What is Taxable Income?

Taxable income is the amount of income subject to taxes after deductions and exemptions. Generally, any amount included in your income above the deductible amount is subject to taxation unless it's specifically exempted as nontaxable income.

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Tax forms with cash, calculator, glasses, and pencils. — Image source: Getty Images.

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Federal Income Tax

The federal income tax is the primary source of revenue for the United States government.

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Understanding 401(k) Tax Rules

Yes, taxes are a factor with your 401(k). Here's what to consider.

Property Taxes in Each State

Property tax rates affect real estate investors and homeowners. Here's what you need to know.

What Are Qualified Retirement Plans?

This specific type of retirement plan confers tax benefits to employees and employers.

Best Income Stocks for Passive Income

Investing in these companies can mean collecting passive income.

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Deferred Revenue

Income received for goods or services not yet delivered, recognized as revenue when services are provided or goods are sold.

But if you can get a client to pay you in January instead of December, it could benefit you. Of course, you’ll be on the hook for the additional income the following year still. But if you expect your income to be lower next year, it may make sense to defer compensation.

Another method to lower taxable income is to increase your retirement account contributions or other tax-deductible savings accounts like a health savings account. These above-the-line deductions may also lower your adjusted gross income to the point where you qualify for more tax credits, further reducing your tax bill.

If you expect your itemized deductions to exceed the standard deduction, increase your deductible expenses. Give more to charity. Pay your January mortgage payment in late December to add an extra month of mortgage interest to your deductions.

The above examples should provide you with some ideas on how to lower your tax bill come April.

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About the Author

Adam Levy is a contributing Motley Fool stock market analyst covering technology, consumer, and financial stocks and how policy, economic, and consumer trends shape personal finance, Social Security and retirement savings. Before The Motley Fool, Adam was a financial advisor at Edward Jones. He studied finance and electrical engineering at Carnegie Mellon University.

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