Tax Basics

It has been said many times that there are only a few certainties to life, that is death and taxes. Each year we all have to pay our yearly income taxes and most of us have no idea on how the tax system works. Considering with all the different terms floating around like adjusted gross income or standard deduction. For all the tax newbies out there, income-tax-calculator.org has gone through the IRS website and came up with a brief explanation on how taxes work and how to understand them better. This may save you some money come next tax season.

Taxable Income

The government will have certain guidelines on what is considered taxable income. Here are some examples:

  • Your salary
  • Interest on Bank accounts, or any other investments
  • Unemployment Compensation
  • Royalties, Winning the Lottery, Gambling Profits
  • Withdrawals from a retirement account

Basically any income you make in your life, the government wants a piece of it.

Non Taxable Income

You might be thinking, is there anything I do not get taxed on? And the answer is yes. This is called nontaxable income. Here are some examples:

  • Childcare
  • Return of Investment
  • Repayment from a loan
  • Gifts
  • Money contributed to retirement plans
  • Health Savings Accounts

Now that you know what the government counts as income, we can start to look at ways to reduce that income to lower the taxes that you pay. This is the part that will save you money! The government always has special incentives or tax breaks. For example if you buy a energy efficient home you may get some tax breaks. You can contribute to tax exempt savings accounts like for retirement. You can deduct interest paid on student loans. There is a whole set of great deductions you can take advantage of and they are always changing. It is always a good idea to keep up on what you can do to reduce your income.

Income-tax-calculator.org is dedicated to keeping you informed on what you can do to get the most out of your taxes and take the headache out of doing them each year. Check back in for more great info.

Tax Calculator . Privacy Policy . Tax Basics . Tax Deductions . Tax News