Today TaxMama hears from Joe in Montevallo, NY who wants to know, “Is my income tax rate, including social security, and other income based on my adjusted gross income or gross income?”
Uh, actually, Joe, neither.
You income tax rates are based on your taxable income.
That’s the number you get when you use all the income, losses and adjustments on page 1 of your tax return, then deduct all your itemized deductions and personal exemptions on the second page of your tax return. Look at line 43, where it says Taxable Income.
And oh! I have a link for you, to the new 2005 tax form – to your 1040
https://www.irs.gov/pub/irs-pdf/f1040.pdf
Your adjusted gross income is the bottom line of page 1 of your Form 1040 – and the top line on page 2. And your gross income is simply your income before you deduct anything.
Now, if you’re asking about what the deductions on your paycheck are based on…that’s different. Your income tax withholding is computed on your Gross Wages.
Your Social Security taxes are also computed on your Social Security and Medicare taxable wages. That may include funds that you contributed to your tax deferred retirement plan. It may include a variety of other benefits that aren’t taxable to you for income tax purposes.
So, remember, you’ll find answers to questions about your tax rates paycheks and other tax issues, free. Where? Where else? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
- IRS Form 1040 :: The new 2005 Income Tax Return
- MarketWatch.com :: TaxMama’s article about Paycheck Deductions
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