Enter your annual income, filing status, and withheld taxes into the calculator to determine your estimated tax refund.

Tax Refund Calculation Formula

The following formula is used to calculate the estimated tax refund. 

Estimated Refund = (Federal Tax Withheld + State Tax Withheld + Tax Credits) - Estimated Tax

Variables:

  • Estimated Refund is the amount of money you will get back from the IRS ($)
  • Federal Tax Withheld is the amount of federal tax that has been withheld from your paycheck ($)
  • State Tax Withheld is the amount of state tax that has been withheld from your paycheck ($)
  • Tax Credits are the total tax credits you qualify for ($)
  • Estimated Tax is the estimated amount of tax you owe based on your taxable income ($)

To calculate the estimated refund, add the federal and state tax withheld to your tax credits and subtract the estimated tax.

What is Tax Refund Calculation?

Tax refund calculation refers to the process of determining the amount of money you will get back from the IRS after filing your tax return. This involves understanding your gross income, applicable deductions, tax credits, and the amount of tax that has been withheld from your paycheck. Proper tax refund calculation ensures you receive the correct refund amount, helping with accurate budgeting and financial planning.

How to Calculate Tax Refund?

The following steps outline how to calculate the tax refund using the given formula.

  1. First, determine your gross income and applicable deductions.
  2. Next, determine the applicable tax credits you qualify for.
  3. Calculate the taxable income by subtracting deductions from gross income.
  4. Estimate the tax based on your taxable income and filing status.
  5. Add the federal and state tax withheld to your tax credits and subtract the estimated tax to find the estimated refund.
  6. Finally, calculate the refund by plugging in the values and check your answer with the calculator above.

Example Problem:

Use the following variables as an example problem to test your knowledge.

Annual Income = $70,000

Filing Status = Single

Federal Tax Withheld = $10,000

State Tax Withheld = $2,000

Tax Credits = $500

FAQ

1. What is gross income?

Gross income is the total amount of money earned before any deductions like taxes, insurance, or retirement contributions are taken out.

2. How is estimated tax calculated?

Estimated tax is calculated based on your taxable income, which is gross income minus deductions, and the applicable tax rates based on your filing status.

3. How often should I use the tax refund calculator?

It's helpful to use the tax refund calculator whenever there's a change in your income, tax withholdings, or if you want to budget your finances more accurately before tax season.

4. Can this calculator be used for different states?

Yes, you can adjust the state tax withheld field to match the tax withheld of any state to calculate the estimated refund accordingly.

5. Is the calculator accurate?

The calculator provides an estimate of your tax refund based on the inputs provided. For exact figures, it’s best to consult a tax professional or your tax return documents.