Startups
- Business Structures
- Tax Identification Numbers
- Accounting Methods
- Income
- Converting Personal Use Property to Business Use
- Your Tax Year
- Your Books and Records
- Passive Activity Rules
- At Risk Rules
- What is a Small Business?
- Qualifying Small Business (QSB) Stock (Section 1202)
- Section 1244-Losses on Small Business Stock
More Tax Topics
- Business Structures
- Start-up Costs
- Depreciation
- Car Expenses
- Home Office Deduction
- Travel Expenses
- Hiring Workers
- Meals and Entertainment
- Retirement
- Top Tax Myths
- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
Quick Links
Hot Topics
Need Some Deductions for 2011?
Don't overlook these!
Updated for 2011
Income
<< Previous
What is Taxable Income?
Before you can determine Taxable Income, you must first determine Adjusted Gross Income.
Keep in mind, from a federal tax perspective, business income is a narrower concept than adjusted gross income.
Adjusted gross income encompasses various types of income of which, business income, is only one.
Examples of other types of income included in adjusted gross income are: wages, salaries, tips, interest, dividends, royalties, pensions, capital gains, and even a portion of social security payments received depending on the taxpayers overall income.
Adjusted Gross Income equals:
- Gross Income, MINUS
- Above-the-line deductions listed on the front of Form 1040.
- You can take above-the-line deductions even if you don't itemize.
Taxable Income Equals:
- Adjusted Gross Income, MINUS
- Below the line deductions.
Below the Line Deductions Include:
- Itemized deductions (from Schedule A of Form 1040).
- The standard deduction (if you don't itemize), plus additional amounts for people 65 or older and/or blind.
- Personal exemptions (for yourself, your spouse, and dependents)
For example:
- If you're single, with no dependents, and
- Have an adjusted gross income of $50,000, and
- You take the standard deduction of $5,800 (2011), and
- You deduct one personal exemption of $3,700 (2011), then
- Your taxable income would be $40,500 ($50,000 minus ($5,800 plus 3,700)).
Next:
Income: Reporting Income for a Service Business; Figuring Gross Income; Figuring Net Income for a Service Business
Related Links
- What is Income?
- What is Adjusted Gross Income (AGI)?
- Adjusted Gross Income May Limit Certain Deductions
- Reporting Income for a Merchandise Business
- Cost of Goods Sold for a Merchandise Business
- Reporting Income for a Manufacturing Business
- Cost of Goods Sold for a Manufacturing
- Reporting Income for a Manufacturing Business
- Rental Income
- Bartering Income
- Debt Cancellation Income
- Investment Income
- Miscellaneous Income
Copyright © 2008-2012 Larry Villano. All rights reserved.
