forms of taxable income

tackling income taxes

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what's in this lesson?

There are many forms of taxable income that you have to pay taxes on. We’ll introduce you to some of the most common ones: hourly wages, salaries, capital gains, and dividends. At least if you know you’re gonna get taxed, you won’t be surprised! That’s good, right?

forms of taxable income

tackling income taxes

There are many forms of taxable income that you have to pay taxes on. We’ll introduce you to some of the most common ones: hourly wages, salaries, capital gains, and dividends. At least if you know you’re gonna get taxed, you won’t be surprised! That’s good, right?

what's in this lesson?

There are many forms of taxable income that you have to pay taxes on. We’ll introduce you to some of the most common ones: hourly wages, salaries, capital gains, and dividends. At least if you know you’re gonna get taxed, you won’t be surprised! That’s good, right?

overview

Forms of taxable income

 

There are many forms of income that you’ll have to pay taxes on. We will take a look at a few of them:

 

  • Hourly wages: these are typically paid out to you based on a specific number of hours you work each week. You will likely agree to an hourly rate with your employer (ex: $18 per hour), and they’ll pay you that amount for each hour worked.
  • Salaries: a salary is a fixed amount that you get paid without an hourly cap. It encompasses all duties of your job, so as long as you complete those responsibilities, and maintain employment, you are paid. You could work 30 hours one week, and 60 the next, and you’ll be paid the same amount.
  • Capital gains: these are earnings you get when you sell a capital asset. A capital asset is something that you own, like a stock, house, car, a valuable family heirloom… if you sell it for more than you bought it for you’ll have to pay taxes on the gains.
  • Dividends: if you own stock in a company, sometimes their board may decide to distribute dividends as a reward, and “thank you,” for investing in the company. This can come in the form of cash or more stock, and can happen regularly (ex: on a quarterly basis) or spontaneously as a one-off event. Check out more details on dividends in our Investing course.

These are the most relevant forms of taxable income to most people, but there are others out there too. The key thing to remember is that, much of the time when money is going into your bank account, unfortunately it might be subject to taxes. Yeah, we know.

 

Source(s): TurboTax

overview

Forms of taxable income

 

There are many forms of income that you’ll have to pay taxes on. We will take a look at a few of them:

 

  • Hourly wages: these are typically paid out to you based on a specific number of hours you work each week. You will likely agree to an hourly rate with your employer (ex: $18 per hour), and they’ll pay you that amount for each hour worked.
  • Salaries: a salary is a fixed amount that you get paid without an hourly cap. It encompasses all duties of your job, so as long as you complete those responsibilities, and maintain employment, you are paid. You could work 30 hours one week, and 60 the next, and you’ll be paid the same amount.
  • Capital gains: these are earnings you get when you sell a capital asset. A capital asset is something that you own, like a stock, house, car, a valuable family heirloom… if you sell it for more than you bought it for you’ll have to pay taxes on the gains.
  • Dividends: if you own stock in a company, sometimes their board may decide to distribute dividends as a reward, and “thank you,” for investing in the company. This can come in the form of cash or more stock, and can happen regularly (ex: on a quarterly basis) or spontaneously as a one-off event. Check out more details on dividends in our Investing course.

These are the most relevant forms of taxable income to most people, but there are others out there too. The key thing to remember is that, much of the time when money is going into your bank account, unfortunately it might be subject to taxes. Yeah, we know.

 

Source(s): TurboTax

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