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Income and Losses against Income
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Taxable Income

  • Wages, Salaries and Tips
  • Investment Income: interest, dividends and capital gains (some investment income receives preferential tax treatment)
  • Taxable refunds, credits and offsets of state and local income taxes
  • Alimony received
  • Business income
  • IRA distributions—including ROTH conversions
  • Pension and annuity income streams
  • Gambling winnings
  • Real estate, royalties, S Corp, partnerships, estates and trusts income
  • Farming profits
  • Unemployment benefits
  • Up to 85% of Social Security benefits

Losses that reduce taxable income:

  • Business losses
  • Capital losses from investing—these offset gains + a max of $3000 --any additional losses are carried forward to future tax years
  • Gambling losses only to the extent that they offset winnings
  • Real estate, royalties, S Corp, partnerships, estates and trusts (if eligible)
  • Farming losses

Income not subject to taxation:

  • Municipal bond interest
  • Social Security benefits up to a certain dollar amount
  • Income earned during a month with at least one day in a COMBAT ZONE
  • Accrued leave earned during COMBAT ZONE service
  • BASIC ALLOWANCE for HOUSING
  • BASIC ALLOWANCE for SUBSISTENCE


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