2021 Federal Income Tax Calculator (Form 1040 Estimated Tax Liability)

Created by Corridor Consulting and James Yochum, CPA this spreadsheet will calculate tax liability estimates for individual tax filers in the USA who do not itemize deductions.

You will receive 1 Google Sheet (that you can download/copy for personal use)

Why is this spreadsheet necessary?

Most individuals only take into account the Marginal Income Tax Brackets, and fail to include the tax implications of the Capital Gains Brackets. Prior to the Tax Cuts and Jobs Act, the capital gains rates were tied to whatever marginal rate you fell under. Now they have their own brackets based on taxable income, which leads to a circular reference calculation to calculate tax liabilities (the spreadsheet takes care of this).

Example of a single individual, with taxable income at $40,400 and it all comes from long-term capital gains from crypto, or qualified dividends, they owe $0 in taxes!

Contrast that with $40,400 in ordinary dividends, they would owe $3,143.  If they had 40,400 of qualified and ordinary dividends the tax implications would look like this.

It will also give you your Marginal and Effective Tax Rates for the year

As a Tax Planning tool, this will show you the tax impact of taking more capital gains out in one year vs the next. It can also let you know the rate that each additional dollar you earn will be taxed at (Marginal Rate) or the rate at which all of your income is taxed on average (Effective Rate).

With these things in mind it can save many of you a lot of time, or a professional fee if you wish to be a bit more accurate (We recommend seeking a professional, if you need to estimate tax payments due, and remit them to the IRS. You could miss additional items of taxable income and be subject to penalties. A Tax Professional will know the right questions to ask, to avoid this.)

What information do you need for the spreadsheet?

1. Your tax filing status (Single, Married Filing Jointly, Head of Household) which impacts standard deduction amounts.

2. Your wages and taxable retirement income (Salaries, Tips)

3. Any federal tax withholding on those wages.

   • Your tax liability is reduced by these payments.

4. Your Net Gains/(Losses)

   • Net Losses are limited to a net $3,000 capital loss per year, per tax law.

   • Net Gains (including qualified dividends taxed as long term gain) are taxed correctly in the spreadsheet at preferential tax rates based on your taxable income level (0%/15%/20%)

5. Other Taxable Income

6. Business Income

   • The spreadsheet assumes you are a Qualified Business for S199A, and can take the entire Qualified Business Income Tax Deduction- 20% of your net income on all of the business income you input.

7. Quarterly Estimated Tax Payments

   • Your tax liability is reduced by these payments.

Where to find the above information on tax forms is further defined in a PDF you'll get in Gumroad after purchase.

As an additional bonus- those of you who purchase this will get notified and receive a discount code when we finish our Cryptocurrency asset tracking spreadsheet. That spreadsheet will calculate via CoinMarketCap's API's in real-time to attain gain/loss on all of your holdings.

Between the Income Tax Calculator and the Cryptocurrency tracking spreadsheet, Corridor Consulting has you covered for the 2021/2022 tax year!

Spreadsheets are not to be relied upon as tax advice. By purchasing you agree this will be used for your educational and personal (non-commercial) use only. Consult your professional adviser for a more accurate tax estimate, as numerous factors will impact your total tax liability, and this spreadsheet cannot be depended to capture those factors specific to your unique situation. This spreadsheet does not cover additional taxes for high networth individuals, such as Net Investment Income Tax. It also does not calculate self-employment taxes on this income (additional 15.3% up to annual cap) in 2021 The Social Security tax is only applied to the first $142,800 of self-employment income earned, for a maximum tax of $17,707.20 in the tax year 2021.