Tax Rebates & Refunds

3 useful steps to calculate income tax

June 28, 2010
Posted in Income Tax — Written by Geoffrey

Are you looking for help with the calculation of income tax? Some individuals might find this process cumbersome and difficult. Do not worry. The following steps will help you in calculating income tax.

Taxable and non taxable income

Firstly, you should add all your taxable income. Be sure to include all the different sources from employed as well as self-employed earnings. Similarly, other sources such as social security benefits and revenue from renting out an apartment or any such accommodation should also be included. Some of the other income sources that should be calculated include pensions and building society accounts for that particular year.

Some of the income sources that should be excluded are as follows:

• Housing benefits
• Maternity allowance
• Child benefit
• Lottery winnings

It is essential that you understand the difference between non taxable and taxable sources of income.

Tax relief

Sometimes, you can claim tax relief for certain investment or contributions you have made over the year. For instance, you can get tax relief for contributions made to a retirement annuity.

Tax allowances

Try to find out the tax allowances you are permitted or entitled to. For instance, in the UK you are entitled to a particular fixed personal allowance. Tax allowances are also given to individuals over 65 years of age.
This amount is deducted barring the tax payable amount. This amount is also known as taxable income.

In addition to the above mentioned steps, it is recommended that you consult tax rebate services to assist you in the process of tax calculation.

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