Taxable income is the income that taxpayers report to tax authorities, like the Internal Revenue Service, for purposes of estimating the tax that they owe the government. The Internal Revenue Service is worried about wealthy individuals undertaking aggressive tax planning to inappropriately lower their taxable income, thereby reducing the money available to run the US government.
- Sharing Your Income with Uncle Sam: The Realities of TaxationYou have a summer job and are anticipating that first paycheck. Come payday, you rip open the envelope and stare in disbelief: Where did all your money go? Lesson No. 1 in the realities of taxation: You must share your income with the government. The sooner you learn to navigate the world of W-4s and withholdings, the better prepared you will be for paycheck sticker shock.