by Cody Hodge

Created on: February 24, 2009

It is tax time 2009, and once again it is time to figure out how much we can expect to pay, or have paid to us. It seems like there are so many things to consider when doing your taxes, and it can be confusing sometimes to figure out what you owe, or will get back. When doing your taxes there are several things to keep in mind, such as your tax bracket, deductions, credits, and anything else that effects your income. So what types of income are considered taxable?

Just about any source of income from the past year will be taxed. You can go to Irs.gov, and you can find the exact tax codes, or you can just look at your form 1040 which will give you step by step instructions on what to include. If you use software like TurboTax, you will be guided through all the things you need to include as well.

You will start with the number on your W-2 as your gross income for the year. That is the amount of money you made before any taxes were withheld from it. After taking into account things such as student loan interest, and other exemptions, you will then have a number that is called you adjusted gross income. So if you have a total of 23,492, and you had 1234 dollars in student loan interest, that would be deducted, and you would have your adjusted income.

After that you have a standard deduction that you can take, or you can itemize your taxes. You can take things like charitble donations, business expenses, or anything like that that would be written off as tax deductions. Typically you should take the standard deduction, which this year was 5,450 dollars.

Once you figure that out, you have your exemption number. You should have filled that information out when you started at your current job, but if you are single you file as a 1, and if you are married, or have children you would use a different number, depending on the exemptions that you can claim. The standard exemption was 3,500 dollars this tax season.

Finally you have the income that is taxable. Depending on the tax bracket you are in, you take the percentage of that income, and you have the amount of taxable income that you will have this year. So if you had 25,000 dollars, and 1,000 deduction for student loans, and the two deductions add up to 8,950 dollars you will be left with 15,050 dollars in taxable income. Since you would be in the 10 percent tax bracket at that income level, 10 percent of that money will be taxed.

So now you have 1505 dollars that is considered taxable income, or the money that is left after deductions, exemptions, and other write-offs. Now you look at your W-2 and see how much was withheld already during the year and subtract that number from the 1505 that is left. If the number is above 0, then you owe tax. If the number is below 0, then you get a refund.

This is just a rough outlook on what is taxable income in the United States. Consult the IRS, a tax professional, or your tax software for further information, or for more detailed returns. Your form 1040 will also tell you more about what is taxable, but in general anything that was earned is taxable. Any donations, or loan interest is generally deductible, but you will have to check with a professional for any particular advice on your unique tax return.

Learn more about this author, Cody Hodge.
Click here to send this author comments or questions.