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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover.
How We Make Money.
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
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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.
Before 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.
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