The tax season is approaching fast and soon, you’ll start filling your 2019 taxes. But before we get into that, how would you like to estimate your taxable income using only simple math? This post will guide you on how to calculate your taxable income, therefore, you can find the right tax bracket and know how much tax you likely pay in 2020.
To calculate your taxable income, all you need to do is open up your calculator on your computer and then you can begin finding your taxable income for 2019 taxes that you’ll be paying in 2020.
What is Taxable Income?
Your Adjusted Gross Income or taxable income iş what we use to refer to the amount your income is subjected to tax. Let’s assume your income in 2019 was $60,000 and you’re going to claim the standard deduction. Unless you are qualified for above-the-line deductions, there isn’t any other deduction that you can claim.
Here is how you need to calculate your taxable income.
Your 2019 Income – (minus) Deductions You Claim
Simple as that. So if you were to subtract the standard deduction amount which is $12,400 from $60,000, you’ll be left with $47,600. Those who are itemizing their deductions must combine all and subtract the deduction amount they can claim.
If you’re a teacher or an educator, you can claim Educator Expenses if you made any qualifying expenses even if you claim the standard deduction. These expenses include those for professional development courses, computer equipment, and software, supplemental materials used in classrooms, and books.
It isn’t finished there. There are many above-the-line deductions you can claim along with the standard deductions as long as you qualify. Most common above the line deductions are
- Contributions to Traditional IRA
- Retirement plan savings for self-employed
- Alimony Payments
- Health Savings Accounts Contributions
- Qualifying expenses that the Army Reserve members make
- Qualifying expenses that state officials make
- Qualifying expenses that performing artists make
These are just the common ones. You can read this post from one of our sister blogs to learn more about above-the-line deductions you can claim in 2020.