Taxable income is calculated by taking total income and subtracting any exempt items (such as gifts or inheritances) as well as applicable deductions and exemptions (such as those for dependents or charitable contributions). This leaves the amount of income that is subject to taxation.

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Taxable Income Is

Question 24

Multiple Choice

Taxable income is:

A) total income excluding exempt items less deductions and exemptions.
B) gross income less deductions.
C) the sum of everything a person makes.
D) gross income less state taxes, mortgage interest, and charitable contributions.

Correct Answer: