- Estimating your income for this year can be important for planning budgets or getting health insurance.
- Over the last two years, incomes rose 7 percent.
- Use your previous year’s taxes and estimate changes to get a snapshot of what to expect.
America finds itself at an economic crossroads, with record unemployment and a booming economy. But with growing signs of a possible recession coming in the near future, plenty of people are seeing their incomes in a state of flux.
During the first two years of President Donald Trump’s administration, incomes have been on the rise. However, that has translated in sharp increases for the wealthy and more modest changes for the rest — with a 7 percent increase in median household income overall, but an 8.2 percent jump for the top 20 percent of earners and a 9.2 percent increase for the top 5 percent.
As people begin trying to budget for the year, estimating their projected income for 2019 becomes more and more important, so here’s a look at how to figure out what you’re most likely to make over the next 11 months.
Different Methods for Different Circumstances
The good news for many people is that calculating your income level can be very simple. Salaried employees are likely to know what they earn with each paycheck, and any raise will probably be scheduled and fall within a somewhat predictable range. However, for plenty of other workers, it gets a lot more complicated. If you’re a freelance or hourly worker, you can’t simply take your biweekly pay stub and multiply by 26. Fortunately, there are some other methods for getting a decent estimate for your income in the next year.
One way to calculate your projected income for the year is to use the method outlined at Healthcare.gov, which needs an estimate of your income to set the subsidies you might or might not receive for signing up for coverage on the platform. Their method has three simple steps:
- Get your adjusted gross income from last year: Start with what you made last year.
- Add any tax-exempt income: If there was any income you received but didn’t report on your tax return, add it in.
- Adjust for any anticipated changes: This is the tricky part, but you can know ahead of time about any scheduled raises or the addition of Social Security income.
Even here, you might not be able to paint as clear a picture as you would like. Maybe you’re planning on leaving your job at some point in the next year, but you still don’t know when, or perhaps you’re planning to shift from something full-time to freelance work. But it’s important to remember that you don’t have a crystal ball and the best you can do is make the best prediction possible based on what you do know.
Read more on what you should know about your paycheck.
More on Taxes
- Tax Deductions Are Changing Drastically But You Can Still Optimize Your Return
- These Are the 13 Tax Law Changes Families Need to Know About
- Republican Tax Cuts Have Put $1 Trillion Back in Shareholders’ Wallets
- Watch: How to Legally Cheat Your Tax Bracket
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