May 15th 2012
By AccountingWEB Staff
The American Institute of CPAs (AICPA) has launched the Total Tax Insights calculator, a comprehensive calculator that was developed as a tool to enable taxpayers to estimate the amount they pay each year for the most common federal, state, and local taxes.
"The AICPA has a long-standing commitment to helping Americans take accountability for their financial health. One critical step in achieving financial well-being is to understand your tax payment and how it impacts your financial decisions. We have introduced this new calculator to help Americans grasp how much they are paying in combined federal, state, and local taxes," said Barry C. Melancon, CPA, CGMA, AICPA president and CEO.
"Our recent national poll showed that taxpayers do not know the percentage of their income that goes to pay taxes or how many types of taxes they pay annually. AICPA's goal is to make federal, state, and local taxes more transparent, and the Total Tax Insights calculator does that," Melancon said.
Although the average American may pay more than twenty different taxes during the course of a year, an AICPA poll showed that a majority (54 percent) estimated they pay less than ten different taxes. Only 11 percent of those surveyed said they had recently added up the total amount of annual taxes they pay to federal, state, and local governments.
The poll also showed that two-thirds (67 percent) said they could not accurately estimate the percentage of income they paid last year in all taxes to federal, state, and local governments. That number is even higher among those who make less than $100,000 a year; nearly three-quarters (72 percent) said they could not come up with an accurate estimate.
"CPAs know better than anyone how important it is for taxpayers to understand what they are paying in taxes. This new tool is designed to increase awareness of how much people pay in taxes and the importance of factoring this knowledge into everyday financial planning. Using the Total Tax Insights calculator is a simple step taxpayers can take to gain greater control over their financial future," said Edward S. Karl, CPA, AICPA's vice president for taxation.
Only basic information is required to use the free Total Tax Insights calculator. At a minimum, visitors to the website input the county or city in which they live, their marital status, their federal adjusted gross income, and their number of dependents. Based on the information provided by the user, the Total Tax Insights calculator estimates what that taxpayer is paying on an annual basis for approximately twenty different taxes, and it provides a pie chart that shows the percentage of their total tax bill by category. A user's privacy is protected – the Total Tax Insights calculator does not require individuals to identify themselves in any way, and the data is erased when a user leaves the website.
The AICPA encourages taxpayers to use the Total Tax Insights information and resources to improve their overall tax and financial well-being. The calculator only provides estimated amounts, and a taxpayer's actual taxes may vary significantly depending on his or her particular situation. For example, income tax calculations do not take into consideration certain deductions, credits, or other adjustments. The Total Tax Insights calculator is not a tax preparation tool or a substitute for the expert tax and financial advice of a CPA.
The AICPA will periodically update the calculator to reflect the most recent changes in federal, state, and local taxes. Taxpayers should consider using the calculator several times a year to get the most accurate estimate of their current situation.
Visit the Total Tax Insights website for more information.
- IRS Unveils New Version of Smartphone App
- Opportunities Exist for CPAs to Better Leverage Emerging Technology
Clarus Research Group conducted the telephone survey on behalf of the AICPA within the United States between April 24 and 25, reaching a nationally representative sample of 1,000 adults aged eighteen and older by landline and mobile phone. For full results and methodology contact Diane Zyats at (202) 434-9266 or [email protected].