____ income is subject to federal taxes.
Gross
Adjusted gross
Net
Taxable
taxable
Taxable income is subject to federal taxes.
To determine taxable income, you first need to calculate gross income. Gross income includes all sources of income such as wages, salaries, tips, business income, rental income, dividends, and interest.
From gross income, you can then determine adjusted gross income (AGI) by making certain adjustments specified by the Internal Revenue Service (IRS). This includes deductions such as certain business expenses, contributions to retirement accounts, alimony payments, and student loan interest.
The next step is to calculate deductions and exemptions to arrive at taxable income. Deductions include expenses such as mortgage interest, state and local taxes, and certain medical expenses. Exemptions are deductions for each taxpayer, their spouse, and dependents.
Finally, taxable income is the amount on which federal income taxes are calculated. Tax rates vary depending on your filing status and income level.
Keep in mind that tax laws may change over time, and it's always a good idea to consult with a tax professional or refer to the IRS website for the most up-to-date information.