How can I estimate my income tax bill for the current year?
One option is to look at the IRS Witholding Calculator - As George Marian notes, this is by no means a perfect way to "estimate" how much you'll owe.
Other key questions for you to answer:
- Have you setup the proper number of deductions for you and your family? E.g. if you have a partner (wife or husband) who doesnt have a job, do you have 2 federal and 2 state deductions noted?
- Take 30 minutes to identify the major tax deductions that you qualify for. For example, do you typically itemize your deductions or take the standard deduction? Do you invest money into IRA's, 401k's, HSA's, or any other tax deferred investment vehicle? Do you pay any interest on student loans? Here is the IRS's website
on tax deductions. Another decent website lists the top most overlooked tax deductions. It isn't hard to find these type of websites, all I did was to google "tax deductions ".
There's no silver bullet here. The best you can do is to understand the key inputs into how your taxes are calculated, and then identify the most important tax deductions that you might take. Then pray that you haven't missed some nuance and use a tax program early in January to check your assumptions so you're not completely surprised when April rolls around.
A final suggestion: do your own taxes using a website like TurboTax. Take the time to "itemize" your tax deductions just to learn what is tax deductible. You can figure out how the big parts of tax law works by just looking at what you could deduct in the future.