Advantages of Tax Calculators

Federal and State tax forms can be daunting, and even experienced taxpayers can miss the latest changes in the tax codes. Persons with changes in income, filing status, and personal or business situations must pay particular attention. They can lose opportunities to reduce taxes or miss tax advantages such as credits for energy conservation. The advantages of a tax calculator include categories for the taxpayer’s income and expense information, and this can be valuable because it summarizes the tax forms. Similarly, when applied to state tax codes, online calculators offer significant advantages for determining tax liabilities and refunds. These services offer a further advantage by providing past tax year calculators. One can file or correct a past year return in the process of filing a current year return. Past year calculators permit multiple filings to bring taxpayer accounts up to date.

Tax Codes Change Frequently

The tax codes undergo constant revision by the Congress and the Internal Revenue Service. Rules that drastically change the outcome for an individual taxpayer or business occur with surprising frequency. Many changes come with a time limit, and one must use them before they expire or the benefits granted by the Congress may be lost. Tax calculators can reduce the complexity of tax filing. They set out the categories for income, expenses, credits and exclusions from taxable income. Many people qualify for subsidies or benefits based upon a status such as age, retirement, marriage, health, and geography. State and federal taxes involve granting credits for the taxes paid respectively to the federal and state systems. Online tax calculators can manage this task in a convenient one-stop format. Estimating tax refunds and liabilities is useful during periods of profound changes in the code, and taxpayers can learn far in advance whether they must make changes in record keeping.

Healthcare Law Changes Affect Businesses And Individuals

Employers have new rights and responsibilities under the Affordable Care Act of 2010, and some individuals received tax-based subsidies based on estimated incomes. The tax calculators can quickly determine the full effects of the subsidy provisions and confirm the payer’s status. A taxpayer’s refund will be substantially smaller if the taxpayer’s status does not support an estimated tax subsidy. Many online private tax services offer an Affordable Care Act calculator.

Refund Calculators Do Not Replace Expert Advice

The IRS, its authorized E-file agencies, and private companies post tax calculators online. None of these sources can completely replace the expert advice of qualified tax consultants and advisers. In some taxpayer situations, citizens and businesses require a legal opinion to interpret provisions, particularly for new regulations, which the IRS and the Courts have not reviewed. Most calculators confine their scope to the 1040 individual or joint file form for single payers and married taxpayers filing jointly. However, a growing number of online tax calculation resources are available for S Corporations and other individual and closely held forms of doing business. Further, some areas are complex and require expert consideration such as trusts, will, and decedent’s estates. The rules that apply to federal estate tax exemptions are complex, and they have an enormous potential impact.

Data Security

Data security is a global concern. It is particularly important when it involves unique-identifier numbers. Tax refund calculators require inputs of sensitive data like social security and employer tax identification numbers. There are risks associated with putting personally identifiable information onto an online form, or any screen connected to the Internet. The federal government has issued security standards requiring redundant layers of encryption to provide a reasonable level of security. Users of online tax refund calculators and electronic filing systems should assure themselves of the security protocols for any online tax refund calculator that they choose.

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