If you were entitled to a big fat refund last year, or you think you may be entitled to a large refund check this year, you can start estimating your refund amount right now. Of course, there are no guarantees until the money’s actually in the bank, but you can get a pretty accurate idea of your refund amount using pay stubs from the month of December.
We’ve created a list of ways in which a person with a simple tax situation can calculate their refund using their paycheck stubs, online resources, and IRS forms. Want to find out if you’re owed a refund? Read on and see.
1. Online calculator tools
If you want to estimate your refund before you receive your W2, online calculator tools like Tax Slayer’s online calculator can produce this information for you within a few moments. First, you simply need to enter in your demographic info — like your age, the state you live in, whether or not you’re married, your filing status, whether or not you’re claiming dependents, whether or not you can be claimed as a dependent, and your number of exemptions.
After that, you can use your last paycheck stub to enter in your taxable wages for the year. You can determine your year-end taxable wages by adding your year-to-date taxable wages to any left over taxable wages not included in the pay stub your using.
The same idea applies for federal withholding and social security. Use the year-to-date amount, plus any additional amounts that you paid throughout the rest of 2016 to determine the appropriate number to enter into the online calculator.
Next, the calculator will ask if you want to opt for the standard deduction, or if you want to itemize your deductions. You can choose the standard deduction as a shortcut and later determine if itemizing your deductions is more beneficial for your individual situation.
The calculator will then ask you about tuition credits and other applicable tax benefits. You can apply the same amounts from your last year’s tax return into those boxes if nothing has changed. Or, you can leave them blank for the time being and determine the appropriate amounts come tax time.
Finally, the calculator will tell you your estimated refund amount. Although this is only an estimate, it is generally a solid ballpark figure. You can try and locate additional tax benefits and savings so that you can potentially increase this amount from now until tax time.
2. A free software program
You can also estimate your refund using a free online program like FreeTaxUSA or Tax ACT. If you have never used the program and you are creating a new account, it will take a few minutes to enter in all of your information. But entering this info into the online program now can potentially save you time later when you actually file your return.
These programs will also calculate your return automatically, but the main difference between these programs and calculator tools is that free filing programs are much more in-depth. The free file software program will ask you to enter in the information from your W2, and you will also have to answer a series of questions. Again, you can estimate the wage and tax information for your W2 using December’s pay stub.
The amount you place into box 1 — wages, tips, and other compensation — is your taxable income. Just as with the calculator tool, the amount you want to enter here is your taxable earnings for the year. For those with applicable pre-tax items (like retirement accounts or certain benefits), you should account for these items as well.
Box 2 is where your Federal income tax goes. You can simply use your year-to-date Federal taxes paid, plus any additional amounts you paid for the rest of 2015. For instance, if you paid $1,100 in taxes for January-November (given there’s one month left in the year), you can tell you pay around $100 per month in taxes. In this case, at the end of the year, you probably ended up paying around $1,200 in federal taxes. You can apply this same logic to Box 4 — Social Security taxes withheld.
Social Security wages — or box 3 — are your Federal taxable wages plus any retirement deductions you may have. For many people, Box 3 and Box 5 are the same amounts as Box 1.
The remainder of the top portion of the W2 form only applies to certain people. For instance, those who earn tips will have amounts for boxes 7 and 8, and those who have certain tax and income situations may have an amount for box 9, but many people will place zeros in these boxes.
Once you’ve placed estimated amounts into your W2, you can run the tax software. Answer the questions it asks you using the information you have available and you will be provided with an estimated refund amount. Again, you can work on locating additional applicable tax credits and benefits between now and tax time.
3. The old-fashioned way
Perhaps the most tedious and time-consuming way to estimate the amount of your tax refund is by using IRS Form 1040. You can think of the formula the Form 1040 uses as kind of like a balance scale. If the tax you should pay (based on your income after deductions, and non-refundable credits) is higher than what you did pay (plus any refundable credits you may be entitled to), then you receive a refund. Online software and programs use the same formula, the only difference with the 1040 is that you are completing the form yourself by hand.