INCOME

LESSON OBJECTIVES:
1.Define income
2.Differentiate income from other terms
3.Differentiate taxable and nontaxable
income
 What is INCOME?
• is money what an individual or business receives
in exchange for providing labor, producing a
good or service, or through investing capital.
Individuals most often earn income through
wages or salary. Businesses earn income from
selling goods or services above their cost of
production.
Differentiate income from other terms:
• Income refers to the money that a • The term “income” generally
person or entity receives in refers to the amount of money,
exchange for their labor or property, and other transfers of
products. Income may have value received over a set period of
different definitions depending on time in exchange for services or
the context—for example, products.
taxation, financial accounting, or
economic analysis.
Differentiate taxable an nontaxable income
What is taxable income?
• The term taxable income refers to any gross income
earned that is used to calculate the amount of tax you
owe. Put simply, it is your adjusted gross income less
any deductions. This includes any wages, tips, salaries,
and bonuses from employers. Investment and unearned
income are also included.
here are the different types of taxable income:
• Salary, wages, tips, and self-employment income
• Bonuses and commissions
• Unemployment pay and severance pay
• Income from rental properties
• Capital gains, stocks, dividends, and interest
• Bartering
• Virtual, crypto-currencies like bitcoin
What is nontaxable income?

is money on which
you do not have to
pay taxes to the
government.
some types of nontaxable income are:
• Life insurance death benefits, but not proceeds when a policy is cashed in
• Child support
• Alimony received under decrees or court orders made after 2018
• Inheritances
• Financial gifts
• Lawsuit proceeds representing payment for pain and suffering
• Cash rebates on purchased items
• Most healthcare benefits
• Qualifying adoption reimbursements
• Some municipal bonds