taxes

How do I: Calculate my taxable income?

Topic: TAXES
Who is affected: CONSUMERS AT EVERY STAGE OF LIFE
DEGREE OF DIFFICULTY: MODERATE
What you'll need: All forms listing income (earned and unearned), including a W-2 and 1099 forms; individual tax form.

What you need to know

Doing your taxes can be a headache, and figuring out your taxable income is no exception.

Simply put, taxable income is the total gross income you make, minus exemptions, deductions and credits. Gross income can be classified as earned and unearned. 

You gross income includes:

Earned income

  • Salary.
  • Wages.
  • Tips.
  • Commissions.
  • Bonuses.
  • Unemployment benefits.
  • Sick pay.
  • Some benefits from your company (e.g., company car, tickets to events).

Unearned income

  • Money from interest and dividend payments.
  • Profit from assets you sold.
  • Business and farm income.
  • Rents.
  • Royalties.
  • Gambling winnings.
  • Alimony payments.
  • Earnings from your retirement fund.
  • Social Security payments.

Taxpayers add their earned and unearned income together to get their gross income.

Depending on your filing status and which form you choose to file, the Internal Revenue Service allows you to use deductions and tax credits to adjust your income downward.

Personal exemptions also reduce your taxable income. Exemptions include people who depend upon you for financial support, such as your spouse, your kids, possibly your parents and yourself.

After making these adjustments to your income, you arrive at your adjusted gross income, or AGI. Your AGI is used to calculate how much tax you owe.

Step-by-step
Enter the filing status, income, deductions and credits to estimate your total taxes for 2008.
Filing status
Total exemption
Total income
Go

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed, 0 point 4.36%  0.12 4.24%
15 year fixed, 0 point 3.39%  0.13 3.26%
5/1 ARM 3.36%  0.09 3.27%
 
View Rates in your area Search
Product Rate Change Last week
30K FICO-based HELOC 4.74%  0.01 4.75%
50K FICO-based HELOC 4.51% --0.00 4.51%
100K FICO-based HELOC 4.24% --0.00 4.24%
 
View Rates in your area Search
Product Rate Change Last week
60 month used car loan 2.86%  0.13 2.99%
48 month used car loan 2.79%  0.12 2.91%
60 month new car loan 2.94%  0.04 2.90%
 
View Rates in your area Search
Product Rate Change Last week
1 Year CD 0.90%  0.02 0.88%
2 Year CD 1.03%  0.00 1.03%
5 Year CD 1.59%  0.01 1.60%
 
View Rates in your area Search
Product Rate Change Last week
Balance Transfer Cards 15.67%  0.04 15.71%
Cash Back Cards 16.32%  0.04 16.36%
Low Interest Cards 10.91% --0.00 10.91%
 
Search
DAILY TAX TIP NEWSLETTER

Get expert advice during tax season on tax preparation and tips for cutting your tax bill.

advertisement

Connect with us