payments are reported on Form W-2 and Form 1099 you receive. Estimated tax payments are payments you send to the IRS to pay income tax on income not subject to withholding during the tax year.
How Do I Estimate My Refund?
The easiest way to determine your refund amount is to enter your information into your TaxACT Free Federal Edition return and let TaxACT do all the calculations for you. You can also use TaxACT’s TaxCalculator.
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