What is tax liability? The amount of taxes you owe to the IRS - Business Insider

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Your tax liability may not be the amount you end up paying

that allows pre-tax deferrals, those amounts won't be included in your gross income.

Further, if you paid interest on student loans or are self-employed and paid health insurance premiums throughout the year, for example, you can subtract those amounts from your gross income. These are referred to as adjustments to income, or above-the-line deductions. This results in your adjusted gross income .

From there, you can subtract either the standard deduction — $12,200 for single filers and $24,400 for married joint filers in 2019 — or itemized deductions , whichever is higher. This brings you to your total taxable income. That's the figure the IRS applies to the tax brackets above to determine your true tax liability.Form W-4

. This tells your employer how much to withhold from your paychecks for income taxes based on your filing status, family situation, and any additional jobs you have. Your employer sends the amount withheld for income taxes from each paycheck to the IRS on your behalf. At the beginning of the next calendar year, you'll receive a W-2 — or 1099 if you're an independent contractor — from each employer you had, detailing how much you earned and how much was withheld for taxes. Self-employed taxpayers generally pay their

 

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