Federal Income Tax Calculator

Tax planning and filing doesn't need to be difficult. This calculator can help with estimating taxes and provide guidance for tax minimization both now and in the future.

Tax Calculator

Input

Output

$0 $0 $0 $0 $0 $0 $0

Summary

Usage

Inputs:

Year: Your tax year.
Filing Status: Your tax filing status - Married filing jointly or separately, Single, Head of Household. This decides which standard deduction and tax brackets apply (see details here.)
Ordinary Income: Job & self-employment income, interest, non-qualified dividends, short-term capital gains, taxable retirement income, etc... Put the sum of all ordinary income here.
Qualified Income: Qualified dividends and long-term capital gains.
Adjustments: Top of the line deductions - IRA contributions, student loan interest, 1/2 of self-employment taxes, etc...
Itemized Deductions: The sum of all itemized deductions (if applicable)
Foreign Earned Income: The sum of all foreign earned income eligible for the Foreign Earned Income Exclusion (FEIE.)

Outputs:

Adjusted Gross Income (AGI): Total income minus adjustments.
Taxable Income: AGI minus deductions (Standard or Itemized).
Tax on Ordinary Income: Calculated tax burden on ordinary income.
Tax on Qualified Income: Calculated tax burden on qualified income.
Total tax: The sum of tax for both Ordinary and Qualified income.
Tax on Foreign Earned Income: Calculated tax burden on the excluded income.
Total Tax with FEIE: Total tax minus tax on excluded income.

Background

Long-term thinking is at the heart of any good tax minimization strategy, including our own efforts to Never Pay Taxes Again. To think long term, we need to understand our marginal tax rate and options for tax-free income and growth.

The US tax code is rather simplistic and straight forward for the vast majority of tax-payers. By trying to cover the weird cases that apply to only a few people, most tax calculators are needlessly complex and time consuming. Instead of using unhelpful tools, I built my own.

This tax calculator will estimate tax burden, yes, but by sharing marginal rate info and opportunities for tax-free Roth conversions and capital gain harvests it also is helpful for minimizing tax burden today and in the future.

To see how these opportunities play out, see how we pay zero taxes on $100k/year income. For more detail, you can review our latest tax return (2018.)

Considerations

Federal taxes are only one aspect of tax burden - if you live within the US, you are also probably subject to State taxes and maybe get insurance through the ACA Health Exchange (which acts as a tax.) Increasing AGI may impact the ability to take deductions and may eliminate or reduce other subsidies, such as the Saver's credit and Earned Income Tax Credit and Student Aid. It is important to consider all angles.

To better understand how ACA subsidies change with income, see our ACA Premium and Subsidy Calculator.

Tax law is always changing and the future is unknowable. Maybe tax rates will increase or means testing will be implemented for retirement benefits. What is an effective strategy today may not be so tomorrow.

To decide how to prioritize Roth conversions and Capital gain harvests, see Roth Conversions vs Capital Gain Harvesting.

Disclaimer: Always consult with a professional before taking action. This calculator may not produce accurate results in all scenarios, including those most important to you. I am at best an amateur coder and my knowledge in financial matters is limited and often inaccurate.


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36 Comments

  1. Shane

    Sweeeeeeeeet! Thanks GCC. Happy New Year to you and yours.

    Reply
    • Go Curry Cracker

      Happy New Year!

      Reply
  2. Siamond

    Nice and compact. The Foreign Tax Credit math isn’t quite right though. It is capped by the effective tax rate (before credits), see Form 1116. When one has limited ordinary income and mostly lives on qualified income, the credit gets unfortunately severely restricted.

    Reply
    • Go Curry Cracker

      There is no Foreign Tax Credit math.

      Reply
      • Siamond

        Well… <> Seems like foreign tax credit math to me? Or it should be…

        Reply
        • Siamond

          Hm, sorry. quote was missing…

          “The Tax on foreign earned income of $10,000 is $1,000. Excluding this reduces total tax to $1,684.”

          Reply
        • Go Curry Cracker

          I agree, the foreign tax credit would be a good thing to add. This is the Foreign Earned Income Exclusion.

          The FTC is good if you live in a country with higher tax burden than the US (not unlikely if you are living off investment income.) The FEIE is good when overseas tax burden is zero or lower than the US and you have reasonably significant earned income (our scenario.)

          Are you an expert on Form 1116? (self-proclaimed or otherwise?) I’m in need of a good guest post on it… it’s been on my list for a long time and I haven’t been able to focus on it. It’s only in the last year or two that we surpassed the $600 threshold but I started filing Form 2555 which required the 1116 anyway.

          thanks!

          Reply
          • Siamond

            Aaah… Got it now. The expat perspective. Sorry for the confusion.

            I scratched my head a good deal on Form 1116 because I couldn’t understand why I was only getting 1/3rd of the credits I was expecting. Now I get it (and hate it!). But I’m no expert, form 1116 covers numerous situations and I only explored mine (early retiree with dividends from mutual fund tracking ex-US). Thank you for the suggestion, but I think you need to find a more qualified candidate!

            Reply
            • Go Curry Cracker

              You are living in the US and your foreign tax is largely from the withholding on your ex-US fund?

              At least the excess carries over to future years…

              Reply
  3. Chris

    In the summary, the tax on ordinary income should be calculated on the AGI instead of all ordinary income, as standard deduction and other deduction does not apply for tax purposes.

    Reply
    • Go Curry Cracker

      This is incorrect. The standard deduction (or itemized deductions if greater value) definitely applies.

      The current calculation is correct – the tax is calculated on total ordinary income minus the sum of adjustments and deductions.

      edit: I’ve updated the output phrasing to better explain the calculations and results.

      Reply
      • Michael

        A bit confused, I only plugged in $60k ordinary income, with $19k adjustments and am getting taxable income of $9.8k. If taxable income = total ordinary income – adjustments – deductions shouldn’t my taxable income be $28.8k (60k-19k-12.2k) and not 9.8k? What am I missing?

        Reply
        • Go Curry Cracker

          The calculated tax is accurate, but in the output I referenced the wrong variable when reporting Taxable Income. This effectively doubled the amount of adjustments. (60k-19k-19k-12.2k) = 9.8k. Fixed now, thanks!

          Reply
      • Robert

        I’m not understanding how a $100,000 AGI is calculating a taxable income of $45,600 with a MFJ standard deduction.

        Reply
        • Go Curry Cracker

          Fixed now. I was referencing the incorrect variable when reporting taxable income.

          Reply
  4. Alan

    Very nice! You are missing the Net Investment Income Tax (NIIT) of 3.8% on AGI over $200K.

    Reply
    • Go Curry Cracker

      Yes, the NIIT is not included at the moment.

      Reply
  5. Tobe

    Hi Jeremy. This is a nice, quick and easy tax estimator. I would suggest adding an entry for ages of the filer/filers to account for increased standard deduction for 65 and over. Thanks!

    Reply
    • Go Curry Cracker

      I looked at this a bit… the calc would need a checkbox for Age 65+ and a way to specify if this applied to both spouses (MFJ.)

      I’ll see if I can do this cleanly. In the mean time, you can choose to Itemize and enter the higher value there.

      Reply
  6. EDUARDO

    Hi Jeremy, Happy New Year!
    Thanks for this useful tool. Using these inputs
    Year: 2019
    Filing Status: MFJ
    Ordinary Income: 140000
    Qualified Income: 0
    Adjustments: 20000
    It says taxable income 75600, shouldn’t taxable income be 95600 (140000-20000-24400)?

    Reply
    • Go Curry Cracker

      Yes, fixed now. The tax was calculated correctly, but when reporting the output I referenced the wrong variable.

      Reply
  7. Steveo

    My tax in Oz is double. Dang nab it.

    Reply
  8. James

    this is nice for some quick what-ifs. Personally, I am a HUGE fan of the workbook posted at https://sites.google.com/site/excel1040/. I have no affiliation, though I have donated. I first used it to plug in the return my preparer did for me to help me understand how everything works and double checking their work… and later estimating it myself ahead-of time… to now all-out optimization GCC-style.

    Reply
    • Go Curry Cracker

      I put this in the “needlessly complex and time consuming” category.

      Reply
  9. Jeff

    Once again, a very helpful tool. I’ll be sure to share this among the expats and soon to be retired expats living on long term gains. Well done

    Reply
    • Go Curry Cracker

      That sums up my target audience :)

      Thanks Jeff!

      Reply
  10. Lynn

    This is so cool, thank you! I’ve been looking for something like this for ages! :)

    Reply
  11. Terry

    Thank you for providing the tax calculator worksheet. As an ex-pat with foreign earned income, I could not find a suitable worksheet online until I saw your post. However, I do not understand how the Roth Conversion is calculated. Subtracting my AGI from the standard deduction for MFJ gives a different result from what is listed in the worksheet summary after I enter my data. For example, $24,400 std. deduction minus $19,591 AGI + $1060 Qualified Income = $5869. The result in the summary is $9069 for roth conversion. What am I missing in my calculation?

    Reply
    • Go Curry Cracker

      Can you share the exact numbers you are entering into the calc for each input?

      If you are using the FEIE you do need to enter that in the Foreign Earned Income box. The Roth conversion values are calculated differently if you are using the FEIE.

      With AGI < Standard Deduction, the FEIE probably doesn't save you anything as you are already at a 0% tax rate.

      Reply
  12. Terry

    Do I need to add my FEI of $3200 to the calculation? When I do that, the result equals $9069.

    Reply
  13. Terry

    Here are the numbers that I input into the calculator.
    Ordinary Income: $25531
    Qualified Income: $1060
    Adjustments: $7000 (ira contribution)
    FEI: $3200

    Reply
    • Go Curry Cracker

      Thanks. This is how the math works:

      Ordinary income consists of $3,200 foreign earned and $22,331 US sourced (total $25,531.)
      The US sourced ordinary income is reduced by $7k of Adjustments to $15,331.
      The standard deduction of $24,400 minus US sourced ordinary income of $15,331 = $9,069 of possible tax-free Roth conversion.
      You would then also be able to harvest up to $74,490 in long-term capital gains.

      The calculator will show a Tax on Ordinary Income of $320 which will be offset by the $320 in tax that would have applied to the excluded income. State taxes and ACA subsidy reductions not included, if applicable.

      Naturally, this only helps if you did the Roth conversion and capital gain harvest by 12/31/2019.

      One general comment – at a 0% tax rate, Traditional IRA contributions are not a mathematically sound choice. You get a $0 deduction now but all withdrawals are taxable. Roth contributions on the other hand get you tax free growth for the same $0 deduction.

      In the scenario outlined here it might not matter (it’s just a shell game of contributing $7k to a Traditional IRA and converting $7k+ to Roth) but the Roth contribution could be removed tax and penalty free anytime you wished, but the Roth conversion can’t be touched for 5 years.

      Related: the FEIE isn’t always the best choice. See To FEIE or Not to FEIE.

      Reply
  14. Terry

    Thanks Jeremy for explaining the math. The $7000 adjustment was a Roth ira contribution in 2019, not traditional ira. I also did a roth conversion of $5869 on Dec. 30.

    However, I recently discovered that I cannot make an IRA contribution if I do not have US earned income from wages. My current earned income is from a combination of business sale installment payments (I sold my business and receive monthly payments including taxable interest), rent on property I own, and $3200 in FEI work performed outside the US for a US base company (paid in US dollars and directly deposited to my US bank account). Will I have a problem with the IRS for making a IRA contribution in 2019 from funds not earned through wages?

    Reply
    • Go Curry Cracker

      Roth IRA contributions aren’t an adjustment (no deduction.) That input should be $0.
      The $5,869 Roth conversion (and all other ordinary income) should be included in the ordinary income input. (Now maybe more than $25,531?)

      Yes, contributing when you don’t have earned income (or more than you earned) is a problem. This is called an excess contribution, and the penalty is rather severe… 6% of the overage PER YEAR until it is removed. Excess contributions need to be removed along with any interest or earnings related to the contribution. Taxes and 10% penalty will apply to the interest/earnings. (See form 5329.)

      If you don’t claim the FEIE, the $3,200 is US income and can be contributed to an IRA.

      Reply
      • Terry

        Thank you for the advice Jeremy. I had mistakenly assumed that the income from the sale of my business was income considered eligible for a roth contribution, but I have learned that capital gain is not eligible. Therefore I will call Vanguard ASAP to request a return of excess. Fortunately I am over age 59.5 so the 10% penalty on earnings won’t apply.

        Reply
        • Go Curry Cracker

          Silver lining :)

          Reply

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