Topic: TAXESWho is affected: CONSUMERS AT EVERY STAGE OF LIFEDEGREE OF DIFFICULTY: MODERATEWhat you'll need: All forms listing income (earned and unearned), including a W-2 and 1099 forms; individual tax form.What you need to knowDoing 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 incomeSalary.Wages.Tips.Commissions.Bonuses.Unemployment benefits.Sick pay.Some benefits from your company (e.g., company car, tickets to events).Unearned incomeMoney 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-stepEnter the filing status, income, deductions and credits to estimate your total taxes for 2008.Filing status -- select --Married filing jointlySingleHead of householdMarried filing separatelyQualified widow(er)Total exemption Total income GoRelated linksTools & resourcesTipsDetermining your taxable incomeDeductions: cutting your tax billItemized deductionsExemption when filing your taxesGambling winnings are taxable income5 stupid tax mistakesOld tax laws with new amountsDo taxes yourself or hire a pro?1040 tax calculatorWhat is your tax bracket?Net-to-gross paycheck calculator10 common tax filing mistakesBankrate's 7-day tax filing planWhich tax return form should you use?Calculate your federal taxTax preparation checklistBefore starting your taxes, it's best to gather up all the paperwork you'll need. Using Bankrate's 7-day tax filing plan can help you get organized so you'll quickly finish your taxes with less aggravation. advertisementRelated Links:Thank heaven for legal tax havensShould you go offshore?Check estate taxes in your stateRelated Articles:Not all HELOCs deductibleCan ex get tax write-off?Estate tax still in limbo
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
Unearned income
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.
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