Calculate your federal income tax liability to be paid to the IRS Feel free to use the free online tax calculator to calculate your US income tax liability to be paid to the Internal Revenue Service (IRS). What are the basics of US federal income tax Are you worried about how much income tax you need to pay The IRS? Do you need a way to forecast the US income tax liability payable to the IRS? As a tax advisor that owns real estate property investments, I know that many Americans and British expats that invest in real estate property worry about filing 1040 tax returns to the Internal Revenue Service (IRS). They are right to worry, as residential real estate property taxes can be complex to forecast. Our Enrolled Agents help Americans and British investors who own real estate property in the United Kingdom (UK) and the United States (US). The Internal Revenue Service (IRS) annually updates the income tax rates applied to your income. The 2023 US income tax rates are: – 12% for income over $11,000 ($22,000 for married couples filing jointly) and – 22% for income over $44,725 ($89,450 for married couples filing jointly) and – 24% for income over $95,375 ($190,750 for married couples filing jointly) and – 32% for income over $182,100 ($364,200 for married couples filing jointly) and – 35% for income over $231,250 ($462,500 for married couples filing jointly) Please note that most Americans need to file a 1040 tax return to the Internal Revenue Service (IRS) by April, 15 each year. It is possible to apply for extensions if you, as the taxpayer, live abroad. It is also possible for taxpayers to file form 4868 to get an automatic extension to file the 1040 tax return to the IRS. Please note that American expats living abroad have until June, 30 to file and pay their tax liability to the Internal Revenue Service (IRS). The free online income tax calculator will help you estimate what taxes you will need to pay to the IRS. Please note that the US income tax calculator is a great way to forecast your tax liability and put money aside each month. Calculate and pay your US income tax liability Do you worry about your finances? Do you struggle to pay your tax liabilities to the Internal Revenue Service (IRS)? Our free online US income tax liability helps you identify the taxes you need to pay the IRS. Sadly, it does not work out how you should pay the taxes to the IRS. A payment plan is an agreement with the IRS to pay the taxes you owe within an extended timeframe. You should request a payment plan if you believe you can fully pay your taxes within the extended time frame. If you qualify for a short-term payment plan, you will not be liable for a user fee. Not paying your taxes when they are due may cause the filing of a Notice of Federal Tax Lien and/or an IRS levy action. It is not always to pay your US taxes on time, but please do not bury your heads or be too proud to reach out to the Internal Revenue Service as they are accommodating and supportive. They are human beings just like you and me. When you request a payment plan (instalment agreement), with certain exceptions, the IRS is generally prohibited from levying. The IRS’s time to collect is suspended or prolonged while an Installment Agreement (IA) is pending. An IA request is often pending until it can be reviewed and an IA is established, or the request is withdrawn or rejected. If the requested IA is rejected, the running of the collection period is suspended for 30 days. Similarly, if you default on your IA payments and the IRS proposes to terminate the IA, the running of the collection period is suspended for 30 days. Last, if you exercise your right to appeal either an IA rejection or termination, the running of the collection period is suspended by the time the appeal is pending to the date the appealed decision becomes final. Refer to Tax Topic No. 160 – Statute Expiration Date and Tax Topic No. 202 – Tax Payment Options. What are payment plan costs and fees? If the IRS approves your payment plan (instalment agreement), one of the following fees will be added to your tax bill. Changes to user fees are effective for instalment agreements entered into on or after April 10, 2018. For individuals, balances over $25,000 must be paid by Direct Debit. For businesses, balances over $10,000 must be paid by Direct Debit. US Tax Credits to lower your IRS bill Earned Income Tax Credit–This is one of the most prominent refundable tax credits and is generally only available to low or moderate-income households making up to a little over $50,000 and is further dependent on other specifics. The credit is equal to a fixed percentage of earnings from the first dollar of earnings until the credit reaches its maximum. The maximum credit is paid until earnings reach a specified level, which declines with each additional dollar of income until no credit is available. Families with children receive a much more extensive credit than those without qualifying children. For the most part, this credit is refundable. Foreign Tax Credit–This non-refundable credit reduces the double tax burden for taxpayers outside the US. Child Tax Credit–It is possible to claim up to $2,000 per child, $1,400 of which is refundable. The child tax credit starts to phase out once the income reaches $200,000 ($400,000 for joint filers). Child and Dependent Care–About 20% to 35% of allowable expenses up to $3,000 for each child under 13, a disabled spouse or parent, or another dependent care cost can also be used as a tax credit. Like many other tax credits, this is also based on income level. Adoption Credit–This is a non-refundable tax credit for qualified expenses up to a certain level for each child adopted, whether via public foster care, domestic private adoption, or international adoption. Saver’s Credit–Non-refundable credit incentivizes low and moderate-income taxpayers to make retirement contributions to qualified retirement accounts. 50%, 30%, or 10% of retirement account contributions up to $2,000 ($4,000 if married filing jointly) can be credited, depending on adjusted gross income. Must be at least 18, not a full-time student, and cannot be claimed as a dependent on another person’s return. American Opportunity Credit–Generally for qualified education expenses paid for an eligible student in their first four years of higher education. There is a maximum annual credit of $2,500 per student. If the credit brings tax liability down to $0, 40% of the remainder (up to $1,000) can be refunded. Lifetime Learning Credit–Unlike the education tax credit, this can be used for graduate school, undergraduate expenses, and professional or vocational courses. It can be up to $2,000 for eligible students but is entirely non-refundable. It is possible to claim either the American Opportunity Credit or Lifetime Learning Credit in any year, but not both. Residential Energy Credit–Residential properties powered by solar, wind, geothermal, or fuel-cell technology can qualify. However, generated electricity from these sources must be used inside the home. Non-business Energy Property Credit–Equipment and material that meet technical efficiency standards set by the Department of Energy can qualify. The first type is defined as any qualified energy efficiency improvements, and examples include home insulation, exterior doors, exterior windows and skylights, and certain roofing materials. The second type is defined as residential energy property costs. Examples include electric heat pumps, air conditioning systems, stoves with biomass fuels, and natural gas furnaces or hot water boilers. Plug-in Electric Motor Vehicle Credit–It is possible to receive a tax credit of up to $7,500 for buying an environmentally-friendly electric vehicle. It must be acquired brand new for use or lease, not resale, and used predominantly within the US. The free online US income tax calculator will help you work out the various tax credits that help you reduce your IRS payment.