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The best way to do a federal tax return estimate of deductions is to use an online tax calculator or complete a trial return using tax preparation software. These programs can provide you with prompts to determine the types of deductions you qualify for how they affect your adjusted gross income (AGI).
What Deductions Are
When completing a tax return, a taxpayer is permitted to deduct certain items from their income. These reductions in income, known as above-the-line reductions, reduce a taxpayer’s taxable income to their AGI. It is from your AGI, less any credits that their tax rate is determined. A calculator can provide information on the deductions that are available for a taxpayer such as the child and dependent care expenses deduction or education expenses deduction. The amounts of these deductions are programmed into the software so that it is easier for you to perform an estimate.
Manually Looking Up Deductions
In absence of using any type of software for estimation purposes, you may want to look up every deduction individually. The IRS.gov website provides information on every available deduction for an individual taxpayer. This process however may prove to be cumbersome and labor intensive. If you do not feel comfortable using the online tax estimation or preparation software, the manual look-up process is also available.
