# How to figure out sales tax

## Income Tax

Determine your taxable income. Add all sources of income and subtract out any allowable adjustments. This will give you "adjusted gross income," or AGI, on line 37 of Form 1040. Carry this amount over to line 38

Subtract either the standard deduction for your filing status or the itemized deductions from Schedule A.

Determine your exemptions on line 42. Multiply the number of exemptions by \$3650, the amount allowed as of December 2010, and subtract it from your previous total. You now have your taxable income on line 43. If your taxable income is \$100,000 or more, go to step 6 of this section.

Find your income in the IRS Tax Table. Note that if your income is equal to the higher amount in the row, you need to drop down one row to find the correct amount. Find your filing status at the top of the chart and follow down to the correct row for your income. For example, if your taxable income is \$10,200 and you are filing Head of Household, your tax will be \$1023.

Fill out the Line 44 Worksheet for Qualified Dividends and Capital Gains, if

applicable, on page 39 of the Form 1040 Instruction booklet. While the form looks complicated, each step is simple. You will be calculating two different taxable income amounts, one that incorporates the dividends and one that does not. Determine the tax owed via each method, and choose the lower of the two amounts.

Calculate tax if your income is \$100,000 or more. Tax on high incomes is not included in any table and requires actual calculation. See page 89 of the Form 1040 Instructions (see Resources) for the calculations required.

## Sales Tax

Find the sales tax for your locality. Some cities or counties impose different rates than the state's base rate. The best source of current infomation is a recent sales receipt, which will indicate the rate of tax.

Divide the tax rate by 100 and add 1 to get the multiplier. Example, if your local tax rate is 9 percent, the multiplier is (9/100) +1 = 1.09.

Multiply the result by the base amount of your purchase to find the total price, including tax. For example, for a \$10 purchase and a 9 percent tax rate, your total purchase price is 1.09 * 10 = \$10.90.

Source: ehow.com

Category: Taxes