With tax season coming to an end, you may be trying to figure out how to calculate earned income tax. In order to learn how to do that, first you need to know what earned income is. The loose definition of earned income is income that you have earned from doing some type of work for someone or income that you earn from your own business.
- Add up all of your earned income. You can do this by searching for your income on your W2 form in box "1". If you have not yet received your W2 form, you can look for your total income on your final pay stub from each employer. If you are in business for yourself, you should have access to some accounting information that will show you how much you've earned during the year. If you have an outside accountant doing your work, they should be able to tell you your income.
- Find out your tax bracket, also referred to as tax rate. You can do an Internet search on the term "income tax bracket" or "tax bracket" and find a number of tools that will help you figure out what tax bracket your income falls in. You may also look up your tax rate on the IRS web site or on the back of your income tax form. The IRS gives you a table that includes incomes ranging from 0 – 100,000. You find your income on the table choose your filing status from the four columns to the right to determine your approximate tax. If you use the tax table then you don't need to look any further. If you are doing it manually then go to step 3.
- Calculate your approximate tax. Multiply your total income by the percentage given by the tax bracket calculator that you've chosen. This number will be your approximate earned income tax amount.