Gross income – Gross income includes all income received from all sources and could include money, property, and the value of services received.Long story short, your taxable income is what you’ll use to determine your tax bracket. taxable income! These two tax terms are commonly confused with each other but represent different things. Taxable income – Taxable income is arrived at by subtracting the standard or itemized deductions-whichever amount is greater-from your AGI.To clarify the various ways to talk about income, let’s run through a list of the different types: When it comes to talking about income, several terms sound similar, but they have their own definitions and intentions. Let’s face it, tax terminology can get a little confusing. Income definitions, comparisons, and related documents It helps determine your eligibility in other financial situations, like applying for a loan to buy property, eligibility to rent an apartment, or getting a student loan to pay for higher education. (Some credits and tax deductions have specific AGI limitations.)ģ. It helps you better understand if you qualify for specific tax credits or deductions. (More on how to calculate AGI later in this post!)Ģ. It serves as the starting point for calculating your federal tax liability – and your federal tax rate. But what does Adjusted Gross Income mean for you in real life? Here are a few places it comes into play!ġ.
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