taxable income
Taxable income is the portion of the money you earn that the government actually calculates your tax bill on. Certain deductions and adjustments can lower this number before taxes are figured out.
Where it is explained in full
How the wealthy pay less tax: the line between income and wealth, and the empty suite that does not exist. A friend earning two million a year asked how the very rich pay so little. The answer is not a secret and not a loophole. It is one line in the code, and everything else hangs on it. This page explains it, and corrects a story about commercial property that gets told at every dinner where the question comes up.
Roth or traditional: two jars, one tax bill. Pay the tax now or pay it later. That is the whole choice, and it turns on one number nobody knows: what your tax rate will be when you are old.
The health savings account: three tax breaks and one gate. The account people describe with the most excitement and understand the least. It does something no other account does, and there is a gate in front of it that many people cannot walk through.
Workplace plans: the 401(k), the 403(b), and the TSP, from the first paycheck to the last. Everything a person needs to open one, fill it, hold the right things in it, avoid the traps, and carry it with them when they leave. Long on purpose, so that one page is enough.
A definition says what a thing is; it never says whether it fits you. The guides explain how it works and name the professional who confirms it for a particular person. The No Advice Disclosure.
Words beside it
- Adjusted gross income (AGI)
Your total income minus certain deductions; many limits, including who can deduct an IRA, are based on it.
- earned income
Earned income is money you receive from working, like a paycheck from a job or pay from freelance work. You generally need earned income to be allowed to contribute to an IRA at all.
- federal income tax
A portion of the money you earn that the United States government collects each year, with the amount based on how much you made during that year.
- gross income
The total amount of money you earn before any taxes or deductions are taken out. It is the big number at the top before anything gets subtracted.
- Income limit
An income limit is a rule that says once you earn above a certain amount of money per year you are no longer allowed to do a specific financial action, like contributing directly to a Roth IRA.
- Income statement
Revenue, costs, and profit over a period.
- modified adjusted gross income
Modified adjusted gross income is a specific calculation of your yearly earnings that the IRS uses to decide if you qualify for certain accounts or benefits. It starts with your total income and then adds or removes a few specific items according to tax rules.
- Net operating income (NOI)
A property's rent minus operating costs, before the mortgage.
Ask about taxable income
A model reads this page and answers from it. It will say when the answer is not on the page. Education, not personalized advice.