Multiply the monthly wages by 12 to get the annual amount. If you are paid weekly multiply the weekly gross amount by 52. Alternatively, multiply your monthly or weekly wages by the amount of time left in the year, then add that to your gross year-to-date income. Add any estimated variable income you will receive during the year, such as commissions and bonuses. Subtract income that qualifies as exclusions from tax, such as withholding for employer health insurance plans and pre-tax retirement plans, to arrive at the estimated amount your employer reports on a W-2 form.

It is always a good idea to keep a log or special file of stock and bond purchases and sales. You will need the amount you originally paid to buy the stock to calculate gains or losses when you sell it. The capital losses may be limited. Rental losses may not be deductible in full. This is because they might be considered a passive loss. [1] X Research source If you have rental losses, you may want to consult an accountant or tax consultant.

For example, distributions you receive from a Roth IRA are not taxable once you reach age 59½ and your account has been open for at least five years. [3] X Research source

Subtracting your allowable deductions from your gross income results in your adjusted gross income (AGI).

Your medical expenses must exceed 10% of your adjusted gross income for 2019 and future tax years. For 2017 and 2018, the threshold was reduced to 7. 5%.

If you are self-employed, you may qualify for the new Qualified Business Income Deduction. To learn more about if you qualify for this deduction and how to calculate it, see: https://www. irs. gov/newsroom/tax-cuts-and-jobs-act-provision-11011-section-199a-qualified-business-income-deduction-faqs. To calculate your taxable income, subtract either your standard deduction or itemized deductions as well as the Qualified Business Income Deduction (if applicable) from your adjusted gross income (AGI). This is what your federal income tax liability is based on.

Certain types of income may qualify for a different tax rate, such as long term capital gains and depreciation recapture on real estate.

Additions to the tax include self-employment tax based on self-employment income and penalty for early withdrawal of funds from IRA plans and other qualified retirement accounts. Add these amounts to your gross income tax and you will have your projected federal income tax for the year.