how to calculate your tax liability
the most common tax liability for americans is the tax on earned income for federal taxes you use the tax brackets and standard deductions issued by the internal revenue service standard deductions for 2022 are 1standard deductions for 2023 are 2imagine you re a single filer in 2022 earning 72 950 per year after applying your standard deduction of 12 950 your reportable income is 60 000 you also have no other deductions or income because your adjusted gross income is between 41 775 and 89 075 you fall into the 22 tax bracket your tax liability is computed for each tax bracket up to the one you re in here s how it works now assume that your w 4 resulted in your employer withholding 7 500 in federal taxes when you file your individual tax return form 1040 you haven t met your tax liability so you owe taxes in this case you d owe 8 818 7 500 1 318 if your w 4 resulted in your employer withholding 9 200 in federal taxes the irs would refund you 9 200 8 818 382 to calculate your state tax liability locate your state s standard deductions and tax information and use the instructions provided by the state some states have a single tax rate and others have graduated brackets 3