What information is necessary to estimate your tax return accurately?

To estimate your tax return accurately, it is essential to gather income information and details about any deductions you may have. This is because your tax liability is primarily determined by your total income, which includes wages, interest, dividends, rental income, and any other earnings. Additionally, tax deductions reduce your taxable income, which can significantly influence the amount of tax you owe.

Both elements—accurate income reporting and a clear understanding of applicable deductions—are necessary for a comprehensive estimate of your tax return. For instance, common deductions could include mortgage interest, charitable contributions, and certain business expenses, among others. Without this information, it would be challenging to arrive at an accurate tax liability estimate.

In contrast, relying solely on previous year's tax returns, while potentially useful for reference, does not account for changes in income, tax laws, or your personal circumstances. Similarly, while estimated expenses are important for budgeting or planning, they alone do not give a complete picture of your tax situation without corresponding income details. Lastly, social media earnings can be a part of your income, but they do not encompass the totality of what is needed for an accurate estimate without understanding their overall impact on your taxable income.