Taxable income, generally speaking, is the gross income of an individual or corporation, less any allowable tax deductions. Your taxable income is, in other words, the amount of your income that is subject to income tax.
In the USA, what qualifies as “taxable income” is defined in the Internal Revenue Code Section 63. “Gross income” is defined in Section 61 of the Internal Revenue Code. The problem begins before this however.
BUT STOP HERE!
The real first question is DO I OWE FEDERAL INCOME TAXES AT ALL? If so, where does it say in the Tax Code that I have to pay income taxes??!! Most Americans are not subject to the IRS jurisdiction!
The writers of the federal tax code would have you believe that Taxable income can encompass more than just your annual salary. They want you to think that taxable income can include profits from stocks or real estate sales, winnings from the lottery, betting the dogs or horses, and winnings from any casino (domestic or abroad). Even the cash value of bartered items is considered taxable income.
Income as understood by most everyone is part of your gross income but is not identified as taxable income would include child support, proceeds from life insurance policies, inheritances, workers compensation payments, welfare benefits, compensation awarded as a result of physical injury, education scholarships or grants, and income paid to your retirement account (either a 401k or IRA, up to a certain amount).
From your gross income, allowable tax deductions which covers itemized deductions; and subsection (b) covers standard deductions, which is nice of them considering 95+% of Americans don’t owe any income tax AT ALL!
Note that you cannot reduce your taxable income with standard deductions if you itemize your deductions.
In summary, taxable income is that portion of your gross income which is subject to taxation by the governing authority, less any allowable itemized or standardized deductions.
Few people go any further than this… they completely believe whatever they are told and never question the status quo. Who can tell me where it says in the tax code that you owe federal income taxes???
I remember years ago a guy put up $50,000 to anyone who could answer that question. No one ever collected, which should tell you something. The problem is if you don’t understand what it is that got you tangled in the system, then you can never learn how to get out.
When you are searching to insure you get the largest tax return possible it is necessary to begin at the beginning. So your first question should be:
“Do I owe the tax at all?”
I know what you are thinking, “But they threw Wesley Snipes in prison and Johnny Depp and Steve martin got in trouble for not paying.” The thing is people forget that movie stars are just people too.
They are just as uninformed as the mainstream public. They are not exempt from ignorance just because they are rich. They are just as brainwashed and suffer from the same fears regarding the intimidating taxing agencies.
So, what to do. You should always start with finding a professional tax service that has proof of their successes in defeating the taxing agencies. Then as simple as it sounds you have to have the courage to move forward.
This isn’t about being comfortable, it is about Truth. To simplify, either you are fine with giving away 25%-35% of your hard earned money or you are not.
It’s your choice.
If you decide you’d like to learn if you are lawfully required to pay federal income taxes and if you are owed a big tax refund you can send us an email us at firstname.lastname@example.org and visit our website www.endtaxes4ever.com for more information.