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IRS.gov Website
Publication 17
taxmap/pub17/p17-157.htm#en_us_publink1000174206

Chapter 29
How To Figure Your Tax(p207)

taxmap/pub17/p17-157.htm#TXMP18d0abf2
After you have figured your income and deductions as explained in Parts One through Five, your next step is to figure your tax. This chapter discusses:
taxmap/pub17/p17-157.htm#en_us_publink1000174207

Figuring Your Tax(p207)

rule
Your income tax is based on your taxable income. After you figure your income tax and any alternative minimum tax, subtract your tax credits and add any other taxes you may owe. The result is your total tax. Compare your total tax with your total payments to determine whether you are entitled to a refund or owe additional tax.
This section provides a general outline of how to figure your tax. You can find step-by-step directions in the Instructions for Forms 1040EZ, 1040A, and 1040. If you are unsure of which tax form you should file, see Which Form Should I Use? in chapter 1.
taxmap/pub17/p17-157.htm#en_us_publink1000174209

Tax.(p207)

rule
Most taxpayers use either the Tax Table or the Tax Computation Worksheet to figure their income tax. However, there are special methods if your income includes any of the following items.
taxmap/pub17/p17-157.htm#en_us_publink1000174214

Credits.(p207)

rule
After you figure your income tax and any alternative minimum tax (discussed later), determine your tax credits. This chapter does not explain whether you are eligible for these credits. You can find that information in chapters 31 through 36 and your form instructions. See the following table for credits you may be able to subtract from your income tax.
CREDITS
For information on:See
chapter:
Adoption36
Alternative motor vehicle36
Alternative fuel vehicle refueling
 property
36
Child and dependent care31
Child tax credit33
Credit to holders of tax credit
 bonds

36
Education34
Elderly or disabled32
Electric vehicle credits36
Foreign tax36
Mortgage interest36
Prior year minimum tax36
Residential energy36
Retirement savings contributions36
Some credits (such as the earned income credit) are not listed above because they are treated as payments. See Payments, later.
There are other credits that are not discussed in this publication. These include the following credits.
taxmap/pub17/p17-157.htm#en_us_publink1000174217

Other taxes.(p207)

rule
After you subtract your tax credits, determine whether there are any other taxes you must pay. This chapter does not explain these other taxes. You can find that information in other chapters of this publication and your form instructions. See the following table for other taxes you may need to add to your income tax.
OTHER TAXES
For information on:See
chapter:
Additional taxes on qualified retirement plans and IRAs10, 17
First-time homebuyer credit
repayment
36
Household employment taxes31
Recapture of an education credit34
Social security and Medicare tax on wages5
Social security and Medicare tax on tips6
Uncollected social security and Medicare tax on tips6
Another tax you may have to pay, the alternative minimum tax, is discussed later in this chapter.
There are other taxes that are not discussed in this publication. These include the following items.
  1. Self-employment tax. You must figure this tax if either of the following applies to you (or your spouse if you file a joint return).
    1. Your net earnings from self-employment from other than church employee income were $400 or more. The term "net earnings from self-employment" may include certain nonemployee compensation and other amounts reported to you on Form 1099-MISC, Miscellaneous Income. If you received a Form 1099-MISC, see the Instructions for Recipients on the back. Also see the Instructions for Schedule SE (Form 1040), Self-Employment Tax; and Publication 334, Tax Guide for Small Business.
    2. You had church employee income of $108.28 or more.
  2. Recapture taxes. You may have to pay these taxes if you previously claimed an investment credit, a District of Columbia first-time homebuyer credit, a low-income housing credit, a new markets credit, a qualified plug-in electric vehicle credit, an alternative motor vehicle credit, a credit for employer-provided child care facilities, an Indian employment credit, or other credits listed in the instructions for Form 1040, line 60. For more information, see the instructions for Form 1040, line 60.
  3. Section 72(m)(5) excess benefits tax. If you are (or were) a 5% owner of a business and you received a distribution that exceeds the benefits provided for you under the qualified pension or annuity plan formula, you may have to pay this additional tax. See Tax on Excess Benefits in chapter 4 of Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans).
  4. Uncollected social security and Medicare tax on group-term life insurance. If your former employer provides you with more than $50,000 of group-term life insurance coverage, you must pay the employee part of social security and Medicare taxes on those premiums. The amount should be shown in box 12 of your Form W-2 with codes M and N.
  5. Tax on golden parachute payments. This tax applies if you received an "excess parachute payment" (EPP) due to a change in a corporation's ownership or control. The amount should be shown in box 12 of your Form W-2 with code K. See the instructions for Form 1040, line 60.
  6. Tax on accumulation distribution of trusts. This applies if you are the beneficiary of a trust that accumulated its income instead of distributing it currently. See Form 4970 and its instructions.
  7. Additional tax on HSAs or MSAs. If amounts contributed to, or distributed from, your health savings account or medical savings account do not meet the rules for these accounts, you may have to pay additional taxes. See Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans; Form 8853, Archer MSAs and Long-Term Care Insurance Contracts; Form 8889, Health Savings Accounts (HSAs); and Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.
  8. Additional tax on Coverdell ESAs. This applies if amounts contributed to, or distributed from, your Coverdell ESA do not meet the rules for these accounts. See Publication 970, Tax Benefits for Education, and Form 5329.
  9. Additional tax on qualified tuition programs. This applies to amounts distributed from qualified tuition programs that do not meet the rules for these accounts. See Publication 970 and Form 5329.
  10. Excise tax on insider stock compensation from an expatriated corporation. You may owe a 15% excise tax on the value of nonstatutory stock options and certain other stock-based compensation held by you or a member of your family from an expatriated corporation or its expanded affiliated group in which you were an officer, director, or more-than-10% owner. For more information, see the instructions for Form 1040, line 60.
  11. Additional tax on income you received from a nonqualified deferred compensation plan that fails to meet certain requirements. This income should be shown in Form W-2, box 12, with code Z, or in Form 1099-MISC, box 15b. For more information, see the instructions for Form 1040, line 60.
  12. Interest on the tax due on installment income from the sale of certain residential lots and timeshares. For more information, see the instructions for Form 1040, line 60.
  13. Interest on the deferred tax on gain from certain installment sales with a sales price over $150,000. For more information, see the instructions for Form 1040, line 60.
taxmap/pub17/p17-157.htm#en_us_publink1000174219

Payments.(p208)

rule
After you determine your total tax, figure the total payments you have already made for the year. Include credits that are treated as payments. This chapter does not explain these payments and credits. You can find that information in other chapters of this publication and your form instructions. See the following table for amounts you can include in your total payments.
PAYMENTS
For information on:See
chapter:
Child tax credit (additional)33 
Earned income credit35 
Estimated tax paid 4 
 Excess social security
 and RRTA tax withheld
36 
Federal income tax withheld 4 
First-time homebuyer credit 36 
Health coverage tax credit36 
 Regulated investment company
 credit
36 
 Refundable credit for
 prior year minimum tax
36 
Tax paid with extension 1 
Another credit that is treated as a payment is the credit for federal excise tax paid on fuels. This credit is for persons who have a nontaxable use of certain fuels, such as diesel fuel and kerosene. It is claimed on Form 1040, line 70. See Form 4136, Credit for Federal Tax Paid on Fuels.
taxmap/pub17/p17-157.htm#en_us_publink1000174221

Refund or balance due.(p208)

rule
To determine whether you are entitled to a refund or owe additional tax, compare your total payments with your total tax. If you are entitled to a refund, see your form instructions for information on having it directly deposited into one or more of your accounts, or to purchase U.S. savings bonds, instead of receiving a paper check.