Taxable income is a crucial concept to understand when it comes to preparing and filing your taxes. It refers to any type of income that is subject to taxation by federal or state authorities. In this blog post, we’ll take a closer look at what is considered taxable income and the different types of income that fall under this category.

1. Actively-Earned Wages Wages earned from your job, such as your salary or hourly pay, are considered taxable income. This includes any bonuses or commissions you may receive as well. These types of income are typically reported to the IRS on a W-2 form and are subject to both federal and state income taxes.
2. Self-Employment Income If you’re self-employed, your income from your business is considered taxable income. This includes income from freelance work, consulting, or any other type of gig work. Self-employed individuals are responsible for paying self-employment taxes, which include Social Security and Medicare taxes.
3. Investment Income Income earned from investments, such as interest, dividends, and capital gains, is also considered taxable income. Interest income is typically reported on a 1099-INT form, while dividends and capital gains are reported on a 1099-DIV or 1099-B form.
4. Rental Income If you own rental property, the income you earn from renting it out is considered taxable income. This includes any money you receive from tenants, such as rent payments and security deposits. Any expenses related to the rental property, such as property taxes, repairs, and management fees, can be used to offset the income and lower your tax liability.
5. Retirement Income Income from retirement accounts, such as traditional 401(k)s and IRAs, is considered taxable income when you begin taking withdrawals. The same goes for social security benefits if you exceed the limits set by the government.
6. Gambling winnings If you win money from gambling, whether it’s from a casino, lottery, or other source, it is considered taxable income and must be reported on your tax return.
   It’s important to keep in mind that these are general guidelines and that your specific tax situation may be affected by other factors, such as deductions and credits. Be sure to consult with a tax professional or refer to the IRS website for more information on what is considered taxable income and how it applies to your unique situation.
   

In conclusion, taxable income refers to any type of income that is subject to taxation by federal or state authorities. It includes actively-earned wages, self-employment income, investment income, rental income, retirement income and gambling winnings. It’s crucial to understand what is considered taxable income in order to accurately report your income and minimize your tax liability.