Learn the benefits and pitfalls of relying on online tax calculator estimates for your personal tax liability for the year.
When it comes time to figure out how much you will owe Uncle Sam this year, you may wonder if online tax calculator estimates are reliable or not. There are a ton of different calculators available. They’re designed to make it easier to determine your personal tax liability. But, do they really work? Here’s what you really need to know before you start crunching the numbers.
Calculators Only Estimate Your Tax Liability
Don’t rely on an internet calculator to provide you with an exact number. They’re only capable of giving you a ballpark estimate, at best. A calculator looks at different aspects of your tax situation to come up with a number. It runs the information you provide through a series of formulas and algorithms. The result is approximate. No calculator guarantees 100 percent accuracy, but at least you’ll have a good estimate of how much you’ll owe come tax time.
Calculator Programming Matters
Every calculator comes with different presets. A computer programmer determines a wide range of tax variables for the calculator to sort through. Since tax codes just changed, it’s important to find a recently programmed calculator. Look to see when it was last updated. If you use an outdated version, you’ll end up with incorrect figures.
Calculator Results Often Vary
Not every internet tax calculator is appropriate for every person. For example, if you have a complicated tax situation, you need a calculator that takes this into consideration. Sticking to a basic, bare-bones calculator won’t give you the right answers. If you want to get the most accurate numbers, compare the results from several online calculators. It may surprise you to find out that each one gives you a different figure. Read online reviews to learn which calculator is best for your tax situation.
The IRS Calculator Knows Best
For the most accurate results, you should ask the most trusted source. It only makes sense that the official tax calculator provided by the IRS is the most trustworthy. This calculator uses the most variables. People with all types of tax situations, both simple and complex, may benefit from the IRS calculator.
The IRS updates their calculator on a regular basis. It also asks users more questions, so it can give you a clearer picture of your personal tax liability. Unlike some other calculator services, the IRS calculator is completely free to use.
User Error Is a Common Mistake
Tax calculators rely on proper data entry in order to work. Entering the wrong numbers is one of the main reasons these calculators don’t always provide accurate results. To help avoid user error, make sure to meticulously enter every figure. Have all your tax documents ready before pulling up a calculator. Check each number before pressing enter.
Tax Professionals Outperform Online Tax Calculator Estimates
While a decent online system may give you a rough estimate of how much you’ll owe this year, only a tax professional can provide you with an exact number. Every tax situation is unique and best handled by a pro.
Let our team at Incompass Tax, Estate & Business Solutions run your tax numbers. Our experts can handle any personal tax situation. And, unlike online tax calculator estimates, we know our numbers are right. Contact us to learn why our services are more reliable than online tax calculators.