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How to Calculate Taxable Earnings


Determine your total gross earnings. Gross earnings comprised salary and/or wages, bonuses, commissions, tips, sick and/or vacation pay, company benefits (such as a company car), and unemployment benefits.

Unearned income generally includes dividends, gifts, interest payments, rental income, royalties, profit on assets sold and capital gains, business income, alimony, retirement fund earnings, gambling winnings, and Social Security payments (see Resources section).

Adding all applicable earned and unearned income will yield your total gross income, or adjustable gross income, called AGI.


Find your tax bracket. The Internal Revenue Service publishes its tax tables to help taxpayers determine their federal income tax bracket (see Resources section). Depending on the bracket, taxpayers might or might not be eligible for certain deductions and/or exemptions.


Subtract your qualifying deductions and exemptions form your adjustable gross income. Qualified deductions include medical expenses, child care expenses, student loan interest, moving expenses, property taxes, and so forth.

Exemptions will be based not only on your tax bracket but also on personal specifics (married, head of household, married filing separately, married filing jointly, widow or widower).

Tips and Warnings

  • It is best to seek the advice of tax professional to determine what income (whether earned or unearned) is taxable.

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