Tax season is upon us, and understanding what constitue taxable income is key to understanding the financial landscape!đĄLets break it down. Taxable income encompasses various earnings subject to taxation by the government. From salaries and wages to dividends and business profits, it's the sum total of what's eligible for taxation after accounting for deductions and exemptions. Here are the most common types of income
Wages and Salaries: All wages and salaries, including tips you earn, are subject to tax. your employer will report your income to the government using a w-2. this form details your total earnings and taxes withheld throughout the yearÂ
Interest and Dividends: Earnings you might receive from investments, such as savings accounts, bonds, or stocks, can enjoy preferential tax rates or even be tax-free based on factors like investment type, holding duration, and specific tax laws.
Rental Income: Rental income from leasing property is typically taxable. yet landlords can take advantage of deductions like mortgage interest, property taxes, repairs, and depreciation to lower their taxable income
Business Income: Business profits are taxed, but deductions for expenses like salaries, equipment, and research help reduce taxable income, letting businesses keep more earnings for growth.
*This information provided is for general information purposes only and should not be constructed as legal advice. It is recommended you consult with a qualified professional or lawyer for accurate guidance tailored to your specific situation
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