1 / 7

Income Tax: Taxable Income

Income Tax: Taxable Income. Taxes – Day 1 Notes. Vocabulary. Gross Income: ALL income; e.g. salary, tips, interest on account, dividends Adjustments: Tax-deferred income that you get to subtract off your gross income e.g. IRAs, other retirement accounts, tax-deferred savings accounts

jetta
Download Presentation

Income Tax: Taxable Income

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Income Tax: Taxable Income Taxes – Day 1 Notes

  2. Vocabulary • Gross Income: ALL income; • e.g. salary, tips, interest on account, dividends • Adjustments: Tax-deferred income that you get to subtract off your gross income • e.g. IRAs, other retirement accounts, tax-deferred savings accounts • Adjusted Gross Income (AGI): Gross Income – Adjustments

  3. Vocabulary • Deductions: expenses that reduce taxable income • E.g. college tuition, work expenses, interest on a mortgage, charitable contributions, state income taxes, medical expenses • Standard Deduction: Deduction you can take instead of itemizing ($5950 for a single individual or $11,900 for a family) • Exemptions: Reduce taxable income for each person you support ($3,800 per person) • Taxable Income: Money that you can be taxed on; AGI – (Deductions and Exemptions)

  4. Example 1 • Melissa earned wages of $42,000, received $250 in interest from a savings account, and contributed $1200 to a tax-deferred retirement plan. She was entitled to a personal exemption of $3800 and to deductions totaling $5950. Find her gross income, adjusted gross income, and taxable income.

  5. Example 2 • Eugene earned wages of $28,400, received $95 in interest from a savings account, and had deductions totaling $6000. He has only 1 exemption. Find his gross income, adjusted gross income, and taxable income.

  6. Example 3 • Mark works as a waiter at Applebee’s. In one year, he earned $18,000 in salary and $1500 in tips. He received $50 in interest from a savings account. He contributed $1200 to a tax-deferred retirement plan. He has a wife and 1 child that he is supporting. He has contributed $195 to charity, has paid $250 to state income tax, and has paid $2000 for interest on a home mortgage. Calculate his gross income, adjusted gross income, and taxable income.

  7. Example 4 • Isabella earned wages of $88,750, received $4900 in interest from a savings account, and contributed $6200 to a tax-deferred retirement plan. She is supporting herself, her husband, and 2 children. She has contributed $9000 to charity, has paid $3500 for interest on her mortgage, and paid state income tax of $2750. Calculate his gross income, adjusted gross income, and taxable income.

More Related