At the end of each year, all you have to do to prepare your tax return is tally up every bit of money you brought in from various channels, right? Not necessarily. It’s important to differentiate types of income based on the government’s designations.
For instance, do you know the difference between earned and unearned income?
- Earned income comes from providing your personal services. This includes wages, commissions, tips, and income from self-employment.
- Unearned income comes from investments, capital gains, pensions, and other passive activities.
Another term you’ll come across is taxable income. This refers to the dollar amount on which you’ll be taxed—your total income once adjustments, deductions, and exemptions are removed.
Still confused? Taxation Solutions, Inc. is standing by to provide the guidance you’re seeking to get through tax season in one piece. We’re the Memphis area’s experienced choice for tax help, offering tax resolution services as well as general tax advice. Whatever questions you have, we’ll take the time to listen and to give you thorough and effective answers.
Want to learn more? Book a consultation with a member of our team today!