The American Institute of CPAs has introduced a Web-based calculator to help individuals estimate the total amount of taxes they pay every year for the most common federal, state and local taxes.
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The AICPA plans to periodically update the Total Tax Insights calculator to reflect the most recent changes in federal, state and local taxes, and taxpayers should consider using the calculator periodically to get the most accurate estimate of their current situation.
“The AICPA has a longstanding commitment to helping Americans take accountability for their financial health,” said AICPA president and CEO Barry Melancon in a statement. “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.”
While the average American may pay more than 20 different taxes during the course of the year, a recent AICPA poll showed that 54 percent of taxpayers estimated they pay less than 10 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 67 percent of those surveyed 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; 72 percent said they couldn’t come up with an accurate estimate.
“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,” said Melancon. “AICPA’s goal is to make federal, state and local taxes more transparent and the Total Tax Insights calculator does that.”
The AICPA is encouraging taxpayers to use the Total Tax Insights information and resources as a guide to improve their overall tax and financial well-being. The calculator only provides estimated amounts. 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 Institute cautions.
“CPAs know better than anyone how important it is for taxpayers to understand what they are paying in taxes,” said AICPA vice president for taxation Edward S. Karl. “This new tool is designed to increase awareness of how much people pay in taxes and the importance of factoring this knowledge into every day financial planning. Using the Total Tax Insights calculator is a simple step everyone can take to gain greater control over their financial future.”
