Taxes
Make tax time a little less taxing
Learn how the income tax system works, what goes into calculating your taxes, and how you can plan to minimize your tax liability.
Make tax time a little less taxing
Learn how the income tax system works, what goes into calculating your taxes, and how you can plan to minimize your tax liability.
Computing your income tax is a multi-step process. Here is a general overview of the steps.
Step 1: Subtract above-the-line-deductions from your total income to determine your adjusted gross income.
Step 2: Subtract below-the-line-deductions from your adjusted gross income to determine your taxable income.
Step 3: Your taxable income is used to calculate your federal income tax.
Total income includes salary, other income, interest, dividends, capital gains, retirement plan distributions
Above-the-line-deductions include certain retirement contributions and health insurance deductions.
Adjusted gross income (AGI): Determines how your income is taxed and your benefits from certain itemized deductions
Below-the-line-deductions: Standard or itemized deductions (e.g., medical expenses, mortgage and investment interest expenses)
Generally, you’ll want to itemize if it will allow you to deduct more expenses than the standard deduction — which is a fixed amount generally based on your filing status.
1. Do I pay income tax on everything I receive? There are exceptions, but in general, you do not pay federal income tax on gifts, most inheritances, insurance proceeds, some distributions from trusts and partnerships, child support, alimony payments made under post-2018 agreements (check to see if the laws of the state you live in are different), and interest received from investments in municipal bonds.
2. Will all of my income be taxed at the same rate? Some income receives special treatment and may be either tax-exempt or taxed at lower rates. For example:
3. What’s included in itemized deductions? Although subject to a variety of rules and limitations, the following may be included:
If the total of your itemized deductions is more than your standard deduction, you can itemize your deductions for a greater tax benefit.
4. Can I pay all of my taxes on April 15? If you have any of the following, you may need to make quarterly estimated tax payments. (Look for income you received where there is no tax withholding.)
5. When will I get my refund? If you file electronically, and have your refund direct deposited into your checking account, you can expect your return within a few weeks. If you file a paper return or don’t choose direct deposit, it may take six weeks or more.
6. How long should I keep my tax returns? Keep your returns and backup materials (federal and state if applicable) for at least seven years.
We strive to provide you with information about products and services you might find interesting and useful. Relationship-based ads and online behavioral advertising help us do that.
Here's how it works: We gather information about your online activities, such as the searches you conduct on our Sites and the pages you visit. This information may be used to deliver advertising on our Sites and offline (for example, by email) that's customized to meet specific interests you may have.
If you prefer that we do not use this information, you may opt out of online behavioral advertising. If you opt out, though, you may still receive generic advertising. In addition, financial advisors/Client Managers may continue to use information collected online to provide product and service information in accordance with account agreements.
Also, if you opt out of online behavioral advertising, you may still see ads when you sign in to your account, for example through Online Banking or MyMerrill Account Access. These ads are based on your specific account relationships with us.
To learn more about relationship-based ads, online behavioral advertising and our privacy practices, please review the Bank of America Online Privacy Notice and our Online Privacy FAQs.