The individual income tax formula, drawn
Fourteen boxes, left to right, from gross income to the balance due — the major subtotals of the Income Tax Summary in the ACCTG 410 Individual Taxation Toolbox. The map carries labels only. A formula is a shape, and putting figures on it turns the diagram back into the table it is meant to stand above.
The figures live underneath. Nine of the fourteen are amber, and each one opens into the sheet’s own line items — the nine income components under row 8, the three adjustments under row 18, and so on. Type there and the box above fills in. Open as many as you like at once; nothing you enter leaves this page.
Gross income to the balance due
The line items behind each box
Nine tables, from the same sheet. Their entries are what derive the amber boxes above.Where this comes from The workbook sheet, row by row — optional
Income Tax Summary, the framework tab of the ACCTG 410 Individual Taxation
Toolbox (Individual taxation excel simulation master - organized.xlsx), rows
8–59. That sheet is the individual income tax formula written out once, and every other
tab in the workbook feeds one of its lines. The map above is its fourteen major subtotals; the
tables are its line items.
The reference letters in the Ref column — a, b,
a-b, c, d, e, c+d-e,
f, c+d-e+f — are the sheet’s own, from its column A.
| Row | Ref | Subtotal | Comes from |
|---|---|---|---|
| 8 | Gross income | rows 9–17 | |
| 18 | For AGI deductions | rows 19–21 | |
| 22 | a | Adjusted gross income | row 8 − row 18 |
| 23 | b | From AGI deductions | rows 24, 27–29 |
| 30 | a-b | Taxable income | MAX(0, a − b) |
| 32 | c | Income tax liability (tentative 1) | rows 33–34 |
| 35 | d | Other taxes | rows 36–38 |
| 39 | e | Nonrefundable tax credits | rows 40–43 |
| 44 | c+d-e | Income tax liability (tentative 2) | MAX(0, c + d − e) |
| 45 | f | Other taxes | rows 46–48 |
| 49 | c+d-e+f | Total tax | row 44 + row 45 |
| 50 | Refundable tax credits | rows 51–53 | |
| 54 | Prepayments | rows 55–58 | |
| 59 | Tax due or (refund) | row 49 − row 50 − row 54 |
Two rows are floored at zero, and the map marks both. Row 30 cannot go below zero, so deductions past adjusted gross income do not carry anywhere. Row 44 cannot either, which is what makes the credits on row 39 nonrefundable — past that point they stop being worth anything. The taxes on row 45 are added after that floor, so those credits never reach them.
This page does not compute a tax. Rows 33 and 34 — ordinary tax and preferential-rate tax — are figures the sheet takes as entries, worked out on its Comprehensive Tax Calculation tab. They are entries here too, so no rate schedule is embedded and none needs verifying.
The example is the sheet’s own. Salary 100,000, taxable interest 6,000, a 25,000 itemised deduction beating the 15,750 standard, ordinary tax of 13,127, one 500 credit and 10,000 withheld — landing on 2,627 due. It is illustrative, not a return, and the figures are the workbook’s rather than anyone’s. Nothing here is tax advice.
Educational use only. Ported from the Income Tax Summary sheet of the ACCTG 410 Individual Taxation Toolbox; the Ref column throughout is that sheet’s own row numbering. This page does not recompute a tax liability — ordinary and preferential-rate tax are figures you enter, as they are in the workbook — and it does not determine eligibility for anything. Take filing decisions to a qualified tax professional.