For tax purposes, “gross income” is all the money a person receives in a given y

ID: 1193368 • Letter: F

Question

For tax purposes, “gross income” is all the money a person receives in a given year from any source. But income taxes are levied on “taxable income” rather than gross income. The difference between the two is the result of many exemptions and deductions. To see how they work, suppose you made $50,000 last year in wages, $10,000 from investments, and were given $5000 as a gift by your grandmother. Also assume that you are a single parent with one small child living with you.

For tax purposes, “gross income” is all the money a person receives in a given year from any source. But income taxes are levied on “taxable income” rather than gross income. The difference between the two is the result of many exemptions and deductions. To see how they work, suppose you made $50,000 last year in wages, $10,000 from investments, and were given $5000 as a gift by your grandmother. Also assume that you are a single parent with one small child living with you.

Explanation / Answer

Gross Income- 50000+10000+5000 =65000

Taxable Income = 50000+10000-1000(Tax cedit for single parent)=60000

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For tax purposes, \"taxable income\" rather than gross income. The difference be

For tax purposes, “gross income” is all the money a person receives in a given y

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For tax purposes, “gross income” is all the money a person receives in a given y

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