Tax features ABCs of Income Tax by PJ Wade Income tax may not be as simple as ABC, but understanding the fundamental principles is not as difficult as you might believe. For many people, it's what they have misunderstood that makes income tax seem intimidating.
Tax planning is a year-round process.
Make tax planning part of your everyday life and you'll reap the benefits in April. Get in the habit of thinking in terms of after-tax dollars , instead of gross income. This way, you'll work with money you actually have to spend and you'll also become more aware of how much you lose to taxes. To calculate after-tax dollars, use an estimated average tax rate based on your last tax return. Average tax, expressed as a percentage, is the total amount of tax you paid divided by your total gross income, multiplied by 100.