Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Standard Deduction and Tax Computation

Determining Taxable Income and Tax

Figuring the Taxes

Taxable income and tax are determined by using the taxpayer's adjusted gross income, exemption amount, and standard deduction or itemized deductions.

Caution

These amounts play an important role in determining the taxpayer's tax liability. Be certain they are figured correctly.

Taxable income is determined by subtracting certain items from the adjusted gross income (AGI). These include:

  • Personal and dependency exemptions, and
  • Standard or itemized deductions
Tip

A separate worksheet is used to calculate the tax (instead of the tax tables) for taxpayers with certain types of income, such as capital gains, qualifying dividends, or foreign earned income.

More Information

Please see Publication 5157, Affordable Care Act for VITA/TCE, for additional information on calculating the Excess Advanced Premium Tax Credit.

Form 1040 showing Tax and Credits section.