How to Calculate Tax Rate on a Revenue Check

by Lee Nichols

Revenue checks that come from anyone other than an employer typically do not have taxes withheld. This leaves the recipient calculating the required amount to send as an estimated tax payment. While Americans calculate their total tax when they file their tax return, the tax system is a pay-as-you-go system. If you expect to owe more than $1,000 total tax, you must file estimated payments to prevent penalties on income that does not come from an employer.

Inspect the revenue check to determine the amount of income. While taxpayers are responsible for making quarterly estimated payments, calculating the tax due on each payment enables you to put the tax amount in an interest-bearing account until you make your payment to the Internal Revenue Service.

Look up the current tax rate table that lists the frequency that you receive your revenue checks. IRS Publication 505 lists estimated payment calculation tables based on your filing status. Select the correct table based on whether you file your taxes as married filing jointly, married filing separately, head of household or single.

Calculate the tax on your revenue check by looking at your filing status under the appropriate table. For example, as of 2011, if your check is for $30,000 and you are married, you owe a flat rate of $1,700 plus 15 percent of any amount over $17,000 up to $69,000, or $1,950, for a total of $3,650.

Divide $3,650 by $30,000 to determine that the tax rate on your $30,000 revenue check is slightly over 12 percent.

Tip

  • Deductions lessen your tax liability.

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