The calculator, which can help taxpayers gauge the impact of twenty different taxes, reflects data applicable in 2013. It has been updated to include the latest tax law developments, including changes in federal tax rates and imposition of the 3.8 percent Medicare surtax, as well as revised state and local levies for cable, cell phones, gasoline, and groceries, among other expenses.
“The calculator gives the public greater insight into a broad array of taxes that impact their financial lives,” Edward Karl, AICPA vice president of taxation, told AccountingWEB in a phone interview. “The idea is to drive the public to consider their financial well-being.”
Here’s how the calculator works in four easy steps:
- On the map of the United States and its territories, click on the state or jurisdiction where you live.
- Enter, at a minimum, the county and/or city where you live, your marital status, federal adjusted gross income, and number of dependents.
- For a more detailed calculation, factor in housing-related costs (electricity, natural gas, and cable), as well as other expenses, including cell phone, gasoline, cigarettes, and alcoholic beverages. The more information you provide, the more detailed your tax calculation will be.
- If you’re interested in seeing how your total estimated tax liability compares to other locations around the country, you can choose up to two more places of residence for a side-by-side comparison.
But the calculator should not be viewed as an income tax-preparation tool, cautioned Karl. He noted it can provide a good estimate of federal income tax liability, especially if you provide detailed information, such as the number of your personal exemptions and itemized deduction amounts. Nevertheless, the calculation for income tax doesn’t take into account certain personal credits a taxpayer may be able to claim, nor does it factor in any state and local income taxes.
“It helps when you fill up your car with gas, pay a hotel bill, or even buy a six-pack of beer,” said Karl, who added that the figures for cigarette taxes are particularly revealing.
Karl also stressed that the calculator helps promote the idea that taxes should be a year-long consideration and are not just limited to income tax return time.
The AICPA is encouraging taxpayers to use its Total Tax Insights calculator as a guide to improving their overall tax and financial circumstances. Although it is designed for public use, the calculator may benefit tax professionals as well. They may refer to it in client newsletters, suggested Karl, to illuminate the need for financial planning. As a result, readers may be inclined to seek professional assistance. Many CPAs are experienced in handling such matters.
“As tax reform discussions continue in Washington and in states throughout the nation, we’re reminded of how significant a role taxes play in our lives,” summarized Karl in an AICPA press release. “The insights offered by the calculator provide greater transparency into our financial status and underscore the point that taxes are far more than an April 15 phenomenon. Understanding your tax burden today can help you plan for tomorrow.”
For more information about the Total Tax Insights calculator, visit https://www.totaltaxinsights.org.