Estimating 2008 Taxes And Making Sure that I’m Withholding the Correct Amount
I just got (mostly) through doing my 2007 taxes, and figured it would be a good time to take a look at my estimated 2008 taxes to make sure that I’m having appropriate amounts withheld from my paychecks. Since I have the 1040 fresh in my mind, it is pretty easy to estimate what I’ll make during the next year, and estimate my total taxes.
It’s still very early in the year, but I know what my annual salary is, and about how much I should make in interest and dividends. My income from side businesses varies a lot, but is generally growing, so I can make an educated guess at that too.
So add up your income (wages, interest, dividends, business income), and subtract from that any adjustments (Health Savings Account, IRAs, Student Loans, etc) to get your Adjusted Gross Income
Now add up your deductions. The standard deduction for 2008 will be $10,900, and $3,500 per dependant. Subtract those from your Adjusted Gross Income to get your Taxable Income. I’m not sure how much the tax rates will change next year, but I’m guessing that you can look up your taxable income in this year’s tax table to get a ballpark figure in the taxes you will owe in 2008.
From there, you can probably make a good guess at your tax credits, and then calculate how much your total tax will be in 2008. Then divide that by the number of paychecks you receive in a year, and make sure it is close to what is actually being withheld.
